Small business owners looking to launch and grow their companies should consider applying for a small business grant, which is essentially free money from a federal, state or privately funded program. Unlike a loan, these funds don't have to be repaid. Here's a look at some of the top small business grants available and how to apply.
Federal grants for small businesses
The federal government typically provides grants to nonprofits and educational institutions only. However, local governments may offer grants through departments such as their office of economic development. SBA.gov has documents that detail the full list of eligibility requirements, terms and conditions for Small Business Administration grants.
Here are the top federal grants for small businesses and how to apply for government grants.
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs
The SBIR and STTR programs are competitive grant programs that encourage small businesses to engage in federal research and development, particularly with technological innovation and scientific research.
The grant programs help connect small businesses, universities and research centers with federal grants. To qualify, you must be a for-profit business with 500 or fewer employees. Nonprofits – those with a 501(c)(3) designation by the IRS – aren't eligible for these programs.
The SBIR and STTR grant programs are structured into three phases. SBIR Phase I awards are normally between $50,000 and $250,000 for six months or one year, and Phase II awards are typically $750,000 for two years. Phase III is designed for small businesses to pursue commercialization objectives resulting from Phase I and Phase II. The SBIR program doesn't fund Phase III.
National Institutes of Health
The National Institutes of Health, a subset of the U.S. Department of Health and Human Services, offers grants for small businesses researching and developing biomedical technologies.
Department of Energy
The Office of Science, a subset of the U.S. Department of Energy (DOE), participates in the SBIR and STTR grant programs. It offers numerous funding opportunities for more than 60 technical research topics and 250 subtopics, spanning areas that support energy production, energy use, fundamental energy sciences, environmental management and defense nuclear nonproliferation.
National Institute of Food and Agriculture
The National Institute of Food and Agriculture (NIFA), a branch of the U.S. Department of Agriculture, supports research, educational and extension efforts in several rural areas related to agricultural and behavioral sciences. These fields include food science, animal life, farming and ranching, business and economics, and plant life.
The NIFA's grants consist of four phases:
- Pre-award: This phase begins with the announcement of funding opportunities for grants and involves the preparation, submission and review of proposals related to those announcements.
- Award: This phase involves making funding decisions and notifying awardees of their selection for a grant.
- Post-award: This phase consists of setting up accounts in the financial payment system and monitoring awardees for compliance with applicable laws, regulations, policies and the submission of required reports.
- Closeout: The closeout phase involves the submission, review and approval of all final reports as required by specific program policies and regulations.
National Institute of Standards and Technology
The National Institute of Standards and Technology, a non-regulatory agency of the U.S. Department of Commerce, gives small business grants to startups researching and developing technology under fields like advanced communications, artificial intelligence, bioscience, nanotechnology, and neutron research.
Environmental Protection Agency
The U.S. Environmental Protection Agency (EPA) awards more than $4 billion annually for grants and other assistance agreements. The aim is to help small nonprofits and even large state governments achieve their environmental goals.
In December 2021, the EPA announced $4.6 million in funding for clean diesel projects across New England. These grants were part of $77 million distributed across the U.S. for various ideas that aim to reduce diesel emissions from older vehicles.
You can find current EPA funding opportunities by searching Grants.gov.
Department of Transportation
The Volpe Center, the U.S. Department of Transportation's (DOT) systems center, is a federal resource that accepts solicitations for financial aid. Visit Volpe's Solicitation Center to view active topics and learn about submitting proposals. The organization seeks funding for proposals that may enhance the DOT's ability to execute its mission or that otherwise deliver innovative concepts.
COVID-19 government grants
The effects of the COVID-19 pandemic on small businesses have been extensively documented. Lockdowns, stay-at-home orders and the general risk of crowded indoor spaces have vastly reduced the amount of revenue flowing into small businesses in certain sectors.
The good news is that the SBA has introduced grants that cater to hard-hit industries and communities. Of course, unlike with government business loans, such as Paycheck Protection Program loans, you don't need to repay these grants.
Shuttered Venue Operators Grant
When lockdowns went into place, virtually all concert halls, theaters and indoor performance spaces closed their doors. As such, these small businesses came to a screeching, completely unexpected halt. At the same time, their bills didn't stop. The SBA introduced the Shuttered Venue Operators Grant (SVOG) program to help these businesses stay afloat in times of unprecedented difficulty.
