As an entrepreneur, you’ve probably heard the phrase “It takes money to make money.” This is true, especially when it comes to growing or scaling a business.
Luckily, you don’t need money of your own to make this happen. You can tap into different kinds of funding, such as grants, loans, and lines of credit. Grants are particularly appealing to a lot of B2B sellers since that type of funding doesn’t need to be paid back.
In this article, we will cover everything you need to know about getting a small business grant. We’ll review the types of business grants, where to find them, and how to apply for them. We will wrap things up with tips and best practices for applying for small business grants.
Table of Contents
A small business grant is business funding that does not have to be repaid. It can be granted to individuals or businesses by government agencies, non-profits, and businesses.
Small business grants come in many amounts, ranging from a couple of hundred dollars to tens of thousands of dollars.
Since the money is not paid back, grants are typically part of initiatives geared towards economic stimulation, empowerment of a specific demographic, or something charitable.
As we mentioned, small business grants come from different types of organizations, so naturally, there are several business grants to consider. Let’s review a few of the most popular types of grants for small business owners.1
In many economies, such as the United States, minorities are underrepresented in the business world.2 Minority grants are designed to bridge those gaps and create diversity in business ownership and improve minority representation.
Some grants for minorities are focused on specific minority groups, whereas others are for minorities in general.
The grantors determine the guidelines for who qualifies for each individual grant. For example, US-based grants for Mexicans may require recipients to be first-generation Mexican-Americans, whereas others may require recipients to simply have a Mexican great-grandparent.
Women only account for 34% of business owners globally.3 In some countries, women account for as little as 18% of business owners. That’s why many lenders offer grants that are specifically designed for woman-identifying business owners.
While each small business grant for women will have different criteria for eligibility, they all share the common requirement of being a woman.
Since veterans serve their countries, many organizations offer grants as a way to thank these men and women for their service.
While small business grants for veterans are surely a symbol of gratitude, they are also designed to encourage those who have served in the war to rehabilitate and reintegrate into normal civilian life.
Since the start of the pandemic, we’ve seen quite a few stimulus and economic recovery grants pop up. These are typically federal grants issued by the federal government, but there can be stimulus grants from local governments, as well.
The purpose of these grants is to help businesses survive economic crises and natural disasters. Some of these grants are need-based, and others are not.
Finding business grants to apply for is pretty easy if you know where to look, and luckily, there are quite a few places to find them. Here are a few places to look for small business grants.
Your local small business development center should be the first call on your search for grants to apply for. A quick search for “smallest business development center + [your location]” will give you contact information for your local office.
The great thing about these organizations will have grants that you won’t find anywhere else. In addition to helping you find grants, the specialists at these organizations can typically help you through the application process.
Local libraries can be great for finding small business loans since they have special access to databases with grants. Since local libraries have access to local grants, they also are a good place to search for lower competition loans.
Many librarians are quite familiar with the materials and resources in their libraries, so they tend to be great resources for small business owners who are looking for grants.
Many countries have federal business organizations that are designed to uplift small businesses throughout the nation. These organizations are typically created to improve the nation’s economy, create employment opportunities, and generally improve the state of the country.
For example, in the United States, small businesses can check out sites like grants.gov or score.org to access these grants. Canadian small business owners can check out Corporations Canada.4
To find resources in your country, simply Google “[your country] + federal business organization.”
GrantWatch is a large database of grants that provides applicants with access to federal, state, local, corporate, and other types of grants.5
This organization has resources for both grant applicants and grantors. This is helpful because it provides the support team at GrantWatch with unique perspectives to help applicants in their searches for funding.
Now that you have a better understanding of what sort of business grants are out there and how to find them, let’s shift gears to review how to apply for a small business grant.
Here’s what you need to do.
Finding grants that you’re eligible for is the first step. We recommend starting with smaller, local grants since a lower applicant pool typically yields lower competition for you as an applicant.
As you add grants to your list, make sure that you and your business meet all of the requirements. Some qualifiers to look out for include:
It is also important to look for organizations that align with your business’s core values and your personal principles. Taking money from organizations that do not have moral alignment can reflect badly on your brand if your audience ever makes the connection.
