You may have heard a lot recently about how a small business can get a grant from the government. The way applying for and obtaining business grants is presented in various types of advertising is often oversimplified or just plain untrue.
If you want to have any possibility of success in receiving a small business grant, you first of all need to get a good clear sense of the way the process actually works. Websites and infomercials selling books or services usually will not give you this type of true view of the process.
If you’re asking: “how do I get a small business grant?” this article will help you get a better understanding of the answer.
What is a small business grant?
A small business grant is money given by certain branches of federal and state government or by a grant foundation for the purpose of paying for the costs of starting a particular business.
This grant money need not be repaid and can be used to cover costs such as initial investment in equipment, materials, employee wages, overhead – any costs associated with getting a business going.
A question you should be asking is what branch of the government or other organization would give you a grant and why?
Organizations or governments don’t just give money away for no reason.
Government grants for small businesses
There are a few small business grants available from the government, but they are usually not directly given by the federal government (they are more likely to offer loans directly).
The way the process generally works is this…
The federal government allocates funds at the state level and the state governments decide what to do with it.
Each state faces different economic, political, social, and technological issues that influence the way they spend the money the federal government has supplied them with.
Thus applying for small business grants is mainly something that happens on the local or state level.
Now, as you might imagine, state governments give grants in line with various programs and statewide objectives.
For instance, they may award entrepreneurs that are starting technology based businesses in their states because they want to develop the economic sector.
Or they may with to give a boost to agriculture and thus award money to people starting small farms.
Or for people starting business that will attract tourists. And so on.
So what you’re really talking about when you’re discussing getting a government grant is finding out what your state or local government wants to develop as far as small business go and seeing if your business or business idea fits into that somehow.
Alternately you may want to consider starting a business along the lines of where the grant money is going if you don’t already have a business.
There is only a certain amount of money to be given out, so you need to be realistic about your chances of getting a grant. There is no guarantee that there will be enough money left or that the government will approve your small business as being eligible to receive the grant.
The key is to present yourself in the best possible light and write a good grant proposal.
We have an article called 16 Tips for Writing Awesome Grant Proposals that you may find useful.
There are also people who offer grant writing services for a fee.
Foundation grants for small businesses
The other major source of small business grant money is from private foundations.
Private grant foundations are organizations formed for the express purpose of encouraging certain types of business and other enterprises.
These may be local, state wide, or national in scope.
The process of applying for grants with these foundations is essentially the same as with governmental sources – the small business owner has to get a good sense of what the foundation awards money for and see if they might qualify.
Again this is either by finding an organization that awards grants to businesses like their own, or by starting a business following the template of some grants being awarded.
Again, grants are quite selective and whether or not you’ll receive one depends on a whole variety of factors.
Your best chance is to try to fit the criteria for a grant as closely as possible.
Often grants that are offered for a small business have stipulations such as that you have to match funds with the grantor.
That is to say, you have to come up with the same amount of money as the organization, be it governmental or private, in order to be eligible for a grant.
The grant information and application should tell you about these and other types of parameters and requirements.
How Do I get a small business grant
Getting grants for small businesses is really about matching your small business intentions with those of larger organizations and convincing them that you’re the “right business for the job.”
If you are serious about getting a grant you need to put your best foot forward, see what grantors value and look for in the business they fund, and write your grant application accordingly.
Only then will you have a chance at getting the money. It can be difficult to secure a small business grant, all the talk aside, so you should be realistic and level headed about the matter.
However it certainly doesn’t hurt to apply, so you’re encouraged to apply for a number of grants from different sources and explore the process. At the very least you’ll learn something and if you’re lucky you may get the free money you’re in search of.
