How to Get Approved for a Small Business Grant

Whether you are looking to start a new business or expand an existing one, small business grants are an important part of the financing landscape for small businesses. A grant provides a sum of money, often focused on a specific business activity or outcome, that doesn’t need to be paid back.

As a small business owner or manager, you can apply for small business grants from a variety of sources—the federal government, your state government, foundations, charities, and corporations. Once you’ve found a suitable grant, you should make sure your application is as competitive as possible. In this guide, we’ll show you how.

KEY TAKEAWAYS

• Getting approved for a small business grant is essentially a four-step process: finding a suitable grant, collecting the necessary documents, writing the application, and waiting for a decision. 
• Of these steps, finding a grant is likely to take the longest amount of time, because there are dozens of grant programs, each focused on a particular sector or type of business. 
• Once you’ve found a grant, you should take the time to make your application as competitive as possible, and ensure that your business plan clearly explains how a grant will support your business.

Types of Small Business Grants

Often, the most time-consuming part of getting a small business grant is finding a grant that is suitable for your business and that you are eligible for. There are several different types of small business grant, and each grant has its own eligibility requirements.

Federal Small Business Grants

The biggest distributor of small business grants in the United States is the federal government. These grants are distributed by a range of federal agencies, such as the Department of Agriculture (USDA) and the Small Business Administration (SBA). Many are designed to allow small businesses to develop specific capabilities—such as offering child care services to employees, or strengthening their environmental commitment.

If you own or run a small business, there likely will be at least one federal grant that you are eligible for. To apply, you’ll need to identify if that’s the case. To do this, you should check several sources:

• The most likely source for a business grant is the SBA. In addition to its loan program, this agency offers business grants to small businesses engaged in specific types of work, or owned and run by women and minorities.1 
• The SBA also runs the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which support businesses to carry out research and commercialize the results of this.2
• Grants.gov is a website that details all of the business grants administered by the federal government, and allows you to search for a suitable grant.
• A number of other federal agencies also offer grants to specific types of small business, including the USDA, the Department of Energy (DOE), the Environmental Protection Agency (EPA), and the National Institutes of Health (NIH).3456
• Part of the U.S. Department of Commerce, the U.S. Economic Development Administration (EDA) can also be an excellent resource for small businesses looking for state grants.7

State Small Business Grants

Many states also offer grants for small businesses. On one hand, these are generally less competitive than federal grants and focused on local business needs, so it may be easier to secure one that is appropriate for your business. On the other hand, they can be more difficult to find than federal grants, and they tend to be for less money. 

To find this kind of grant, you can research several sources:

• Many state and local government grants are listed on the State Business Incentives Database, where you can search by location.
• Small Business Development Centers (SBDCs) can also be a useful source of advice and guidance. There are almost 1,000 of these centers across the country, and they can help you find and apply for grants for your business.8

Corporate Small Business Grants

Many large corporations have a philanthropic arm that makes grants to small businesses. Most of these grants are focused on companies in the same business sector as the donor company, but some accept applications from a broader range of small businesses. Among the most prominent of these grants are:

• The National Association for the Self-Employed (NASE) offers grants of up to $4,000 for its members.9
• The Venmo Small Business Grant program awards 20 eligible small businesses with $10,000 in free funding. It also offers public promotion on the Venmo website and social media accounts, as well as mentorship from industry leaders.10
• The Amazon Small Business Grant Program is a competition that awards $15,000 to $25,000 to businesses that have an Amazon business account.11 Similar schemes are run by FedEx, Lenovo, Verizon, and Visa.
• America’s Top Small Business Awards can also be thought of as grant funding. Winners of the awards receive up to $25,000 that doesn’t need to be paid back.12

Grants for Minorities, Women, and Other Demographics

Many donors also offer small business grants to support specific demographics that are underrepresented in the world of business. Some of the best small business grants for women, for example, are offered by private foundations rather than the government or corporate donors.

The U.S. Department of Commerce’s Minority Business Development Agency (MBDA) is charged with supporting underrepresented business owners, and is a valuable source of information on this kind of grant. The agency runs a national network of business centers that are dedicated to supporting and promoting minority-owned small businesses, and can advise business owners or managers on where to seek funding.13

In addition, the MBDA runs an annual competition, and the winners receive a grant directly from the agency.14

Grants to Start a Business

• Several donors offer business grants designed to help entrepreneurs start a business. This is important because it can be difficult to qualify for other types of business grant before you’ve been in business for a few years and have built up evidence of the stability of your company. Examples of this type of grant include:
• SBA loans designed to support startups
• Incfile’s Fresh Start Business Grant, which offers up to $2,500 to cover startup costs. Incfile also offer grants for students who want to start their own business.15
• Hello Alice is a company that has formed partnerships with Progressive and DoorDash to offer grants to small businesses. These grants can be used to start a business or support an existing one.16

Small Business Hardship Grants

Even the best-run business can be threatened by an unexpected disaster or a public health crisis. Since the COVID-19 pandemic, both the federal government and corporations have expanded their hardship grants programs, making them more accessible. However, be aware that these hardship grants often have strict deadlines on when you can apply, so make sure you pay attention to the application deadlines.

