What are small business grants?
A loan is money given to you or your business that you must pay back. A grant doesn’t need to be paid back, so it’s essentially “free money.”
Grants are an important source of funding that can help your small business grow — whether you’re just starting out or you’ve been operating for years. They’re usually distributed annually.
You often have to qualify for a loan based on revenue, credit score and experience. A small business grant, however, has application requirements related to your business’s size, type, needs and goals. Some grants are offered only to small business owners of certain backgrounds, so make sure your business meets the requirements before applying.
In general, grants with fewer requirements tend to get the most applications, while grants with highly specific requirements see less competition. That’s why searching for a grant that closely fits your business can pay off.
Learn how to secure funding for your small business.
What are federal small business grants?
The U.S. government is strongly interested in the growth and success of small business owners, and they offer many grants to help support them.
When applying for a federal government grant, the application process is critical. Agencies will ask to see your business’ history and credentials, including your license, certifications and proof of business insurance coverage.
Hiring a grant applications expert who understands the nuances and details of an application can be a good idea.
You can also get assistance from a Small Business Administration (SBA) counselor to help you sort through funding options.
Look for government grants for small businesses in federal agency databases in industry-specific areas. Some options include:
- Grants.gov: This is a vast, searchable portal with listings for thousands of federal government grants. You can filter the database to show only the grants open to small businesses and then narrow the grants down by category.
- Small Business Innovation Research program (SBIR): SBIR is managed by the Small Business Administration, and it helps your small business develop new products that benefit a U.S. government agency. That could include medical, environmental or other important technological innovations. Awards are given in two phases: Phase I, for small businesses exploring the feasibility and potential of an idea, and Phase II, when small businesses continue the research and development for ideas that have made it past Phase I.
- Small Business Technology Transfer (STTR): The STTR program is similar to SBIR, but your small business must partner with a nonprofit research institution for eligibility, and that institution must perform at least 30% of the R&D.
- 7(j) Management and Technical Assistance program: The 7(j) program helps small businesses compete for federal government contracts, which are lucrative but challenging to win. To qualify for a 7j grant, your small business must be located in an economically disadvantaged area or owned by low-income individuals. The awards include free one-on-one consulting and financial assistance for business development.
What are state and local small business grants?
State and regional government agencies also offer small business grant opportunities. Usually they provide funds to businesses fulfilling specific needs in the community, such as economic development or other social needs.
When applying for these grants, explain how your business can meet local needs. You’ll also need proof of your business license, certifications and business insurance coverage.
Look for state and local government grants in government databases, including:
Small business grants for women
Many private entities offer grants to help women-owned businesses succeed. If you’re a small business owner who identifies as a woman, you may be able to get support from an organization that supports female entrepreneurship.
Here are a few you should know:
- WomensNet’s Amber Grant: WomensNet gives grants to women business owners each month.
- IFundWomen grants: IFW partners with businesses to offer grants to women-owned businesses. It also offers a monthly “Pay-It-Forward” grant for entrepreneurs actively crowdfunding on its platform.
- Cartier Women’s Initiative: This international entrepreneurship program provides grants as large as $100,000 to women-owned businesses, in addition to one-on-one training and career development.
- Tory Burch Foundation Fellows Program: Women business owners selected for the Tory Burch Foundation’s Fellows Program receive a $5,000 grant for business education, coaching and networking opportunities, and a trip to New York.
- Women Founders Network Fast Pitch Competition: This annual opportunity for women entrepreneurs could win you cash grants as well as mentoring and professional services.
- As a female small business owner, you can also seek opportunities on a state and local level through Women’s Business Centers. These are sponsored by the Small Business Association and they’re designed to assist business development in the community.
Learn more about grants for women business owners.
Minority small business grants
Minority business owners can be underrepresented in small business funding. A growing number of organizations are providing grants to help minority business owners thrive.
If you’re a minority business owner, you can look into these opportunities:
- Fast Break for Small Business: Business service provider LegalZoom partners with the NBA, WBNA, and the NBA G League to support small businesses, “especially those who face obstacles because of who they are, who they love, or how they identify.”
- National Black MBA Association Scale-Up Pitch Challenge: The NBMBAA offers a grand prize each year to the winners of its pitch competition, which is open to the association’s members.
- Galaxy Grants: Hidden Star, a non-profit helping low-income, disadvantaged and minority entrepreneurs, offers grants to help women and minority entrepreneurs succeed.
- Fearless Fund: This venture capital fund invests in women of color businesses, offering small businesses grants, digital tools and mentorship.
- digitalundivided’s BREAKTHROUGH Program: Women entrepreneurs who identify as Black and/or Latina can win grants and mentorship through this program, backed by JPMorgan Chase.
- If you need more help, your local Minority Business Development Agency (MBDA) center is a great resource that can connect you to local and community-oriented funding.
- You can also get support by joining a nonprofit organization like the National Minority Supplier Development Council, which aims to build connections between minority-owned businesses.
Small business grants for veterans
Veteran-owned small businesses play a big role in the economy — but they often face challenges getting funding.
If you’re an active or former member of the armed services, there are grant opportunities for your small business, including::
Private grants for small businesses
Many large companies offer grants as part of their philanthropic efforts, including grants for small businesses. Some of these grants are awarded through competitions, so be sure to read the rules carefully.
Here are some notable sources of private grants:
Alternatives to small business grants
Grants can be difficult to get, but they aren’t the only way to fund your small business. Crowdfunding, small business loans and business lines of credit should also be considered.
Crowdfunding
Crowdfunding means asking a large number of supporters to contribute a small amount of money. Online tools can help you, and it can be a quick way to raise some cash, especially if you already have an online following. Even if you don’t, it can be a way to help you build your customer base and get feedback while you’re at it.
Crowdfunding can be time-consuming, and if your campaign doesn’t get much attention, you may not raise much money. Keep in mind that you can’t access the funds you raise with some sites unless you reach your goal.
Small business loans
Loans have to be paid back along with interest. But the right loan can be an excellent way to jumpstart your business.
To get approved for a loan, you’ll need to share information about your finances, credit score and details about your business — typically in the form of a business plan — with your lender.
Make sure you can pay back your loan. Good small business insurance coverage can help safeguard your finances if something goes wrong.
Line of credit
A line of credit works like a credit card. Unlike a loan, a line of credit is a revolving form of debt, which means you repeatedly borrow and pay back money up to a certain limit.
Lines of credit often have higher interest rates than loans. Some business owners treat lines of credit as an emergency fund when they have low cash flow.
To qualify for a line of credit, you’ll have to demonstrate the strength of your small business’ finances. Some lenders require a small business to have been operating for six months to a year before they can open a line of credit.
How NEXT helps small businesses stay financially secure
NEXT supports small business owners and self-employed professionals with business insurance coverage.
We’ll ask a few questions about your business and give you a quote. You can select your coverage options and purchase your policy — all in about 10 minutes. Your certificate of insurance will be available immediately, and you can access your policy 24/7 via web or mobile app.
If you have questions, our licensed, U.S.-based insurance professionals are available to help.
Start a free quote with NEXT.
