Grants Available to Start a Small Business
When productivity improvements reduce the need for workers and technology changes require new job skills, many people have turned to starting their own small businesses. In 2005, about 7 million new businesses were started, and the number of new startups each year since then is estimated to be about the same, according to the Small Business Administration (SBA). A small-business entrepreneur may apply for government and private grants to help get the business started.
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Funding Programs
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The SBA doesn't provide general grants for startup purposes to most small businesses, since the source of funds is general taxpayer money and a high percentage of small business startups aren't successful. Small business loans are the primary form of financial assistance the SBA offers. If a new small business is involved in developing new technology in a scientific research and development process, grants may be available through the Innovation Research or Technology Transfer grant programs.
Innovation Research Grants
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The SBA administers the Small Business Innovation Research grant program. More than 10 federal agencies participate, including the departments of Commerce, Defense, Energy and Education. The agencies set aside part of their research and development budgets for the program and advertise research topics available for small businesses to apply for. The small businesses that win contracts are funded for research and development of products. In 2011, the grants ranged from $100,000 to $750,000.
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Technology Transfer Grants
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Funding for the Small Business Technology Transfer grant program is the same as for the innovation program. To be eligible, the small business must work with a nonprofit research institution for a joint research and development effort. Eligible institutions include nonprofit colleges or universities, nonprofit research organizations, and federally funded research and development centers. Five federal agencies are involved in the program, including the departments of Defense, Energy, and Health and Human Services; the National Aeronautics and Space Administration; and the National Science Foundation.
Alternatives
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Given the sometimes limited supply of grants, venture capital can provide an alternative source of funds for small-business startups. In return for contributing money to the business, a venture capitalist receives partial ownership of the company, sharing in its profits, and usually has a voice in management decisions.
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References
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