Applying for a small business grant can be a time-consuming, labor-intensive process with no guarantee that you'll be chosen as a recipient. The attraction of course, is the idea of free money, but once you account for the time and effort you have to invest in the process, that free money may cost you more than traditional funding. Before you throw yourself headlong into the application process, you should understand what kinds of grants for small business are available, which ones you're eligible for and what your chances of winning are.
Government Grants for Small Business
The federal government doesn't offer small business grants, but state governments do. The number of grants, the amount of money those grants provide and the application and award criteria vary from state to state.
However, there are some trends common to these public grants. Generally, they're awarded to large, non-profit organizations like universities and hospitals, and any funds that are awarded to small businesses tend to focus on non-profits as well, although those grants occasionally will go to minority-owned, for-profit businesses that have been deemed a benefit to the community at large.
Also, public small business grants tend to favor particular industries, usually education and healthcare. For example, according to a 2007 report by the Office of the Legislative Auditor of Minnesota, the state of Minnesota awarded over $1 billion in grant funding in 2005 to non-institutional, non-profit organizations where approximately 50 percent of those grants were awarded to health and education.
How much grant money was given to business organizations in Minnesota? About 1 percent, the same percentage that was awarded non-profit organizations focused on arts, music and other cultural areas.
Check with your state government to see which industries receive the most grant monies. If your business falls within them, you're more likely to benefit from the grant process and pursuing public funding may be worth the time and effort. If not, you may do best to look elsewhere for the funds you need.
Private Foundations
Like state governments, private foundations tend to award grants to non-profit organizations. However, the award recipient's mission usually has to align with the foundation's mission.
A search on the charitable foundations administered by Wachovia Bank reveals that grants are given only to non-profit organizations whose mission falls within one of five categories: education, health and human services, social and civic services, environment or arts and culture. If your business meets the criteria of the private foundation you're considering, let the grant writing begin.
Funding for For-profit Businesses
Small business grants for for-profit organizations are harder to find and the competition is fierce. These grants tend to focus on projects or research versus operating grants, meaning that any money that's given must be used for the specific project or research you present in your application. It's not to be used for daily operations costs. If you violate the terms of your grant by using the money for anything outside the realm of the project or research, legal action may be taken against you.
US Small Business Administration
The US Small Business Administration (SBA) does not offer grants for starting or expanding small businesses, but it does offer several loan programs that may suit your needs. The few grants that the SBA does offer are awarded to organizations that provide small business management, technical or financial services for non-profits, some lending institutions and state and local government. In other words, your company will need to demonstrate the willingness and ability to provide government contract services.
Other Funding Sources
If your small business is among the many that don't qualify for government or other small business grants, you'll need to rely on more traditional sources to fund your operation. The upside is that filling out a small business loan application with a local lender is far less complicated and you won't wait months or years to hear if you've been approved.
Grants aren't the only alternative sources of funding, however. It's not uncommon for small business owners to raise initial capital through investments from family and friends or leveraging their existing assets and equity. Which path you choose will depend on your individual situation, risk tolerance and the advice of your accountant.
 | Small business grants are difficult to find, but can make a significant difference in the start up of your small business. |
 | The easiest way to find women business grants is to hire a professional proposal writer to find the grants. However, if you are determined to find grant money on your own, plan on doing a lot of research. |
When applying for business grants, it's easy to make these simple proposal-sinking mistakes, especially if you are not educated in how to write a grant proposal before you apply. |
If you want to find out if you are eligible for any number of government funded grants, you'll want to research what kinds of grants are available. Many of these grants lean toward non-profit organizations that invest in research and development. |
If you're looking start up a new business, you should look into the possibility of landing a small business grant. While small business startup grants are few and far between, you may be eligible for this tax-free, interest-free money. |