Eligible small businesses include theaters, live venues, talent representatives, museums and live performing arts organizations. Qualifying applicants can receive grants as large as 45% of their gross earned revenue, with a cap of $10 million.
The SBA has also reserved $2 billion in SVOG funding for businesses with at most 50 employees. Though initial applications closed on Aug. 20, 2021, previous applicants can apply for supplemental grants up to 50% of their original amount.
Restaurant Revitalization Fund
Just as live venues immediately lost most of their revenue sources during pandemic-related lockdowns, so too did restaurants. The SBA also created a grant program for restaurants. Through the Restaurant Revitalization Fund (RRF), qualifying food establishments can receive up to $10 million in SBA grant money. The program closed on May 24, 2021, and the SBA is continuing to disburse funds to eligible applicants.
Targeted Economic Injury Disaster Loan Advance
Unlike the SVOG and RRF grants, the Targeted Economic Injury Disaster Loan (EIDL) Advance program applies to any business in any sector. The distinguishing factor is that the business must be located in a low-income community. If businesses can prove that the COVID-19 crisis has led to substantial revenue losses, they may qualify for EIDL grants of up to $10,000.
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State and local grants for small businesses
Many state-level grants for small businesses focus on the state's social and economic affairs. You can find state business grants by checking your state's department of commerce website. Here are some of the most popular state government grants.
Arkansas Economic Development Commission
The Arkansas Economic Development Commission (AEDC) offers many job-creation incentives and business grants for small businesses in Arkansas. For example, ArkPlus is a state income tax program that provides tax credits of 10% of the total investment in a new location or expansion project.
The AEDC also offers infrastructure grants, which share the cost of project infrastructure needs by committing grants from state and federal infrastructure funds. The amount of money committed depends on several factors, including the strength of the company, jobs, average wage and project investment.
Small Business Development Centers
The SBA can help small business owners and entrepreneurs find local assistance for business grants through its Small Business Development Centers. These centers are associated with local colleges and universities, and many can connect business owners with networking and financing opportunities.
Corporate grants for small businesses
Numerous organizations throughout the U.S. offer corporate grants. These grants help spread goodwill in the community and polish a corporation's public image. While many nonprofits may overlook corporate philanthropy as a means to raise capital, many startups will likely jump at the opportunity.
The Halstead Grant
The Halstead Grant is a yearly award for emerging jewelry artists. Applicants must answer 15 business questions and submit a design portfolio. The award money is intended to help silver jewelry artists jump-start their businesses. The grand prize is $7,500 in cash. Check the website for annual deadlines.
Comcast Innovation Fund
Comcast hosts several grant contests searching for internet innovation in the areas of open source, research and "useful things." Each applicant must create a Comcast Innovation Fund account, select a grant and apply for the grant.
National Association for the Self-Employed (NASE)
NASE members can apply for Growth Grants worth up to $4,000. This grant money can be used to purchase equipment, create marketing materials, create a website or hire part-time employees. To be eligible, Growth Grant applicants must be a member in good standing three months prior to applying. A resume and thorough business plan are required.
FedEx Small Business Grant Contest
FedEx hosts an annual small business grant contest that awards 12 small business owners money and insight from FedEx experts to help grow their companies. This grant contest is open to U.S.-based for-profit small businesses that have fewer than 99 employees and have been selling a product or service for less than six months from the start of the contest.
The amount of grant money awarded changes every year, but past winners have received $50,000 for first place, $30,000 for second place, and $15,000 for third place. Check the website for entry deadlines and more details.
Grants and training opportunities for women-owned businesses
SBA Office of Women's Business Ownership
The SBA helps women entrepreneurs on their journey toward owning successful businesses and remaining competitive in the marketplace. The Office of Women's Business Ownership has programs designed to help women entrepreneurs with business training, federal contracts, and access to credit and capital.
The Girlboss Foundation
The Girlboss Foundation provides business grants for women working in creative fields, such as design, fashion, music and the arts. The grants are exclusively awarded to women entrepreneurs; past grant recipients have received $15,000 in project funding. Check the website for deadlines and entry information.
