Are you wondering what are the types of business grants available for you?
You have an idea for a new business, and while you know it would be a success, you lack the funds to get off the ground. For those afraid of falling into debt so early in the venture, a business loan may not be that attractive. Raising equity from investors may be an option, but what about a business grant?
Business grants help organizations progress by giving them financial assistance. The best part? Grants are non-payable, allowing the business to grow debtless. There is a catch though. While grants are plentiful, they can be hard to receive. Grant-makers want to award their funds to businesses aligned with their own projects and worldview.
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Unlike loans, grants come with a list of limitations—set by the grant-maker—that must be followed. Straying from the contract can result in having to pay it back. These restrictions narrow down the number of businesses and entrepreneurs that can apply for each grant.
Before you can begin your grant application process, it’s important to find the type of grant that matches your business. Be it governmental or private—every grant listing is different.
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The U.S. government offers three main types of business grants: federal, state, and local grants. Federal grants offer the highest sums and are therefore the most competitive. State grants come with lower budgets but often have lower competition. While local grants may be more scarce in your area they can be easier to receive through connections.
While the government often extends grants to non-profit organizations, and scientific or medical research groups or educational projects, they do fund innovative new ventures which create jobs and help the community as well.
The funds awarded are not designed to be implemented for survival expenses like paying debts or maintenance expenses. Yet, if your new idea fits into one of these categories, there are several federal grants to choose from, and you can find them all in the Catalog of Federal Domestic Assistance (CFDA).
This inventory includes hundreds of listings posted on Grants.gov. The grants are offered by 26 different government agencies and are divided into more than 20 categories. The categories include arts, business and commerce, community development, environment, housing, legal services transportation, and more. The grants themselves vary in purpose, ranging from issues like cancer and infectious disease research to agriculture education to funds for civil rights activists.
The catalog allows the user to search for grants by keywords, published date, grantmaking agency, eligibility, and category. Each listing includes the grant’s CFDA number, whether it is funded, its last updated date, its closing date, and the type of assistance it offers.
Regardless of the grant, you are going for this is still fundraising. When it comes down to fundraising keep in mind that it is all about storytelling. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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The U.S. Small Business Administration (SBA) is one of many government agencies that offer federal grants. The SBA offers three types of business grants every year. Two SBA programs are dedicated to helping businesses involved in research and development. The Small Business Innovation Research (SBIR) and the Small Business Technology Transfer programs grant funds to those pursuing scientific endeavors that agree with federal projects and could eventually be commercialized.
The SBA also works with state governments to help their local small businesses investing in export development. The grants are distributed through the State Trade Expansion Program—or STEP—which is nationally managed by the SBA’s Office of International Trade.
And even if you’re not applying for an SBA issued grant, be aware that they oversee a lot of governmental grant management.
The SBA is also involved in the new PPP loan program.
Many governmental and non-governmental organizations give out grants to specific groups of people. Veterans, women and different racial and ethnic groups can apply to grant programs to help their business.
The Veteran’s Business Outreach Program, managed by the SBA, features different resources for business-owning veterans. Besides entrepreneurial training given by Boots to Business, veterans can apply for B2B Funding Opportunity. Through this program, the SBA supports the veteran’s organization for up to five years.
Over 5,000 government agencies and several private organizations award grants specifically to female entrepreneurs. The government agencies share a total of $20 billion in grants for small business owning women. Additionally, private groups like the Girlboss Foundation create grants for women working in creative fields.
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Annually, the government budgets $1 billion to be spent in grants for minority-driven projects and makes it available at the federal, state, and local levels. Through the SBA’s Business Development Program, the government gives minority business owners resources to grow. In addition to the small business grants, training workshops, and counseling is offered.
Use the Minority Business Development Agency to search for government grants awarded to your minority group.
Private companies often invest in entrepreneurial projects as part of their philanthropic budget, though also to nurture new innovative projects which they may end up using or acquiring. Often these grants are won through competitions in which business owners turn in portfolios, essays or business plans to explain their merit.
Every year, FedEx hosts its Small Business Grant Context, in which three companies are awarded different grants. The contest is specifically for young businesses, limiting participation to those under six months of service with less than 99 employees.
The Comcast Innovation Fund encourages companies working on open source software development. The fund divides its grants in development, research and useful things, hoping to finance a project that can be later on used by Comcast.
Founded in 2015, Visa’s Everywhere Initiative gives away $150k in grants. The competition challenges start-ups to solve commerce and payment problems and propose their products and solutions to Visa partners.
Finding Private Grants
Besides the aforementioned, thousands of non and for-profit organizations around the nation are looking for projects to fund. Resources like Candid.org can open the doors to a funding network. Its Foundation Directory Online includes the profiles of over 226,000 American grantmakers, many of which don’t even have websites of their own. While a subscription to FDO is not free, it gives you access to 18 million grants.
You can find a free directory of grantmaking foundations through the Council on Foundations website. Their Community Foundation Locator maps out grantmaking organizations across the U.S.
Hopefully, this post provided some guidance when it comes down to understanding the different types of business grants. You may want to take a look at the video below where I cover in detail how to create a pitch deck that may help you in the process of applying to those grants.