There’s no point in denying it: small business “grants” are just another word for “free money.” You don’t have to pay them back, or worry about fees, terms, and the various other disadvantages of traditional business loans. It’s actually quite simple: you just see if you qualify, gather the paperwork for the application, and that’s it.
When it comes to eligibility, however, you’d almost certainly have an easier time meeting the requirements for debt financing. The same goes for accessibility: unlike business loans, you can’t just Google your way to small business grants. Searching for grants will likely lead you to expired websites, outdated public databases, and discontinued contests. You have to know where to look as well as your realistic likelihood of qualifying before you begin filling out applications.
And while you can usually use small business loans for any purpose, most small business grants have very strict rules for functionality. Recipients can only spend the money on certain things, since your intended use of the funds directly influences your chances of winning the grant. For example, the recipient of a “research” grant can only spend the money on research equipment or staff, as opposed to the many other expenses associated with business growth.
To clear the air, we’ve created a list of perfectly legitimate federal, state, and local grants for new and established small businesses. Under each grant, you will find the general requirements as well as how to apply:
Small Business Grants: Federal
Most federal small business grants go to companies in the fields of science, technology, energy or healthcare. These companies tend to allocate significant funds to research and development, and the grants help cover the accompanying expenses.
Though the federal government determines eligibility requirements along with the recipients of the grants, the money doesn’t come directly from them. Instead, the federal government distributes the money to state and local governments, which then assume responsibility for giving the money to the recipients.
Here are the most well-known federal small business grants:
Small Business Innovation Research Program
The SBIR offers separate grants from eleven government agencies aiming to encourage scientific entrepreneurship. Recipients are established businesses currently researching some form of new technology with serious commercial potential. Each agency has its own eligibility requirements, topics of interest, and application format. The minimum grant starts at $150,000 but businesses with exceptional projections for success can reportedly access multiple rounds of funding for as much as $1 million.
Small Business Technology Transfer Program
The STTR bares several similarities with the SBIR but at least one unique requirement sticks out: the recipient must use the funds to conduct research in collaboration with a government agency. These agencies include NASA, the National Institute of Health, the Department of Energy, the Department of Defense, etc. Like the SBIR, each agency distributes its own STTR grant, and the funds come straight out of the agency’s budget. Recipients can access $150,000 to $1 million.
Small Business Grants: State
State-level small business grants usually offer less funding than federal grants, but the lower competition makes them much more accessible. Recipients tend to do work that directly impacts their communities and/or improves the economy of lower-income areas.
Many state-level grants are “matching” grants, which means that the recipient must use their own funds to match the amount they receive. In other words, the state and the recipient invest the same amount of money in the initiative that won them the grant. Therefore, in order to win a matching grant, the state must really believe that your initiative is worthy of a large investment.
To search for state-level grants in your industry, visit the website for your state’s department of commerce or grants portal. While the following grants come from specific states, similar versions are offered by multiple states. These state-specific grants are just particularly accessible in their locations.
Arizona Commerce Authority
The Arizona Commerce Authority offers numerous programs, both old and new, every year. Among the most popular is the Arizona Step Grant, which is geared towards export businesses or basically any business looking to sell products overseas or establish international partnerships.
Arkansas Technology Transfer Assistance Grant Program
This grant is one of several that comes from the Arkansas Economic Development Commission, which also offers rebates and incentives. Recipients are Arkansas-based businesses that create local jobs or are looking to expand to other regions in the state. Businesses that specialize in creating full-time jobs, for example, can apply for the state’s Infrastructure Grant.
Colorado Export Development Grant
Colorado is one of the best states to start a business, partially because its government makes a conscious effort to stimulate growth in the science and technology sectors. Though Colorado offers grants for various industries, much of the funding goes to small and medium-sized businesses involved in robotics or engineering. Like Arkansas, Colorado also tends to favor businesses that are expanding overseas.
DC Small and Local Business Grant
Grants from the DC Department of Small and Local Businesses usually go to retail-oriented businesses located in inner-city neighborhoods. The department’s primary goal is to bring commerce to areas with weak local economies and little opportunity for entrepreneurs.
Idaho State Trade Expansion Program (STEP)
STEP programs can be found in many states, each of which has its own eligibility requirements and application process. Every state also favors certain types of businesses. Idaho’s grants typically go to businesses looking to establish international partnerships. Sensing an overarching theme here?
