Funding is an essential part of running a business. Without proper funding for your business, it is almost impossible for the business to grow. In such a case, small business grants are great options to choose from if you want to secure funding for your small business. If you are eligible for certain grants for small businesses, you will not have to apply for a loan with a bank or a financial institution. You can avail of grants from a variety of sources.
In this article, you will learn about how to apply for grants as a small business owner. Here, you will find essential steps to follow for the application process. Apart from that, you will also find useful tips that can prove handy for you while you apply for grants for small businesses. Hence, to learn more, read on through to the end of the article.
Small Business Grants: Why Businesses Apply For Grants?
One of the major advantages of securing business grants is that you will not need to repay the funds. Hence, you will be able to start, grow, or expand your entrepreneurial venture for free. However, this applies to your case only if you are eligible to receive a particular grant. You will learn how to be eligible for a grant in later sections. Furthermore, the usefulness of a grant depends on a lot of factors.
There are a variety of sources that provide grants to small businesses. The target here is to help a business grow and succeed. However, there are vested interests for the provider of the grant. Hence, there are eligibility criteria for a business to clear for the grant. Furthermore, the eligibility criteria of a grant differ based on the provider of the grant – the federal government, state/local governments, and corporate institutions.
According to Investopedia, “While taking out a loan may be the first idea that comes to mind, you could be overlooking another possibility: cash grants from the federal government, state or local government, or private companies. While grants can be much more competitive and difficult to obtain, unlike loans, they don’t have to be paid back.”
However, one of the major drawbacks of small business grants is that they are time-consuming. Despite that, one cannot deny that these grants have significant advantages over business loans. A major advantage is that you do not need to pay it back. To ensure an effective application, you need to learn how to apply for a small business grant in the right way.
Major Pros And Cons To Consider Before You Apply For Grants
The following are some of the major pros and cons you need to understand before you apply for small business grants:
Pros Of Applying For Small Business Grants
Here are the major pros of applying for small business grants:
- With the help of grants, small businesses get a boost in their finances. This is really helpful when a business does not have good access to loans or other traditional funding options. Hence, a business is able to cover expenses related to marketing, equipment financing, R&D, and more.
- As discussed earlier, you will not need to repay a grant as you do with a loan. Hence, there are not many financial risks in business grants. Hence, the small business owner will be able to take new risks, as there are no debts.
- Once a business becomes eligible for a small business grant, it makes the business credible. This is because the business has already cleared the eligibility criteria for a grant. As a result, the business becomes eligible for many other grants as well. Furthermore, the market also becomes aware of the potential of the business.
- Once a business receives a grant, it can align itself with the goals and mission of the grant provider. Hence, there are big chances to make a large impact.
Cons Of Applying For Small Business Grants
Here are a few cons of applying for small business grants:
- There is a lot of competition you will face once you apply for a small business grant. As compared to the number of applicants, there is limited funding available from grant programs. Hence, it makes it difficult for a business to secure a grant.
- Every grant comes with restrictions and limitations. Once you receive a grant, you can use it only for specific purposes and in a specific manner.
- Furthermore, you will also have to report your spending, as well as the performance of the grants. Hence, there is less flexibility for small business grants. If the business, however, fails to adhere to the restrictions, it will have to return the grant value along with its interests.
- It is time-consuming to prepare for a strong grant application. Here, you will have to research deeply and need to prepare the document accordingly. Apart from that, you will also need impeccable writing skills. In some cases, small businesses even take the services from professionals in the application process.
- Since grants come as one-time funding, you cannot rely on them for the long term. Hence, to secure your business funds for long-term growth, you will need to focus on other sustainable financial strategies.
Apply For Grants: How To Find A Small Business Grant?
Investopedia adds –
“Financial grants that can help your small business grow and succeed are available from a variety of sources—the federal government, state and city governments, and a wide range of philanthropic organizations and corporations. Applying for these grants can be time-consuming, but they have several significant advantages over small business loans if you can get one.”
To secure a small business grant, you will need to be realistic and approach the grant strategically. Before you find a useful grant provider, you will need to be fully aware of the needs of your business and research deeply. Furthermore, you must also weigh the pros and the cons and decide accordingly.
If your business has some innovative idea, or if your business is addressing certain social or environmental needs, there are high chances to receive funds from grants.
