Starting or growing a small business takes a lot of hard work and dedication. It also requires access to capital to get your operations up and running. While loans are a common financing route, another option to consider is a small business grant. Grants provide funding that generally does not need to be repaid, making them an attractive funding source for many entrepreneurs.
If you’re wondering how to get grant money for your small business, here is a step-by-step guide:
1. Determine if you are eligible for grants.
The first step is making sure you and your business qualify for small business grants. Each grant program has its own eligibility criteria, but some common requirements include:
Your business must be legally registered and in operation. Pre-start up businesses generally do not qualify.
You must be located in the geographic area served by the grant program. Some are nationwide while others serve specific cities, counties or states.
Your business must meet industry requirements. For example, some grants target technology startups, women-owned businesses, minority-owned businesses, etc.
You must meet income thresholds. Grants focused on economic development often have income limits.
Your business cannot be too mature. Some grants have maximum annual revenue caps (e.g. under $250,000 in revenue).
Take inventory of your business to ensure you satisfy basic grant eligibility rules. Being ineligible upfront will save you time and effort later.
2. Identify relevant grant programs and funding agencies.
Your next step is finding grant programs suited to your business goals and circumstances. A few places to look:
Government agencies – The Small Business Administration, state economic development agencies, local governments and municipalities all offer grants tailored to their jurisdictions.
Non-profit lenders – Many Community Development Financial Institutions (CDFIs) provide grants as well as loans.
Foundations and corporate social responsibility programs – Major corporations, charitable foundations and community development organizations commonly grant money to small businesses.
Your local Small Business Development Center – SBDCs offer one-on-one counseling and maintain databases of available grants.
Search online listing databases like Grants.gov and business grant directories. Network with other entrepreneurs, lenders and your local SBDC to uncover leads.
3. Understand the application process and timing.
Once you’ve identified relevant grant programs, dig into details on how and when to apply. Key questions to research:
When are applications accepted? Many grants accept proposals on a rolling basis, but some only open applications during set windows. Submitting outside those windows guarantees rejection.
Is there an extensive pre-application process? Some funders screen applicants via pre-applications before inviting full proposals.
What information needs to be submitted? Standard components often include bios, business plans, financial projections, tax documents and details on proposed grant activities.
What are the funding priorities and selection criteria? Tailor your proposal to the grantor’s mission and key evaluation metrics.
How long is the review and decision timeline? Can take a few weeks to several months.
4. Prepare a compelling grant proposal.
Submitting a thoughtful, polished proposal is key to grant success. Essential elements to include:
Executive summary – Overview of business, funding amount requested and proposed use of funds.
Business background – History, operations, products/services, target markets and competitive advantages.
Funding needs and proposed activities – Clearly explain how much funding you need, exactly how you will use it and expected outcomes.
Management team bios – Showcase relevant experience and capabilities.
Financial information – Past financials, income statements, balance sheets, cash flow statements, and projections.
Supporting documents – Licenses, certifications, resumes, letters of recommendation, and anything else required by funder.
Aim to present a compelling narrative around how your business fills a need in the community and will create positive local economic impacts. Quantify anticipated results such as new hires, revenue growth, neighborhoods served, etc.
5. Follow up and manage the grant if awarded.
With your proposal submitted, remain in touch with funders to track status. If awarded, make sure to closely follow grantmanagement guidelines regarding use of funds, recordkeeping, reporting requirements and more. Document how you fulfilled the grant’s objectives.
Carefully managed grants can kickstart breakthrough growth for small businesses or help them pivot in new strategic directions. While highly competitive, small business grants are invaluable funding sources for entrepreneurs who do their homework, pursue options aggressively, and take the time to submit well-crafted and targeted proposals. With sound preparation and persistence, securing a business grant is an achievable milestone in scaling your startup.
