Grants for Starting a Small Business

People who have lost their jobs in this fallen economy are seeking alternative methods of providing income for their families. The dream of starting a small business either at home or in a separate facility is an attractive opportunity for ambitious entrepreneurs to pursue. However, most people who have always worked for someone else have very little money to start a business. That’s why the lure of a small business grant is so strong.

Media claims of free government grants to start a small business draw thousands of would-be entrepreneurs yearly. These claims lead people to think that by just attending their “free” seminar they can have a check in their mailbox within 30 days. Even though there are small business grants available they are not that easy to find or obtain. This information will include ways of finding small business grants, how to apply for them and the secrets of obtaining a small business grant.

Government Grants for Small Business

Before we begin it is necessary, but a little disappointing, to let you know that the federal government does not issue grants to start or expand a small business. You can ignore the infomercials that claim otherwise. The only grants issued by the federal government are grants awarded to state and local government for economic development and to non-profit and educational organizations for scientific research, medicine, education and technological development.

For example, some states issue small business grants to daycare centers for expansion purposes. Some provide grants for energy efficiency technology. The amount of the small business grants depend on the money available and the project itself. These grants are not considered “free” money because the grant applicant must match the funds applied for with their funds or with other sources of financing.

Federal and state governments operate in issuing small business loans rather than grants. This is another avenue to explore but is not included in this report. There are enough small business grants available through local governments, non-profit organizations and others to explore.

Types of Grants

Before we move into looking for a grant we should define why you need a grant. A brand new business has different needs than a business that has been in operation for awhile.

A new small business is very likely to be seeking start up capital to pay for equipment, facilities, supplies and other start up costs. An established small business may need funds to expand, add a new line of product or to add new equipment among other things.

Grants are also based on certain characteristics of the recipient such as women, minorities and the disabled. Some grants are given only to businesses that operate a certain type of business such as cottage industries, restaurants or childcare facilities. State or local government grants are given only to the residents of that state or city.

Do You Have What It Takes to Pursue a Small Business Grant?

Finding small business grants takes diligence, patience and persistence. The organizations that issue grants are not looking for you. The following are questions to ask before setting out to find small business grants.

• Do you have the time and resources to look for and carry out the process of getting a small business grant?
• Determine if you can wait for up to a year or more to get a small business grant because it may take that long to find and apply for a grant for which you qualify.
• Decide if you will be carrying out the process yourself or will you need a grant consultant?
• Can you afford to take time away from running your business while seeking a grant for expansion?

These are questions that are necessary to ask before embarking on the journey to finding and getting a small business grant.

Where to Look for Small Business Grants

Government Grants

One of the best places to begin your search for small business grants is the federal government. We mentioned earlier that the federal government does not issue small business grants and they don’t—at least not directly to the applicant. However, the federal government gives grants to foundations who issue grants to entrepreneurs.

The Grants Program Management Office is the government agency that issues grants. These grants are listed for public scrutiny at www.grants.gov. This site allows you to look up possible grants electronically by plugging in certain criteria that will take you to grant information that specifically addresses your needs. Be sure to read the eligibility requirements for each grant before applying.

You may also access the government’s Catalog of Federal Domestic Assistance (CFDA) where you can search by keyword, topic or category. Some programs may be available to women or minorities like native Americans.

Government grants are not available all the time. Instead, the Federal Register announces each weekday the grants that have been released and the expiration date for an application.

The next best place to look is within your state, city and county government agencies. These funding sources are set up to issue grants to small businesses that will generate jobs and increase tax revenue. Contact the economic development agency in your area to inquire about available funding for small businesses.

Corporations and Foundations

Other sources of grants are large corporations and foundations that issue grants as a part of their philanthropic process. These grants are issued to non-profit public charities that comply with Section 501(c)(3) of the Internal Revenue. These charities are educational, religious, literary, cultural, or charitable in nature.

Corporations or foundations may award a low-interest loan to social enterprises. A social enterprise is a business, a for-profit, or an individual that produces a profit and meets a social need in the community. These are not grants but loans.

Grants for Women

As stated before, there are no federal small business grants given directly to women. The Small Business Administration (SBA) has a program targeting women entrepreneurs that offers education and support to women business owners. The SBA has various loan programs for start-up and expansion.

The SBA can give excellent help with preparing a business plan to obtain funding. The SBA will assist women entrepreneurs in their bids for government contracts.