Illinois Recycling Expansion and Modernization Program (REM)
Like STEP, multiple states have REM programs, which are meant for businesses that work to improve statewide sustainability. Recipients can access up to $250,000, but it’s important to note that this is a matching grant program. Thus, in order to win the grant, you must be able to put up $250,000 (or however much you’re looking for) of your own money as well.
Iowa Business Development Grant Recycling
Iowa’s grants tend to go to businesses that create manufacturing jobs or aid the expansion of budding, related industries. Some of the state’s grants are even reserved for retail businesses that are improving infrastructure by opening up shop in formerly decrepit buildings. To view the latest business development grants, visit Iowa’s grants portal.
Kansas Job Creation Fund
This funding program has relatively broad criteria: smaller businesses looking to significantly expand their teams. In most cases, portions of the grant are distributed over the course of three years to finance multiple hiring stages.
Louisiana Community Development Block Grant
Louisiana’s Office of Community Development refurbishes residential buildings and improves economic opportunities in low-income areas. In order to apply, businesses must contact the state or local government branches typically associated with their industry. Business that have previously been affected by hurricanes or other weather-related incidents can also apply for special disaster recovery grants.
Maryland Child Care Quality Incentive Grant Program
This quarterly grant from the Maryland Division of Early Childhood Development goes to local childcare facilities that meet certain criteria. The most important requirements involve the economic backgrounds of the parents.
Maryland’s Department of Commerce awards this grant to small and mid-sized businesses looking to cut down on the costs of entering international markets.
Maryland Economic Development Assistance Authority & Fund
Many states offer nearly identical programs of this nature, but Maryland’s version has exceptionally broad criteria. The state also provides loans for businesses that meet the same requirements of the grant. The target industry and location, however, changes with each grant cycle, so stay up to date by checking the priority funding areas.
Minnesota Dairy Business Planning Grant
As the name denotes, this program only goes to dairy farms or businesses that make equipment used by dairy farms. Highly-specific criteria means less competition, so virtually all dairy-related businesses in Minnesota should at least consider applying.
The above acronym stands for Retaining Early Educators Through Attaining Incentives Now. A small grant, REETAIN goes to childcare professionals who have continued their own professional and educational development. In addition to training, the money can be used for supplies or any expense that could reduce your organization’s bottom line.
Minnesota Crop Research Grant Program
Most states offer their own Crop Grant Research Programs, which come from their Departments of Agriculture. Recipients must conduct research related to the quality, value, or production rate of agricultural products.
Minnesota Job Creation Fund
To qualify for the Minnesota Job Creation Fund, you must be a new or young business looking to hire more workers or renovate your physical property. Fulfilling these requirements can get you up to $1 million, which can also go towards maintaining high-salaried positions.
New York City Commute Enhancement Grant
The NYCCE grant awards up to $10,000 to small businesses involved in transportation to, from, or within New York City. The funds can be used for a variety of different initiatives, so any New York-based business that helps people commute in any way should apply.
North Carolina Recycling Business Development Grants
This annual grant from the Recycling Business Assistance Center helps finance growth-related investments for businesses involved in sustainability and/or waste reduction. The funds cannot be used to cover operational costs, labor costs, or expenses associated with contract processing.
North Carolina IDEA
North Carolina-based startups should definitely consider applying to this grant, which has helped finance the growth of approximately 100 tech companies. Recipients can get up to $50,000 but their projections must show potential for major success. Different grants can be accessed by certain types of companies, like early-stage businesses or minority-owned businesses.
Tennessee Department of Economic & Community Development
Businesses that are ready to expand or are involved in the improvement of public infrastructure can access numerous grants from the Tennessee DoECD. Your chances of winning will likely be higher if you are looking to finance employee training programs and/or are located in a low-income area.
Texas Young Farmer Grant
Texas residents from 18 to 46 years of age can apply for this matching grant, which finances projects that strive to expand the state’s agricultural industry.
Small Business Grants: Local
Unsurprisingly, grants from local governments and nonprofits offer less funding than state and federal options. But there’s less competition for smaller amounts. So, if your business has evidentially bolstered your local economy or created lots of jobs, you might have a pretty good shot at winning a local business grant. You’ll have even more grants to apply for if your business promotes environmental awareness or healthy living.
Like state-level options, local business grants tend to target businesses in certain types of locations. But while the following options come from specific cities, there’s probably one just like it in a city near you.
Cleveland Department of Economic Development
Cleveland is one of many cities that gives out several grants to businesses looking to expand or relocate to the city in question. Your city’s Department of Economic Development likely gives out equipment loans, working capital loans, and other traditional business financing products as well.
