What Is a Small Business Grant?
A firm, organization, or government typically provides a small business grant to assist with a goal or promote achievement. Grants are donations that are often non-repayable.
Small-enterprise grants can help establish, manage, or expand a firm. Not all grants are free money. Infractions of the grant terms will result in repayment, maybe with interest.
How Small-Business Grants Work
Grants have a defined aim and a rigorous, time-consuming application process. The federal government defines “the grant lifecycle,” which comprises three parts.
- In the Pre-Award Phase, the government agency decides on funding categories, announces grants, and assesses submissions.
- The award phase involves determining approval, finalizing the legal structure, and disbursing monies to grantees.
- During the post-award phase, a grants management officer monitors grant compliance through periodic reports and on-site audits. With goals met and cash spent, each grant is closed.
Despite differences in scrutiny and monitoring, non-federal funds are mostly the same.
Small Business Grant Types
Several grantors offer at least five generic small-business awards. Opportunities in these five areas are too many to list in one article and may overlap.
Grants.gov has hundreds of federal business grants, making it the most comprehensive source. Over 1,000 small-business awards are in GrantWatch’s 27,000 grants database. It offers free membership as well as weekly ($18), monthly ($45), quarterly ($90), and annual ($199) subscriptions with keyword search and grant information.
Check out these grant examples to learn about available assistance and where to find it.
Federal small-business aid
The government agency SBA provides restricted small-business funding for specific objectives. This includes:
- Research and development: SBIR and STTR grants may be available to businesses conducting scientific research and development.
- Management and technological assistance: The SBA’s 7(j) Management and Technological Assistance Program aids small companies that advise other qualifying small firms. To help them compete for federal, state, and municipal government prime or subcontractor contracts.
- Export development: The SBA’s STEP “provides financial awards to state and territory governments to assist small businesses with export development.” It has awarded over $200 million to help small businesses export, participate in foreign trade missions, design international marketing products and campaigns, support website globalization and e-commerce, pay for federal agency subscription services, and attend export trade shows and training workshops.
- These grants promote entrepreneurship, not small enterprises. Instead, they visit community groups that offer counseling and training in entrepreneurship, such as veteran-owned and service-disabled veteran-owned enterprises and government-sanctioned “small business development centers.”
The USDA offers rural small business grants.
- USDA Rural Business Development Awards: These grants provide technical support and training for small rural firms with “fewer than 50 new workers and less than $1 million in gross revenue.” Spending must be on “projects that benefit rural areas or towns outside the urbanized periphery of any city with a population of 50,000 or more.”
Startups and expansions are not eligible for federal small-business funding.
Regional or state small-business grants
As mentioned above, STEP and its Small Business Development Centers get SBA grants to help develop small businesses at the state or regional level. Additionally, two U.S. Department of Commerce programs offer statewide or regional awards. They are:
The Minority Business Development Agency (MBDA) helps African-American, Asian American, Hasidic Jewish, Hispanic-American, Native American, and Pacific Islander-owned businesses. Our network of business centers, specialized centers, and grantees provides personalized company development and industry-focused services at the state and regional levels, enhancing access to finance, contracts, and markets.
The Economic Development Administration (EDA) provides grants for planning and infrastructure construction to support “local efforts to build, improve, or better leverage economic assets that allow businesses to succeed and regional economies to prosper and become more resilient.” Its investment priorities are equity for underserved populations and communities, economic shock recovery and resilience, workforce development, manufacturing, technology-based economic development, environmentally sustainable development, exports, and foreign direct investment. Each state has an agency and competitive grants.
State and regional governments give small businesses incentives. Two instances are from New York and Texas.
CitizensNYC provides neighborhood business awards of up to $10,000 to prioritize companies owned by people of color, immigrants, and women, addressing financing shortages. Grants favor small firms that give back to their communities.
The Texas Workforce Commission (TWC) budgets up to $2 million for Skills for Small Business grants, which help employees pay for training at local community or technical colleges or the Texas A&M Engineering Extension Service (TEEX). A firm with less than 100 employees can use the award to train new hires (up to $1,800 per year) or enhance current hires (up to $900 per year). Employees must work full-time.
Corporations may provide gifts to improve their image, as giving is popular.
Grants for corporate and small businesses
Corporations often want to portray a favorable public image through giving. Good causes, generally nonprofits, can receive grants, as can small businesses. These are a few options.
