Grants for small business: What you may not know

Before you apply, consider these six key points about grants for small business.

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Grants for small business
Published: December 28, 2015

Grants, non-repayable funds awarded by government agencies, foundations, and corporations, can be an important source of growth for new and existing businesses.

To help expedite your search for an opportunity, consider these six key points about grants for small business.

"SBA also has authority to make grants to non-profit and educational organizations, but does not have authority to make grants to small businesses."

1. The federal government does not provide grants to start a business, but some state and local governments do

Although the federal government does not offer grants to startups, they may be available at the state or city level to help eligible small-business owners. For example, in Connecticut, the state's Small Business Express Program offers grants to small businesses to stimulate job creation and job growth. The city of Chicago's Small Business Improvement Fund helps small businesses in select neighborhoods make improvements to their property.

Learn more about grants for diverse small business owners. Your local Economic Development Agency office is a great place to find information about funding opportunities available to members of your community.

2. The SBA guarantees loans but does not give money directly to businesses

The US Small Business Administration (SBA) acts as a loan guarantor for three loan programs: the 504 loan program, the 7(a) loan program, and the microloan program. SBA also has authority to make grants to non-profit and educational organizations, but does not have authority to make grants to small businesses. However, SBA does provide the Loans and Grants Search Tool to help you find the potential grants for your business.

3. It takes time and patience to carefully complete the application

Applying for a grant can be tedious, as most applications require a significant amount of time and resources to have a strong chance of approval. Detailed information about your company, its finances, and how the grant will be used must be collected. The entire application process typically takes at least six weeks, including meetings and several rounds of review. A response from a state or a corporate grantor can take up to six months; and up to 12 months for a foundation grantor. But the effort and the wait may be well worth it.

4. The number of available small business grants is increasing

Good news for small business: The number of available grants is growing. According to a survey by GrantStation1, private foundation awards for nonprofit organizations, educational institutions and businesses increased from 2013 to 2014 by 5%. Also, community foundation awards increased by 9%, and corporation awards in the form of gifts of products or services increased by 14%.

5. Be realistic about your chances of landing a small business grant

Grants are highly competitive. Even if you do everything by the books, you still may not receive funding. According to the U.S. Department of Health and Human Services' Health Resources and Services Administration, it's not unheard of for companies to submit dozens of applications before being chosen — and most never are. Additionally, even if a company receives a grant one year, there's no guarantee it will be renewed. 

6. Small business grants come with responsibilities

Grants come with their own terms and conditions. The hard work begins when you receive a grant, as recipients usually need to submit progress reports to the awarding institution to show they're using the money as planned. If you don't meet the criteria, the award can be discontinued.

Now that you know these keys points about grants, set your sights on an opportunity that could be a boon to your small business.


1 "The Spring 2014 State of Grant SeekingTM." GrantStation. http://www.grantstation.com/includes/sog/2014/The%20Spring%202014%20State%20of%20Grantseeking%20Report.pdf