About Small Business Grants

Start ups and companies interested in expanding their business can apply for grants to cover certain costs and expenses. Small business grants are available through state business development agencies and private investors who want to provide assistance to small businesses and support a company's growth.

Significance

Since many start ups and companies in their early stages of operations do not turn a profit for several months or years, obtaining financial assistance from an outside source can help the company stay in business and expand if necessary. Small business grants are a type of financial assistance provided to entrepreneurs that do not require any type of payback. Grants do not earn interest and can be used to cover the costs of research and development, capital expenses and other costs associated with running the business.

Function

Small business grants allow companies to build and grow without taking on additional liabilities and debt associated with the typical loan or business credit cards. Grant programs can be used to launch a business; hire and train employees; set up a research and development department; execute marketing and public relations initiatives; provide leadership training for managers and executives; or purchase capital equipment.

Types

There are several different types of financing programs and loans available for small businesses in all industries. Some are financed by government entities and made available through the State's Small Business Administration, while others are made available through private entities and venture capitalists. Businesses looking for equity ad venture capital funding programs can apply for the New Markets Venture Capital (NMVC) program, or apply directly to venture capital firms listed on the SBA.gov website. The U.S. government offers a number of specialized grants for both non-profit and for-profit businesses in various industries; these can be found and applied for through the Grants.gov website.

Features

Qualifications and eligibility requirements for small business grants vary by provider, but the majority require companies to show that they have a truly unique product or service; explain their proof of concept; and explain specifically what the funds will be used for. Local grants and those geared towards minorities may require additional support and documentation.

Considerations

Government entities do not make funds available to business directly. They either go through the Small Business Administration (SBA) to provide loan financing or work with certain lenders and financial institutions to support a small business growth program. In most cases, an organization needs to complete a registration form and meet certain eligibility requirements to apply for a grant online. Some grant providers offer online tools such as application tracking and resources for applying online to make the process easier. If a company does not qualify for a grant, they may apply for a small business loan for additional financial assistance. The Small Business Administration also offers a number of attractive loans and financing options including: energy efficiency loans; rural business loans; export assistance loans; farm and agricultural loans; and disaster assistance loans.

Resources

• Types of Grants via Business.gov
• Venture Capital Resources via SBA.gov
• Grants.gov Small Business Grants