Grants are a small business’s dream. They are, are, after all, free money.
Business loans have to be paid back, but business grants do not. Certain entities will grant small businesses and startups money to achieve their goals. These entities include larger, international corporations (like FedEx or Visa), angel funds and government sectors. There are a TON of grants available, and countless funds set up to give them out.
Most of the time, these grants are reserved for specific types of businesses. The EPA gives out business grants, but only to companies looking to advance gree technology. Visa grants to startups with innovative fixes. Huggies grants money to “mompreneurs.” You get the drift. Usually, you have to meet specific criteria for grants, but sometimes there are grants for those who just want to start a business. FedEx awards $25,000 to 10 small businesses nationwide, and they’ve funded anything from skateboards to coffee shops.
Is there a Downside?
There aren’t really any negatives to small business grants. There are, however, some stipulations. In the same way that the government will grant money to universities for specific medical research, those who give out small business grants will usually be pretty picky about what you spend the money on. If you’re starting a food truck that is all about sustainably-raised and locally-sourced food, chances are you’ll only be allowed to spend the grant money on free-range chicken and local vegetables, not on gas for your truck.
They also often have strict criteria they require to qualify for the grant. Because many grants tend to be given out by specific agencies or foundations, or have social causes in mind, they’ll often require that your business be centered around a certain industry or cause, or be founded by an underprivileged social group. This isn’t always the case, but this is part of what makes them a grant. It’s much like a college scholarship – if you’re underprivileged or want to focus on something specific, you’re more likely to be given money to help you out.
How Do You Get A Small Business Grant?
The process of getting a small business grant is different depending on which one you’re applying to. For most grants, you’ll be competing against several different companies, so often they’re competitive and difficult to get. First and foremost, you’ll have to apply. Some grants involve pitch competitions or video submissions, while some are solely based off of an online application.
On the upside, there are a TON of grants available. Grants given out by the government can be found and searched via their grants.gov website.
As for private and corporate grants, there’s not a searchable database. You’ll have to do a little bit of research to figure out whet’s available to you and what you’ll qualify for. However, Value Penguin created a list of 18 popular and beneficial grant programs to consider applying to, and the criteria required.
There are also local grants available to businesses. In order to keep money within communities, many local cities offer grants, as do local businesses or universities. Like The Lumpkin Family Foundation, which offers grants to businesses in East Central Illinois only. There are programs and foundations that are founded specifically for granting money to budding businesses, such as NC IDEA in Durham, N.C.
Essentially, grants are available everywhere and can be a very useful tool when you’re trying to start a business or gain traction as a small business owner. They’re not a loan and they don’t have to be paid back – which makes them massively appealing, albeit competitive.
They aren’t for everyone, though. Due to their strict criteria and longer application process, they require a lot of planning and commitment. If you’re looking for a more traditional way to fund your business that doesn’t require this process, you might want to look into other funding options, like loans or lines of credit.
If you’re curious about other funding options, FaaSfunds is here to help you out. We offer a loan and credit marketplace to find the best option for your business, and a specialist to answer any and all of your questions.