Small Business Grant and How to Apply

As the business world works to adapt to the increasingly severe consequences of COVID-19, small businesses in particular are hurting. In order to survive in the current economic climate, many small businesses are reaching for lifelines. Small business grants are one option that can breathe life into a small business needing an influx of cash to get them through to the other side of quarantine.

What is a small business grant?

A small business grant is a sum of money given as a gift to a person, a for-profit small business, or non-profit organization with no expectation of repayment. Most small business grants are highly specific to a particular type of business owner, location, industry, or other niche.

Pros & Cons of Small Business Grants

Pros

Cons

Free money

Grants counts as taxable income

No repayment

Funds must be used as prescribed

No interest

Time, effort, competition of application process

Small Business Grant Use

An important element to consider when applying for a small business grant is how you would use the funds. Unlike a loan, small business grants will likely have a string or two attached. So where and how can you use grant funds for your small business? This often ties to strict eligibility requirements.

Typically, federal small business grants cannot be used to start a new business, pay off debts, purchase inventory, or cover day-to-day operational expenses. These grants tend to be directed towards innovation and improvement through equipment purchases, upgrades & improvements, advertising, etc.

However, there are many local and private grants that are directed towards specific use cases, like emergency relief, mentorships, or startup costs.

In light of the coronavirus changes, many small businesses are trying to find ways to protect or save their enterprise. Small business grants can be helpful, but it’s unlikely that your grant can be used as a mere substitute for decreased revenue. In the case of fulfilling payroll or operational needs, a small business loan may be more applicable.

When to consider applying for a business grant

A business grant can give you an influx of cash to sustain or improve your business in significant ways. Although grant money is, in a sense, “free,” that doesn’t mean that any business can fill out a simple application and get quickly accessible funds to use however they would like.

Business grants are usually created to stimulate specific types of businesses and industries. For example, there are many small business grants for female entrepreneurs, minorities, veterans, and innovative founders. Business grants may also come with a few strings attached for application of funds.

Small business grants may or may not be the best option for strengthening your business, but here are a few indicators that you might benefit from a business grant:

• You could use a sum of cash to revitalize your business
• You have specific ideas for improving or saving your business
• You fit in a particular niche (or a few!) that set you apart
• You have a business story that can captivate decision committees
• You thrive in competition
• You have the time and savvy to complete complex grant applications

Small business grants often require lengthy and specific applications—the easier the application, the more applicants with whom you’ll have to compete. Essentially, you have to determine if the time, effort, and risk are worth the money you may receive.

Where can you apply?

We’ve got some good news for you—there’s no shortage of small business grants out there. It’s just a matter of finding the right small business grants for your needs and using the time to create a compelling application.

You can start with a general resource like Grants.gov or Challenge.gov. For more specialized grants we recommend checking out local Small Business Association offices, women’s business centers, your local chamber of commerce, and state government economic development organizations, but we’ve gathered a few of the best grants for small businesses.

Federal business grants

The United States Government has a vested interest in the success of small businesses, so there are a wide variety of federal business grants so boost the economy through small business success. Some of these federal programs include grants for veteran-owned businesses and grants for women in business.

U.S. Small Business Administration (SBA)

The Small Business Administration regularly delivers grants to companies involving research and development, exports, and veteran mentorship (learn about SBA grants,Currently, the SBA is also offering up to $2 million in disaster loans applicable to financial hardships incurred by COVID-19.

Coronavirus stimulus plan

In response to the COVID-19 threat, Congress has been rapidly working on a stimulus package that can provide our economy with a much-needed shot of adrenaline. The 2 trillion dollar package being currently negotiated would include paycheck support for businesses of less 500 as well as an expansion to unemployment benefits.

The Main Street Emergency Grant Program

The Main Street Emergency Grant Program was proposed by three Democrat Senators: Chris Murphy (Conn.), Jeff Merkley (Ore.), and Chris Van Hollen (Md.). This federal grant program differs from others in that it actually does allow for the coverage of fixed costs for small businesses suffering from the COVID-19 public health crisis.

Small Business Innovation Research Program

The Small Business Innovation Research Program (SBIR) encourages small businesses to engage in Research & Development (R&D) and explore their technological potential. This program is highly competitive, however, they have awarded over 160,000 grants with over $4 billion in funds. Learn more about SBIR here: https://www.sbir.gov/about/about-sbir

Small Business Technology Transfer Program

The Small Business Technology Transfer Program (STTP) is also funded by the SBIC program. Backed by 11 national agencies—including NASA and the National Science Foundation—these grants are awarded to R&D companies who are building a partnership between the public and private sectors. Learn more about STTP here: https://www.sbir.gov/about/about-sttr

State and local business grants

State and local governments can choose to offer specific grant programs, both in times of stability and in times of crisis.

Here are a handful of the current relief programs specific to certain geographic areas:

• Denver Economic Development and Opportunity’s emergency relief program (cash grants up to $7,500)
• Maryland Emergency Relief Grant Fund ($50 million in grants)
• Michigan Small Business Relief Program ($10 million in grants)
• New York City NYC Small Business Services (Grants cover 40% of payroll for businesses with less than five employees)
• Philadelphia COVID-19 Small Business Relief Fund
• Portland Jade District-Oldtown COVID-19 Small Business Response Fund $140,000 in grants
• Seattle Business Stabilization Fund Grants up to $10,000

For specific guidance, consult the local SBA offices in your state. (Jump to SBA District Office Location Tables).

Private and non-profit business grants

In addition to federal and state funds, some private companies and non-profit organizations will launch grant programs specific to their industry or niche. These are some of the top private small business loans:

FedEx Small Business Grants

Built for existing businesses, FedEx Small Business Grants Contest awards grants up to $50,000 to twelve annual finalists. Typically funds are applied towards improved websites, shipping, or equipment.

NASE Growth Grants

The National Association for the Self-Employed (NASE) awards quarterly growth grants of $4,000 each to micro-business owners. Growth Grant applicants must be NASE members in good standing for 3-months before submitting an application.

Bill and Melinda Gates Foundation

The Bill and Melinda Gates foundation offers several opportunities for grants under the category of “Global Grand Challenges.” Current grants include innovations in women’s health and hygiene.

Visa Everywhere Initiative

The Visa Everywhere Initiative encourages startups and fintech companies to innovate in the payment and e-commerce sphere. $100K in prizes are awarded.

Grants specific to COVID-19

Private companies and non-profits have announced grants specific to the current climate. Here are a few worth considering:

• Amazon’s Neighborhood Small Business Relief Fund: For Seattle businesses with fewer than 50 employees or less than $7M annual revenue.
• Facebook’s Small Business Grants Program: $100M in cash grants and ad credits to small businesses.
• James Beard Foundation’s Food and Beverage Industry Relief Fund: Micro-grants to independent food and beverage businesses.
• JPMorgan’s $50M Philanthropic Investment: Including $8M in grants to small businesses and $2M to nonprofits.
• National Restaurant Association Educational Foundation‘s Restaurant Employee Relief Fund: A one-time grant of $500 disbursed directly to each applicant pending review.

Grants for women-owned businesses and minority-owned businesses

Emergency business loans and alternatives

Grants are only one way of securing additional funding in a time of crisis. Additional funding options include:

• SBA disaster loans
• Emergency bank loans
• Invoice factoring
• Merchant cash advances
• Business credit cards

Check out our full guide of emergency business loans and alternatives for small businesses.

SBA District Office locations (by U.S. state)