Grants for Minorities

Although there are no federal grants awarded directly to minority entrepreneurs there are federal small business programs such as the SBA that help them write a business plan and provide mentoring. The SBA provides small business training that can lead to microloans and other federal loan programs. Your state, city or local government may have minority small business grants.

Tips to Make Your Grant Proposal Stand Out

When you find a small business grant you will need to be prepared to endure a long approval process since many programs have been discontinued or reduced due to the economical climate of today. Competition for small business grants is fierce and you will need to make your proposal stand out above the rest. Here are some tips that will help you.

• Provide the organization with a complete and accurate application. Every question should be answered even if the question is not relevant to your business. Incomplete applications can cause a delay in receiving your grant if it has to be sent back to you for corrections.
• Get to know the review officer, his concerns, budget of the organization and be ready to answer any questions about your application.
• The best way to prove that you know your business well is to provide a well prepared business plan. This will demonstrate that you thoroughly understand your business and why you need a small business grant.
• Do not hesitate to bring in an outside consultant. A consultant will bring credibility to your application.
• Keep in touch with the organization offering the grant without being a nag.
• If you have a problem with the complexity in applying for a grant look into other alternatives such as loans from banks, venture capital, or private loans from friends and relatives.

First Things First – Develop Your Business Plan

You will need a well-developed business plan to present to organizations that issue small business grants. These organizations need to see your written plans and goals for your business before even considering issuing you a grant. Grant money comes from tax payers through the government or private parties who have donated money to help small business owners. The grant-issuing organization is responsible for who receives a grant and they take their responsibility seriously.

Your business plan will be the most important document in your grant package. Your business plan will show that you are not just asking for money without a plan but you plan to use the money to improve your business. The agency issuing the grant will be more comfortable in awarding you the grant if you have well laid plans to make a profit.

If you have a problem with putting together sentences that are easy to read and understand then you will need help right from the beginning with writing your business plan. In order to make writing a business plan seem less intimidating begin with the easier sections such as:

• A description of the business and what you are trying to accomplish.
• Define the market your business will target.
• Explain what stage your business is in. For example, is it a start-up, a franchise, an established business, or a nonprofit.

The organization issuing the grant should be able to read your business plan and see the vision you have for your business. The fewer questions they have the better you have explained the nature of your business. You probably will not eliminate all questions but the questions asked should not be major questions that should have been addressed in the business plan.

Your business plan must also reflect that you know your target market well enough to convince them that their life would be better if they did business with you. You must answer the question why your company can do it bigger, faster and better than your competitors. When you answer that question for your target market in your business plan the grant committee will be more confident in your proposal.

There are several free and paid avenues to take in getting your business plan written. Your local technical school or college may offer a course in writing a business plan. There are courses online that will walk you through a business plan. The Small Business Administration (SBA) can help you put together a good business plan. If you feel confident doing it on your own you can try using software specifically developed to help you write your business plan. Have it ready to show to prospective grant organizations.

The Final Step

Your grant package for a small business grant will include a proposal, business plan and application. Whether you prepare the whole package or hire someone else you need to make sure that the following steps have been carried out before submitting your package for a small business grant. It is crucial that your package is professionally completed to have the best chance of receiving a grant.

• Step 1: Check the package to ensure that all instructions have been followed to the letter. Most grant committees are sticklers for following instructions. Due dates are firm and will not be changed for any reason. You must meet all qualifications or your application will be denied.
• Step 2: Every part of your package should be free from grammar and spelling errors. Investors tend to judge business people by their ability to write correctly and coherently. Have at least two people check for errors.
• Step 3: Have a professional grant writer go over your package if you prepared it. Most grant writers will give you tips on how to make your proposal better for a small fee.
• Step 4: Be as pleasant to the reviewer of your proposal as possible. It is not a good idea to antagonize the reviewer in any way. Be patient to answer any and all questions even if you feel you have explained everything clearly. The more cooperative you are the more the organization will want to work with you.
• Step 5: Explain exactly how the grant will be used. Don’t inflate the need to get more money.

In Summary

Now you know that the infomercials that guarantee you a small business grant from the federal government have led millions of would-be entrepreneurs to believe that the government is waiting patiently for you to find them to apply for a grant. Nothing is further from the truth. You have learned that there are small business grants for which you qualify; however, they are not easy to find if you are a start-up company.

We have given you an idea of what organizations that issue grants are looking for in applicants and what you need to do to submit a professional proposal. If you have the patience and stamina to pursue this worthy objective you can find and win a small business grant.