Minority small business grants are a type of funding for businesses that are minority-owned. In most cases, these businesses are small businesses. However, these businesses do not need to pay back these sums since these are grants and not loans. Despite that, since these grants are equivalent to income, the Internal Revenue Service (IRS) considers these grants as taxable. Hence, such businesses need to pay taxes once they receive these grants.
In this article, you will learn about minority small business grants in general and what they consist of. Apart from that, you will also get a general idea of how these grants work. Furthermore, you will also learn about the eligibility criteria for this grant and how can a minority small business become eligible. Finally, we will share with you how to apply for this grant. Hence, to learn more, read on through to the end of the article.
What Are Minority Small Business Grants?
According to Nerdwallet,
“Minority small-business grants offer funding you don’t have to pay back. Below, we’ve included the best small-business grants for minority business owners. We’ve also rounded up other resources where entrepreneurs of color can get free coaching and additional support. Although business grants can give you a leg up, competition tends to be stiff, and funding amounts are usually relatively small.”
If you belong to a minority small business, you can get grants as an extended fund for your business without applying for any debt. The best part is that you will not need to pay back the amount that you receive from the big organization. These organizations offer these special grants to support the development of these minority businesses.
Investopedia states –
“There are no federal government grants that provide grant funding for the purposes of starting or growing a business, but the Small Business Administration (SBA) does have grant categories for research and development, as well as management and technical assistance. Many private grantors, however, do offer startup grants for small businesses.”
As per data from the US Census, there are more than 1 million businesses that are owned by minorities (ethnic, religious, etc.). Furthermore, more than half of these businesses have only one to four employees. Depending on where a small business owner might fall (demography, location, finance), the business might receive funding from different organizations.
How Do Minority Small Business Grants Work?
These minority small business grants are for those businesses that only members of a protected group own. These protected groups can be based on various factors like race, ethnicity, gender, religion, etc. The business owner of such a small business does not have to repay the money once the business receives grants from a bigger organization.
According to Indeed.com,
“In some cases, the funds must be used for a specific purpose, while in others, there are strict reporting standards that the company must follow to continue receiving funds. Minority business grants are designed to uplift and empower business owners who belong to a marginalized group and may have been previously underrepresented in their industry.”
However, there are a variety of factors that determine whether a business will get funding or not. In some cases, businesses also need to compete to get the grant. The bigger organization that is offering the grant considers various factors that a small business needs to be eligible for.
These grants benefit the minority small business owners and their respective communities. Such businesses rely on capital to ensure that their products and branding are liable for establishment. These businesses and minority entrepreneurs face financial challenges due to various social inequities.
Who Is Eligible For Minority Small Business Grants?
The following are some of the common eligibility criteria for receiving minority small business grants:
- It depends on the grantor’s intended purpose of funding.
- The nature and industry of the grantee also depend.
- The receiving business also needs to have a specified range of annual business revenue.
- The founder-owner or the employees of the business need to be from a minority community.
- The residence of the company needs to be in a protected area.
- The age of the applicant matters.
- The business needs to be opened within a particular time frame (business age).
- In many cases, the number of employees needs to be within a limit.
- The business needs to be located in a particular area.
How To Apply For It?
Depending on who the grantor is and what the prize amount is, the application might differ. On the other hand, the type of grant also has an impact on the application process. In general cases, government bodies have more complicated application processes than other types of grantors.
The following are the steps in the application process for minority small business grants:
Step 1: The small business owner offers information about the business and its members to ensure they are eligible for the grant. In some cases, they also need to register their names on a portal.
Step 2: If a grantor offers different types of grants to select from, the business needs to choose the grant from a range of options. In such cases, there are additional steps to select so that the categories are narrowed as the business fills out more.
Step 3: The owner of the small business makes an application for the grant and submits all the required documentation.
Step 4: The grantor of the prize amount reviews the application of the business and updates about whether the small business will get the rant or not.
Hope this article was helpful in giving you a better idea of minority small business grants. Big organizations like government institutions, private companies, non-profit organizations, and others provide minority business grants as funding to small businesses that identify as minorities. However, businesses need to compete at some level to receive these grants.
Generally, minority small businesses do not need to pay back these grants. However, the IRS does tax these grants since they are equivalent to business income. To become eligible, minority businesses need to fill out forms and offer necessary documents. Do you have more suggestions on how to apply for these grants? Share your ideas and opinions in the comments below.