The following steps will prove to be extremely beneficial for you in securing a grant:
Check Grants.gov
Grants.gov is a platform where you can learn about federal grants. Furthermore, you can also use the search tool on the website to find the grants available in your location. Moreover, you can also search for grants using keywords and the industry in which you operate.
Look For Various Government Websites
There are certain organizations under the federal government that offer business grants to small businesses, minority businesses, and women-run businesses. Some of them include SBA grants, USDA grants, and many more. You must visit their websites and learn about each of the federal grants in detail.
State And Local Grants
No matter which state you belong to, there are small businesses available at the state level and local levels, too. Here, you will need to check your state government’s websites to find news on grants. Furthermore, there are many local grant providers whom you can find online.
Private And Corporate Grants
There are many private companies and corporations that fund grants to small businesses. Here, these entities offer grants to small businesses that align with their overall goals and missions. Apart from that, there are many NGOs that offer grants to businesses as well.
How To Apply For Grants? – Major Steps To Follow
There is no typical way to apply for a small business grant. This is because there are different types of grantors, and the application process differs from one grant provider to another. The following are some of the major steps you will need to take to apply for grants:
1. Check Your Eligibility For The Grant
Before you apply for a particular grant, read the eligibility requirements of the grant first. This is because each grant you come across belongs to a different industry and has different goals and mission. Hence, before the application process, you must ensure that your business meets all the eligibility requirements of the grant.
Furthermore, you must also understand all the mission and goals of the grant and the grant provider. This is because you will need to adhere to them after you receive the grant. If you don’t, you will need to repay the grant. Hence, you need to tailor your grant application accordingly.
2. Create A Strong Application For The Small Business Grant
To create a strong grant application for securing a grant, you will first need to follow the application instructions carefully. Also, try to meet all the deadlines and submit all related documents. You do not need to miss out on a grant due to technical details.
With the application process, you need to explain your business processes and your plan for growth. Here, you will also need to talk in detail about the problem and provide your solution. Basically, you will need to show how your business idea can be useful for many people.
Apart from the business plan, you will also need to show details about your financial status and financial projections once you get funding for the idea.
3. Invest Enough Time In The Application
The amount of time that you spend on your grant application can depend on the sponsoring organization. Furthermore, it also depends on the type and size of the grant you are applying for. For example, if you apply for a federal grant, you will have to pass through a lot of steps. Also, federal grant applications are really time-consuming.
4. Submit The Application And Stay In Touch
As per instructions, you must submit the application, whether online or in person. However, after you submit, you must stay in touch with the manager and administrator of the grant. If you have further questions, you must ask them. Also, show your proactive interest in the grant funds.
5. Make Sure All The Documents Are In Order
Once you apply for a grant, you will need to show certain documents. Furthermore, you will also need to make sure that you organize all relevant information. This will help you streamline the application process. The following are some of the major documents that you might need to show to the grant provider:
- Business plan
- Tax returns
- Bank statements
- Employee Identification Number
- DUNS number
- History of the business revenue
- Hierarchy in the business organization
A Few Other Tips To Follow To Apply For Grants
Here are some other useful tips you can follow as you apply for grants:
1. Always Start Early
Since the grant application process is extremely time-consuming, it is useful for you to start early, once you get the notification. Start your research, prepare early, and do not wait for deadlines. Furthermore, once you apply early, it is highly likely that your application will be reviewed early.
2. Carefully Read The Grant Objectives
Always stick to the grant objectives in the application process. The grant providers prefer those applications that show a better understanding of the objectives and goals of the grant.
3. Spend Enough Time In Making Your Business Plan
The most important part of your grant application is the business plan. Make sure you have taken enough time in the creation and development of the business plan. By taking enough time, you can ensure there are no errors in the plan. Furthermore, you can also ensure the quality of the grant.
4. Have A Strong Network Of Professionals
Start networking with the grant administrators to get to know more about the grants. Furthermore, you can also contact other small business owners who received the same grant. This way, you can get help in creating your grant application. However, you can also get professional help from a business advisor or a grant writer to develop the grant application.
Wrapping Up
Hope this article was helpful for you in learning how to apply for grants. Make sure you follow the aforementioned steps to successfully submit your application. However, before you apply for a grant, ensure you weigh the pros and cons of the same, and check your eligibility for the grant. Do you have more suggestions to add? Consider sharing them in the comments section below.
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