Be mindful of deadlines, as well. If the deadline has passed or you’re unable to submit your application in time, don’t bother adding it to your list.
Now it is time to create a pitch to accompany your grant application.
Your pitch should include your business plan along with some information about your business’s background. It gives you the ability to let grantors know why you feel that you should be gifted the funds.
Run your pitch by a mentor and a few colleagues. Ask for feedback, and remind them that constructive criticism is helpful. Use this feedback to refine your pitch so that it is perfect for submission.
Many applications require specific materials. This usually includes contact information, business records, tax records, financial information, and other documents to confirm the legitimacy of your business.
We will discuss organizing your books and tax documents for your application later on in this post.
Once you’ve perfected your pitch and gathered the required material, it is time to submit your application. Double and triple-check your applications to make sure they meet each grantor’s requirements.
Also, remember to remain mindful of deadlines. Make sure you have everything submitted by the application due date.
Following is part of the post-application process, but it is important nonetheless. There are three suggested follow-ups: an immediate email, an email after 2 weeks, and an email after 3 weeks.
Send an email with a thank you note right after you submit your application. Thank the grantor or organization for taking the time to review your application and remind them that you are eager to hear back.
If you haven’t heard anything after 2 weeks, send another email to ask if your application has been reviewed. Keep it in the same thread as your first email follow-up so that the recipient can see your persistence.
If another week passes without any word from the grantor, follow up with a call to the grantor to inquire about your application status. Remember to be persistent but not pushy.
The application process is very straightforward, but there are a few things that you can do to improve your likelihood of receiving a small business grant. Here are our top 5 tips.
If you’re applying for small business grants, you need to have an incorporated small business. While a sole proprietor can technically operate as a small business, it is important to register as an LLC, S-corp, or your local equivalent.
In many areas, this process is as simple as a short online application. Search for “register a corporation + [your area],” and you’ll be directed to your country, state, or providence’s official business department’s website.
Another important step here is registering for a tax indemnification number. In the United States, for example, this is called an Employer Identification Number (EIN). Do some research to figure out your local equivalent.
In addition to knowing your business is legitimate, grantors are going to want to know how much money you’re already making. Having your books updated and organized is key.
Personal and business taxes should be paid up to date, as well. If your taxes are not paid, that could seem like a red flag to grantors.
Plus, it’s important to have a business bank account separate from your personal one. Not only is this another sign that your business is legitimate, but it makes it easier to track your finances.
It’s important to have a plan for what you will do with the grant money. Map out your goals, and create a plan with how you can use the money to reach those goals.
If you can show how you’ll use each dollar, that is great. Include that breakdown in your pitch. To go a step further, calculate how of a return you’ll expect on each dollar invested in your business.
As you create this plan, create a skimmable overview to make it easy to achieve what you’re setting out to achieve right off the bat. You can also provide a more detailed breakdown for those who are more interested in all of the moving parts.
Most businesses want to use grants to make more money, and that is completely valid and fair. However, many organizations give grants to see an impact beyond one successful business. They want to see how you’ll use their money to make an impact in the community.
Track your intended impact, whether that be jobs created or more business for vendors who serve you. It might be tough to come up with an exact number, so estimate to the best of your ability.
If you plan to “pay it forward” or support another organization with a portion of your profits, be sure to mention that, as well.
Many grants require money to be paid back if the funds aren’t used correctly. That’s why it’s not only important to use the funds as intended but also to track these expenses in case you’re audited by the grantor down the line.
If you can show the return on investment (ROI) from how you’ve spent the money, create reports and keep them on file for future funding applications.
Thanks to B2B marketplaces, such as Alibaba.com, it’s never been easier to connect with buyers around the world.
B2B sellers, like you, can generate leads with branded online storefronts and access an array of valuable selling tools to improve your business operations. Some of these tools include smart product listings, Trade Assurance, and product boosting.
Open a seller account to connect with more buyers in no time at all.