Table of Contents
- What Is a Small-Business Grant?
- Key Takeaways
- How Small-Business Grants Work
- Types of Grants for Small Businesses
- Federal Small-Business Grants
- State or Regional Small-Business Grants
- Corporate Small-Business Grants
- Specialty Small-Business Grants
- Startup Grants for Small Businesses
- Is a Grant a Loan?
- Is a Grant a Form of Income?
- Can You Pay Yourself With Grant Money?
- Does a Grant Have to Be Paid Back?
- The Bottom Line
What Is a Small-Business Grant?
Let me explain what a small-business grant really is. It's an award, typically financial, that one entity—say, a company, foundation, or government—gives to your business to help achieve a goal or boost performance. These are essentially gifts you don't have to pay back in most cases.
These grants target various needs, from launching your company or making it run smoother to supporting its growth. But don't think of them as free money without strings. You have to use the funds as specified in the grant terms, and if you don't, you'll likely need to repay them, possibly with interest.
Key Takeaways
Here's what you need to remember: A grant is an award to you or your company that doesn't require repayment. Grants follow a three-phase lifecycle: pre-award, award, and post-award. For small businesses, the five main types are federal, state or regional, corporate, specialty, and startup. Also, grants count as income and are taxable unless the law exempts them.
How Small-Business Grants Work
Grants are designed for specific purposes, and applying for them is usually rigorous and takes time. The federal government breaks it down into what they call the grant lifecycle with three phases.
In the pre-award phase, the agency decides what to fund, announces the grant, and reviews your applications. During the award phase, they notify you if you're approved, finalize the legal details, and disburse the funds. In the post-award phase, an officer oversees compliance through your reports and audits, and the grant closes once goals are met and funds are spent properly.
Non-federal grants might not be as strictly monitored, but the overall process is similar.
Types of Grants for Small Businesses
You'll find at least five general types of small-business grants from countless sources. These categories can overlap, and there are too many opportunities to list here fully.
For federal grants, check Grants.gov, which has thousands in its database. GrantWatch offers over 27,000 grants, including more than 1,000 for small businesses; it's free to join, or pay for subscriptions from $18 a week to $199 a year for extras like keyword searches.
Let me give you examples to show what's available and where to find it.
Federal Small-Business Grants
The U.S. Small Business Administration (SBA) is a key source for targeted grants. If your business involves scientific research and development, look into the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
For management and technical help, the SBA's Empower to Grow offers free courses, training, and consulting to disadvantaged small businesses to compete for government contracts. The State Trade Expansion Program (STEP) gives awards to states to help you with export development, covering things like trade missions and e-commerce.
Entrepreneurship promotion grants go to community organizations that provide counseling and training, including for veteran-owned businesses and small business development centers. The U.S. Department of Agriculture offers rural business development grants for technical assistance and training to small rural businesses with under 50 employees and $1 million in revenue, focused on non-urban areas.
State or Regional Small-Business Grants
The SBA funds state-level support through STEP and Small Business Development Centers. The U.S. Department of Commerce's Minority Business Development Agency (MBDA) helps minority-owned businesses with access to capital, contracts, and markets via state and regional centers.
The Economic Development Administration (EDA) funds grants for planning and infrastructure to boost local economies, prioritizing equity, resilience, workforce development, and more. States and regions have their own grants too—for example, New York City's CitizensNYC offers up to $5,000 for community-impacting businesses, and Texas's Skills for Small Business program provides up to $2 million for employee training at local colleges, with limits per employee.
Corporate Small-Business Grants
Corporations use grants to build a positive image. DoorDash's Disaster Relief fund gives $10,000 to restaurants hit by natural disasters, if they have up to three locations, 50 or fewer employees, and under $3 million in revenue per spot.
Visa's Everywhere Initiative is a global competition for fintech startups, offering $100,000 to the overall winner, $20,000 for audience favorite, and regional grants from $10,000 to $40,000. FedEx's Small Business Grant Contest awards $50,000 to one grand prize winner and $20,000 to nine others, for U.S.-based for-profit businesses with a FedEx account and up to 99 employees.
Specialty Small-Business Grants
Some grants target specific groups. The Queer to Stay Initiative from Human Rights Campaign, Showtime, and Visa awards grants to at least 25 LGBTQ+ businesses affected by COVID-19, focusing on keeping safe spaces open; apply by August 31, 2024, if you're U.S.-based and serve the community.
The Military Entrepreneur Challenge by Second Service Foundation lets veteran, military spouse, or Gold Star family entrepreneurs pitch for grants like $1,000 or $2,000 cash, plus packages for PR and legal services.
Startup Grants for Small Businesses
The SBA doesn't fund startups directly, but others do. Incfile's Fresh Start Business Grant offers $2,500 plus free Gold plan services worth $385 for incorporation and tax advice.
The SoGal Foundation's Black Founder Startup Grant provides $10,000 and $5,000 to self-identified Black women or nonbinary entrepreneurs with scalable ideas aiming for investor funding. The Cincinnati Chamber Foundation grants $5,000 or $10,000 to women-, minority-, or LGBTQ-owned startups in specific Ohio areas to revitalize retail spaces.
Is a Grant a Loan?
No, it's not. You repay loans with interest, but grants don't require repayment.
Is a Grant a Form of Income?
Yes, it is taxable at federal and state levels unless exempted by law.
Can You Pay Yourself With Grant Money?
It depends on the grant terms, but it's possible if allowed.
Does a Grant Have to Be Paid Back?
No, unless you fail to meet the obligations.
The Bottom Line
Small businesses drive the American economy, which is why there's so much grant support from governments, corporations, foundations, and more. These funds target specific goals and often specific communities. If your business needs help, go find the right grant for you.
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