About Business Grants

Companies that have limited funds or working capital often turn to loans and credit cards to cover operating expenses or capital expenditures. Business grants are an alternative way to obtain funding for a business idea or entity; several state programs and groups offer grant programs for large and small businesses, and each one has a different set of eligibility criteria and requirements.

Significance

Business grants are also known as business development grants, and are readily available from the federal government, local business owners, investors and other agencies that want to invest in business growth. Government agencies are required to provide a certain amount of business grants each year, and many offer specialized grant programs for small business owners and minority groups. Large corporations and investors may also establish 'foundations' where they offer grants and funding for various businesses or to support innovation and business ideas.

Function

Business grants can be used to start a new business, expand an existing business, improve operations, or invest in a new business idea or innovation. The business grant application process typically involves submitting materials before a strict deadline where a committee reviews the application and requests a formal interview with the business owner. Eligibility requirements for grants vary by state and region, but in most cases, a business owner will need to provide a formal summary of intent, a business plan and other supporting materials.

Types

Business grants are available for almost any type of business, and many government agencies also offer their own financial support and business development programs. Some grants are given as awards and provide startup funding for a new business idea, while others work like a loan and need to be paid back over a certain period of time. Grant programs vary by State, and resource centers such as the Small Business Administration and local business agencies can help a business owner track down the most suitable programs.

Considerations

Not all business grants are legitimate, and it takes a considerable amount of research to find grants where a business fits all eligibility requirements. Many small businesses apply for hundreds of grants each year with minimal success; eligibility requirements can be fairly strict, and the grant application process can be complicated for a new business owner.

Benefits

Business grants are valuable for specialized niches or industries that may not have receive funding from conventional sources such as bank loans and credit cards. Minority business owners may have more opportunities for obtaining a grant from government agencies and local civic programs.

Warning

Many small business owners make the mistake of spending hours and days applying for different grants with minimal success. The business grant application process can be lengthy and requires drafting a formal proposal, listing business goals, and even creating a formal business plan for review. If a company does not have the time and resources to invest in professional grant writing, they may not be the best candidates for applying for a grant.