December 18th, 2018 | By: The Startups Team | Tags: Funding
When you’re looking for grants to start a business, you’re looking in an area that’s crowded with a lot of competition. But, if there’s one thing startup entrepreneurs are known for, it’s tenacity.
The reason there’s so much competition is, a) there are a limited number of grants and, b) grants — unlike other forms of funding — don’t have to be paid back. You also don’t have to give up any equity in your company in order to win one. Sounds appealing, doesn’t it?
So while we don’t always recommend grants as the first place startups go looking for funding, they’re absolutely a great option for a certain subset of companies. Here’s an overview of how to secure grants to start to business, as well as a few types of grants for starting a business.
As we mentioned above, getting a grant to start your business is a lot of work. But as long as you’re not afraid of long hours (and would you be in this business if you were?) it can be a great source of startup funding.
Here are the first steps toward getting a grant to start a business.
This may seem basic, but the very first step for getting a grant to start a business is figuring out exactly what you’ll be using the money for. Any agency giving out grants is going to want to know precisely where the money is going.
So sit down and work it out. Do you need the money to hire more people? To launch a new aspect of your company? To complete an already started project? Outline not only the big picture of what they money will be used for, but also smaller things and how much money you think you need for each.
This step also helps you figure out what grants are the best fit for your startup — and which ones to not even bother applying for — as most grants have clear directives about use.
While not all startup funding sources require a business plan, grants definitely do. So be sure to get yours in order before you start applying.
For most founders, writing a business plan feels like the startup equivalent of homework. It’s the thing you know you have to do, but nobody actually wants to do.
Here’s the good news: writing your business plan doesn’t have to be this daunting, cumbersome chore.
Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing it becomes way more approachable. Check out our full guide to creating a great startup business plan here.
Just like other funding sources, agencies that give out grants are going to need financial documentation from you. If your company has been going for a little while, get together any financial document that shows how you’ve been doing. You’ll need your returns, your payroll, your profit/loss statement — you get the idea. And if you’re brand new — or even just a couple years old — be prepared to present your personal tax documents as well. They’re going to want to make sure that you’re going to use their money well, after all.
Once you have your paperwork in order, it’s time to start searching for grants that could be a good fit for your business! But be forewarned: Grants are notoriously difficult to find and also many have certain time periods in which they’re open or closed. So before you start the laborious process of apply for a grant, do yourself a favor and double check to make sure it’s still available.
Government grants for small businesses come in three forms: federal, state, and local. Federal grants usually offer the most money — and have the most competition. They’re also pretty specific and usually tied to a government agency that has clear requirements for qualifying for the money — and for what they expect you to do with it.
State grants, on the other hand, are usually less money than federal grants but also — depending on your state — less competitive. State governments may work with the federal government to administer money that’s been set aside specifically for small business grants.
And on the local level, grants tend to be even smaller but they may be easier to get, because personal connections still mean something! Usually these grants are about improving your local community, so if your startup or small business is focused on bettering your town or county, definitely take a look at local grants.
In addition to agency-specific government grants for small businesses, there are grants available that are much, much more specific. Your best bet for finding a grant that matches your startup closely is to search the Grants.gov database to find out what’s currently available and what most closely matches your startup. You should also check back periodically, as government grants for small businesses end and are added frequently.
Another thing to know about when you’re looking at government grants is that a lot of grant management is handled through the Small Business Association or SBA. The SBA doesn’t actually manage the money — that’s done through partner organizations, like community grants — but rather they act as a go-between for the government and partner lending organizations.
Click here for more information on government grants for small business.
Grants for veterans are a little harder to list out than government grants (even though almost all grants for vets are government-funded) because grants are usually open for a set period of time, after which that money is no longer accessible. So it’s not actually possible to list out business grants for veterans, because by the time you read this, they may or may not still be available. But that doesn’t mean there aren’t some great financing options — including grants — out there for vets!
For example, in addition to all of the federal and state loans that are available to small businesses and startups founded by veterans and non-veterans alike, the government also runs a few loan programs specifically for veterans. There are also private loans for veterans and training programs to help vets who want to become entrepreneurs or who want to improve their entrepreneurial skills. Basically, there are a bunch of great options of veteran entrepreneurs, including but not limited to grants!
Click here for more information on government grants (and other funding opportunities) for veterans.
Business grants for women is a popular topic — and no wonder. According to research from Kaufman, 40 percent of first time entrepreneurs in the United States are women. Even more impressive? The number of women-run businesses in the US is growing at twice the rate of man-owned businesses. The rate of women starting businesses and startups throughout the country is at an all-time high.
But, women aren’t getting nearly as much money for those businesses as men are. In the startup world, women founders got only 2 percent of VC funding in 2017. That means women are forced to look to other money sources when they’re looking to launch a startup or small business. With access to that funding source so dramatically limited (some might even say unaccessible) many female founders are looking for business grants for women.
Another women-only financing option for people look for business grants for women is women-only incubators and accelerators. Incubators and accelerators both offer varying combinations of funding, workspace, mentorship, and community.
While many women-only incubators and accelerators are based in bigger metropolitan areas, it’s worth doing search for women-only incubators and accelerators in your region, as this is an area that has seen a lot of growth in recent years. It seems like maybe the tech industry is starting to recognize how important it is to include women?
In addition to instructions for searching on government databases, we’ve listed out a few government grants for women. We’ve also included private small business grants for women, investors who are looking specifically to invest in woman-founded startups, women-only crowdfunding sites and equity financing platforms, and women-only incubators and accelerators.
Click here for more information on small business grants for women, as well as other funding options.
While there’s no one overarching group that provides grants for minorities and immigrants, there are a variety of resources out there, if you know where to look. Many of these business loans and grants exist at a local and state level, so your first move and best bet should be to connect with a local organization that works with minority business owners or with a lending institution that can help you navigate the local landscape. Some may be listed under loans or grants for “disadvantaged groups” or as loans or grants that specifically target disadvantaged communities.
The federal government also has the Minority Business Development Agency, which helps women and minorities grow their businesses. They often have grant opportunities, so definitely check them out as well.
No one knows grants like non-profits! Because as the name makes clear, non-profits don’t have any other profit source. As a result, there are a lot of grants out there available for non-profit organizations.
As most grants are only offered within a specific period of time, GrantWatch.com is a great resource for finding grants that match your non-profit. The Small Business Association also offers grants for non-profits, in addition to low interest loans and other financial and training assistance.
In addition to agency-specific government grants for small businesses, there are grants available that are much, much more specific. They may be for companies in a certain place or working on a certain product or with a specific population, for example.
Your best bet for finding a grant that matches your startup closely is to search the Grants.gov database to find out what’s currently available and what most closely matches your startup. This is a good move for any startup seeking a grant to start a business, even if they fit into one of the other categories listed above. After all, the more closely you match the funding opportunity, the more likely you are to get it.
Lucky for you, Grants.gov has a clear process for learning about and applying for federal grants for small businesses. It is:
You can click on each one to link through to the full instructions or read our article about types of federal grants here.
And, of course, grants aren’t the only options for startup funding. There’s venture capital. Private equity. Loans. Crowdfunding. There’s a whole world of funders out there! Don’t miss our guides to the full range of startup funding options, below.