DoorDash Disaster Relief: The meal delivery startup gives $10,000 to “selected restaurants across the United States, Puerto Rico, New Zealand, Australia, and Canada affected by natural disasters like fires, floods, and hurricanes.” No more than three brick-and-mortar locations, 50 or fewer employees, six months in business, and $3 million in revenue per site are required.
Visa Everywhere Initiative: For a $50,000 Overall Winner Grant, fintech businesses from North America, Europe, Asia Pacific, Latin America, Central Europe, the Middle East, and Africa (CEMEA) compete worldwide. Visa seeks firms with “products that deliver innovative payment and commerce solutions to consumers and businesses.” Also eligible are $10,000 Audience Favorite and Visa Direct grants. Local and regional awards range from $10,000 to $40,000. Since 2023 applications are closed, mark your 2024 calendar.
Small companies can apply for FedEx Small Firm Grant Contest awards to build or improve their firm.” A firm must be for-profit, have a valid FedEx business shipping account number, ship with FedEx, and have less than 99 workers. In 2023, 10 small firms received $30,000 in grants and $1,000 in FedEx Office print services.
Specialized small-business grants
All grants have an objective, but some target a specific population. It might be LGBTQ+ persons, veterans, or restaurant entrepreneurs like DoorDash and the SoGal Foundation (see “Startup grants for small businesses”) and self-identified black women and nonbinary people. There are some more instances.
Queer to Stay Initiative: The Human Rights Campaign, Showtime, and Visa will grant at least 25 LGBTQ+ small businesses nationwide in 2023. Keeping community-safe places open is a priority. You must be a U.S. for-profit firm that serves LGBTQ+ people and describe how the COVID-19 epidemic has affected you. We’ll prioritize community-owned enterprises. The application deadline is August 31, 2023.
The Second Service Foundation’s Military Entrepreneur Challenge “is a countrywide grant program that connects veteran, military spouse, and Gold Star family entrepreneurs to network, learn, and compete for funding to expand their small businesses. “You must propose your business to a panel of judges and then a live audience. Judges choose who advances to the final round, and the crowd picks the winner. Award amounts and prizes vary per event. The 2023 Challenge round in Arlington, Texas, on Oct. 4-6, offers $1,000 or $2,000 cash rewards, $5,000 PR, and $25,000 in-kind legal services.
Startup funding for small enterprises
Starting a firm is not eligible for federal small business funding. Luckily, many other organizations are willing to help. Here are three.
Incfile’s Fresh Start Business Grant supports small businesses by handling paperwork, giving tax advice, and providing support services to roughly one million users. Its Fresh Establish firm Grant provides $2,500 to establish a firm and free Incfile’s Gold plan, which covers incorporation, registered agent, and tax consulting valued at $385. There are three deadlines every year, with September 30, 2023, remaining.
The 2015-founded SoGal Foundation aims to “close the diversity gap in entrepreneurship and venture capital.” It offers $10,000 and $5,000 grants to “self-identify as a Black woman or Black nonbinary entrepreneur (inclusive of multiracial Black women and Black nonbinary folks)” in partnership with Winky Lux, Bluemercury, TwelveNYC, Twilio, Walmart.org’s Center for Racial Equity, and others. Applicants must “have a legally registered business, plan to seek investor financing to scale, now or in the future, and have a scalable, high-impact solution or idea with the ambition to be the next billion-dollar business.”
Cincinnati Chamber Foundation Startup Award: The Johnson Foundation funded this Ohio organization’s $100,000 award program “to support women-, minority-, or LGBTQ-owned small businesses opening downtown, Over-the-Rhine, and Pendleton.” The purpose is to revitalize city-empty retail storefronts, create jobs, and expand minority-owned businesses. Grants range from $5,000 to $10,000.
Is a grant loan?
It’s not. Borrowing money with interest is different from receiving a grant.it
Is a grant income?
Yes, it is taxed at the federal and state levels unless mandated differently.
Grant Money: Can You Pay Yourself?
This depends on the grantor’s grant usage terms, but it’s conceivable.
Does a grant require repayment?
No, unless the grantee fails to meet all requirements.
Bottom Line
Small companies are vital to the American economy and receive many grants. Federal, state, and regional governments, businesses, private firms, nonprofit organizations, and others can provide support. It typically has defined purposes and targets specific communities. Don’t be bashful. Find the proper funding for your small business.
Conclusion
- A grant is an unrepayable contribution to an individual or corporation.
- Grants often have three phases: pre-award, award, and post-award.
- Federal, state or regional, corporate, specialist, and startup grants are significant for small enterprises.
- Grants are income and are taxed unless otherwise stated.