Grants of this type include:

• Emergency grants offered by the federal government—which you can find on Grants.gov—and state governments. 
• The Etsy Emergency Relief Fund supports Etsy sellers who are affected by a federally declared natural disaster. Applications are accepted on an ongoing basis.17
• DoorDash offers an emergency relief fund for restaurants affected by natural disasters. These grants are only available to relatively small restaurants with fewer than three locations and fewer than 50 staff.18
• The U.S. Chamber of Commerce helps small businesses to prepare for disasters and recover from them via its Readiness for Resiliency (R4R) Program.19

Qualifying for Small Business Grants

Once you’ve found a grant that is suitable and appropriate for your small business, you should carefully check that you qualify for it. That may sound obvious, but it’s a very important step in the application process. 

Most business grants, whether from the government or private donors, are designed to achieve the specific objectives of the donor, and have correspondingly specific requirements for who can apply. These can include:

• Each donor defines a “small business” differently.
• Many grants can only be applied for in the first few years of your business.
• Most grants have requirements when it comes to your business location, business size, and the industry you work in.
• Some also have match requirements, where you are obligated to match the funding you receive from the grant with investment from your own funds.
• Some grants require that your business be owned or run by women or someone from a minority community.
• Others may even require that you are a member of a specific organization before you can apply.

If you have any doubts at this stage, you should contact the grant administrator, because you don’t want to waste time applying for a grant that you are never going to get. In fact, it can be a good idea to contact the grant organization in advance of your application in any case. You can ask questions about the grant, or explain why you think your business is a good candidate for it. The donor organization may be able to give you tips for applying, or share resources that can help you.

How to Apply for Small Business Grants

Once you’ve found a grant that you can apply for, it’s time to apply for it. The process of applying varies by grant and donor, and there are such a wide variety of grants available that it’s difficult to describe the “average” process. However, you can expect to have to complete three steps.

1. Gather Appropriate Documents

Most grant applications will require you to submit documents in support of your application. The exact documents you need will vary by grant, but it’s worth reading these requirements at an early stage so you have the necessary paperwork in good time for the grant deadline.

An important and commonly requested document is a business plan. This should prove that your business is stable and well-run, and has feasible plans for growth. The business plan you submit as part of your grant application should also explain why you are applying for the grant, how it will help your business develop, and how you plan to use the funds. 

Other documents that might be required as part of a grant application include:

• Employer Identification Number (EIN)20
• Data universal numbering system (DUNS) number21
• Revenue history 
• Organizational chart, including the number of employees 
• Bank statements 
• Tax returns 
• List of contracts that your business holds 
• Location(s) information 
• Contact information 

2. Complete the Grant Application

Today, most donors will allow you to apply online for small business grants. However, the sophistication and complexity of online application platforms vary a lot between donors.

Grants from the federal government, for example, are highly competitive and can be for significant amounts of funding. To ensure that these grants go to the correct businesses, the process of applying for these grants can be quite involved and take many hours.

Whichever type of grant you apply for, however, you’ll likely have to answer a series of open-ended questions about your business and what you plan to use the grant for. Some applications will also ask you about how your business fits into—and contributes to—your local community.

3. Wait

It can take months for a donor organization to decide which business it will give a grant to, so be prepared to wait. Some websites—such as Grants.gov—allow you to track your application, which can alleviate some of the uncertainty involved in the grant application process. With other donors, you may have to call every few weeks to check on the progress of your application.

How Can I Get Money to Start a Business?

Many funding sources are available for starting a business, including your savings, a personal loan, venture capital from investors, government programs, corporate competitions, and crowdfunding.

How Do I Write a Grant Letter for a Small Business?

The most important factors in a well-written grant letter for a small business are that it clearly:

• Proves that the business is stable and well-run
• Explains how the grant that you are applying for fits into your business plans

What Is the Most Common Small Business Grant?

The Small Business Administration (SBA) offers a variety of grant programs to support small businesses. The most popular federal grant program is the Small Business Innovation Research (SBIR) program, which provides funding for research and development projects.

What Are the Odds of Getting a Grant?

It completely depends on the type of grant you apply for, and the strength of your application. Federal grants in particular can be highly competitive, so only a small number of applications will be successful. If you are consistently denied a federal grant, it can be worth applying for state- or local-level funding instead.

The Bottom Line

Getting approved for a small business grant is essentially a four-step process: finding a suitable grant, collecting the necessary documents, writing the application, and waiting for a decision. Of these steps, finding a grant is likely to take the longest amount of time, because there are dozens of grant programs, each focused on a particular sector or type of business.

Once you’ve found a grant, you should take the time to make your application as competitive as possible, and ensure that your business plan clearly explains how a grant will support your business.

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Source: Investopedia.com