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 are several of the small business grants available in 2020.
Federal grants for small businesses
The federal government typically only provides grants to nonprofits and educational institutions. 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.
Small Business Innovation Research and Small Business Technology Transfer programs (SBIR, STTR)
The SBIR and STTR 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.
As of November 2019, agencies can issue Phase I awards up to $256,580 and Phase II awards up to $1,710,531.
National Institutes of Health
Department of Energy
The Office of Science, a subset of the Department of Energy, participates in the SBIR and STTR grant programs, and 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, a branch of the 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 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 nonregulatory agency of the 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 (EPA)
The EPA awards more than $4 billion in funding annually for grants and other assistance agreements. Its aim is to help small nonprofits and even large state governments achieve their environmental goals.
In November 2019, the EPA announced $2.7 million in funding to nine small businesses to further develop and commercialize innovative technologies. The contracts are funded through the SBIR program, and the EPA is awarding Phase II contracts to these nine businesses of up to $300,000 each.
You can find current EPA funding opportunities by searching Grants.gov.
Department of Transportation (DOT)
The Volpe Center, the Department of Transportation's systems center, is a federal resource that accepts solicitations for financial aid. Participating in the SBIR program, Volpe recently introduced the DOT SBIR Fiscal Year 2020 Solicitation. The program will include the following:
- Pre-solicitation interchange: Small businesses can review the technical topics and submit clarifying questions to topic authors during this time.
- Streamlined solicitation: DOT teams will evaluate and narrow down the finalists to be considered for awards.
- Pitch Day: DOT will implement an in-person Pitch Day event for SBIR finalists, to take place at DOT headquarters. This event allows the DOT evaluation team to hear a 15-minute pitch from each of the finalists.
Check out the pre-solicitation instructions and full descriptions of DOT's proposed Fiscal Year 2020 Phase I solicitation and the Volpe Center's new and past solicitation activities before applying.
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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 (AEDC)
The 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 strength of the company, jobs, average wage and project investment.
New York City Commute Enhancement (NYCCE) grant
The NYCCE grant awards up to $10,000 toward city commuting. If you're a small business with transportation issues in New York, this grant would be of great use to you.
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 jumpstart their businesses. The grand prize is $7,500 in cash. The deadline to apply for this grant is Aug. 1, 2020.
Comcast Innovation Fund
Comcast hosts a grant contest specifically for organizations and individuals developing the best open-source software. Each applicant must create a Comcast Innovation Fund account, select a grant and submit a CV. Applicants must also describe their project or research and what it will accomplish, and give details on how they would use the proposed grant. The Innovation Fund is now accepting applications for the 2020 grant year.
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 for equipment, marketing materials, website creation or hiring 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 a small business grant contest that awards 12 small business owners money and insight from FedEx experts to help them 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. These were the prize packages for 2020:
- Grand prize: One winner of $50,000, plus $7,500 in FedEx Office print and business services
- Silver prize: One winner of $30,000, plus $5,000 in FedEx Office print and business services
- Bronze prize: 10 winners of $15,000, plus $1,000 in FedEx Office print and business services
The entry deadline for the 2021 competition has not yet been announced. Check the company's website for updates, or sign up for FedEx emails to receive announcements for next year's entry dates.
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 OWBO oversees the Women's Business Centers, which focus on leveling the playing field for women-owned businesses that face various struggles.
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; each grant recipient will receive $15,000 in project funding. The 2021 application cycle began on June 1, 2020.
Grants and training opportunities for minority-owned businesses
Minority Business Development Agency
The Minority Business Development Agency, a branch of the U.S. Department of Commerce and the National Association of Investment Companies (NAIC), is the largest grant opportunity for minority-owned small businesses seeking a grant award and other financial opportunities.
The MBDA has awarded NAIC a $1.4 million grant to support a project that will facilitate the aggregation and deployment of nearly $1 billion in growth capital for minority-owned businesses.
For counseling and more information on financing a minority-owned business, find your local Minority Business Center.
Operation HOPE Small Business Development Program
Operation HOPE is a small business development initiative designed to provide minority-owned businesses the necessary financial services to thrive in the marketplace. The 12-week Entrepreneurship Training Program is a curriculum focused on empowering new entrepreneurs with 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 (OVBD) is specifically devoted to veteran entrepreneurship, service-disabled veterans, active-duty service members, transitioning service members, and their dependents or survivors.
Veterans Business Fund (VBF)
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.
VBF is not currently accepting applications; it will once its fundraising is complete. The only applications it will accept at that time will be from veterans who are seeking to fund a new small business but have been unsuccessful in securing financing.
Boots to Business
Boots to Business (B2B) is an education and training program for veteran entrepreneurs through the SBA. Active-duty service members, veterans of all eras and their spouses are eligible to participate.
Participants are taught entrepreneurial skills and knowledge and 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, or qualifications 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 or 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 in the form of a tax credit.
Do you have to pay back business grants?
Unlike business loans, small business grants don't have to be repaid. You simply apply, and if you qualify, there you have it – free money for your business.
Small Business Administration (SBA) loans, like any business loan, do 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, what types of companies and business innovations are eligible, and on what timeline. The deadlines and processes vary dramatically by grant program.
You'll need to determine which grants you want to pursue and then write the grant proposal. Here are 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 what need your business intends to fulfill, what 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.
Joshua Stowers contributed to the reporting and writing in this article.