Grants and training opportunities for minority-owned businesses
Minority Business Development Agency
The Minority Business Development Agency (MBDA), a branch of the U.S. Department of Commerce and the National Association of Investment Companies, is the largest grant opportunity for minority-owned small businesses seeking a grant award and other financial opportunities.
Operation HOPE Small Business Development Program
Operation HOPE is a small business development initiative designed to provide minority-owned businesses with the necessary financial services to thrive in the marketplace. The eight-week Entrepreneurship Training Program features a curriculum focused on giving new entrepreneurs the skills to handle small business ownership.
8(a) Business Development Program
The SBA's 8(a) program helps minority-owned businesses and other small businesses owned by economically disadvantaged people compete for government contracts. The program can also help minorities form joint ventures with established businesses through the SBA's mentor-protege program.
You must be certified to participate in the 8(a) program. To become certified, visit Certify.SBA.gov and create a profile at SAM.gov. If you're accepted into the program, your certification will last for a maximum of nine years. However, you'll need to complete annual reviews to maintain good standing in the program.
Grants and training opportunities for veteran-owned businesses
SBA Office of Veterans Business Development
The SBA offers support for veteran-owned businesses looking for funding programs, training, and federal contracting opportunities. The Office of Veterans Business Development is specifically devoted to veteran entrepreneurship, service-disabled veterans, active-duty service members, transitioning service members, and their dependents or survivors.
Veterans Business Fund
The Veterans Business Fund nonprofit was created because of the high unemployment rates among veterans. Many veterans could become successful small business owners but lack access to startup capital or don't qualify for a small business loan. Visit the website to apply for funding.
Boots to Business
Boots to Business (B2B) is an education and training program for veteran entrepreneurs that is offered through the SBA. Active-duty service members, veterans of all eras and their spouses are eligible to participate.
Participants are taught entrepreneurial skills and are provided the resources to launch a small business. The two-day Introduction to Entrepreneurship course is managed by SBA experts and introduces transitioning veterans to business ownership through key business steps, such as raising startup capital and writing a business plan. Check out the upcoming B2B course schedule.
What is a business grant?
A business grant is an investment of capital from private or public sources to help small businesses develop. These opportunities are generally based on an entrepreneur's geographical location, income, business type and qualifications, and are designed to support underrepresented groups, such as women, minorities and veterans.
Grant funding is often awarded through a small business contest, in which eligible small business owners apply to be considered as a recipient. Many grants for small businesses target companies in the science, technology and medical fields. Some business grants provide training and technical assistance to low-income entrepreneurs, but they generally do not provide grant money.
Federal agencies administer numerous grant funds and grant contests; however, it can be difficult to receive an award from these programs. Many state-level business grants that target social or economic concerns may be easier to obtain (if you satisfy certain criteria).
Local and state governments also provide business grants for investments in key initiatives they are promoting, such as investing in enterprise zones or supporting certain types of businesses. These grants are sometimes given in the form of a tax credit.
Do you have to pay back business grants?
Business loans and business grants are different. Unlike a business loan, a small business grant doesn't have to be repaid. You simply apply, and if you qualify, there you have it – free money for your business.
An SBA loan, like any business loan, does need to be repaid. The SBA itself doesn't provide grants, but you can acquire grants with its assistance through its website and small business programs.
How to apply for a business grant
Most grants have very specific rules about who can apply, which types of companies and business innovations are eligible, and the timeline. The deadlines and processes vary dramatically by grant program.
You'll need to determine which grant you want to pursue and then write a grant proposal. Follow these three steps to apply for a business grant:
- Find a grant. Confirm your eligibility requirements for business grants on Grants.gov. Read and understand the requirements, and find the federal grants that are most relevant to you and your business.
- Write a grant proposal. This step requires you to gather substantial information, in addition to having a complete business plan. Focus on the needs your business intends to fulfill, the problem you are proposing a solution for and how you plan to track your impact.
- Prepare and submit forms. Register with Grants.gov to complete and submit your grant application. You'll receive a tracking number to monitor the status of your application.
Max Freedman contributed to the writing and research in this article.