Job Creation Tax Abatements
Many cities offer tax incentives for businesses located in certain areas that help create jobs through their own initiatives. Though tax incentives don’t supply funds directly, they do allow you to take home much more income, which you can then put towards growth.
Technology Business Grant Program
This Cleveland-based grant is available for tech businesses that create at least five jobs within the area. The funds cover 0.5% of the new employees’ payroll for up to five years.
Ben Franklin Innovation Partnership
Though this is technically a statewide program, it’s featured in the local category because it offers smaller loans to numerous science and technology businesses located in different regions of Pennsylvania. Most recipients wish to qualify for the aforementioned SBIR and STTR federal grants but cannot afford the required research expenses.
Chicago Small Business Improvement Fund
This matching grant goes to businesses that are currently renovating their physical property or businesses that have recently purchased additional property for expansion in the same region. You wouldn’t receive the funds, however, until you’ve completed and paid for your renovations or purchased your new property. The recipient would essentially make back the money they spent, which is where the “matching” aspect comes from.
Miami Mom & Pop Small Business Grant
This grant is meant for smaller, owned and operated businesses and can be used for a variety of purposes. In addition to purchasing equipment, inventory, building liability insurance, or security systems, recipients can put the funds towards launching marketing campaigns or minor physical renovations.
New York City Fashion Manufacturing Initiative (FMI)
New York City-based fashion companies can access several grants designed to purchase equipment, upgrade technology, finance employee training programs, or cover the costs of moving to another location within the five boroughs.
Lumpkin Foundation Grant
This private foundation provides grants to companies based in East Central Illinois. Recipients typically work in the food service or agriculture industry and promote sustainability, healthy eating and/or environmental protection.
Orlando Downtown Commercial and Residential Building Improvement Program
Businesses looking to renovate their physical spaces in downtown Orlando can access grants valued from $15,000 to $120,000. The building must be located within the boundaries of the city’s Community Redevelopment Agency (CRA). This grant aims to improve the image of downtown Orlando in order to maintain commerce and raise property values in the area.
Salt Lake City River District Gardens Façade Improvement Grant
This relatively small grant is only available to businesses within Salt Lake City’s River District. Like the grant from the previous section, the funding comes from a larger initiative to improve the area’s image.
San Francisco Historic Preservation Grant
San Francisco’s Office of Economic and Workforce Development provides many grants and loans to entrepreneurs approaching different stages of growth. This particular grant goes to businesses that do work related to preserving and rehabilitating historical structures. Recipients can use the funds for research, documentation, education, or feasibility studies.
Small Business Grants: Alternative Funding Options
As mentioned earlier, the convenience of grants makes them very difficult to qualify for. Though other funding options involve repayment and/or fees, there’s no comparison when it comes to accessibility. Anyone applying for a grant should at least have a backup plan they can rely on.
Here are a few other options if your grant applications don’t work out:
Crowdfunding allows you to simply pitch your product or service and wait for donations from the general public. Though you don’t have to pay any of the money back, most platforms take small cuts of the total amount you raise. Many crowdfunded businesses incentivized donations by offering coupons, discounts, free samples of the featured product, or additional services for no extra cost.
Short-Term Business Loans
Think of the traditional business term loan but with much shorter terms (as little as three to four months) and higher interest rates. Some institutions require weekly or daily payments instead of monthly payments. The higher interest rates stem from the significantly looser requirements in regards to personal credit score, time in business, and annual revenue. If you work with an institution like United Capital Source, paying off your first loan on time will almost certainly make you eligible for additional rounds of funding with much more convenient terms. Depending on how well you meet the institution’s requirements, you can borrow anywhere from $5,000 to $500,000.
SBA Loans can offer the high amounts associated with grants for competitively low costs. It’s often easier to qualify for SBA Loans than traditional business term loans. Meeting the requirements for SBA Loans, however, still isn’t easy. You’ll need flawless personal credit, steady revenue and cash flow, and at least two years in business. There’s also lots of paperwork and a notoriously long waiting process. But if you believe you can get approved, the incomparable advantages of SBA Loans may greatly outweigh the time and effort involved in the application process.
Small Business Grants: Always Have A Plan B
Unlike business loans, failing to qualify for a grant is not an indication of poor performance. So, don’t let rejection hold you back from pursuing other options. You’ll almost certainly find something you can qualify for and safely afford without damaging cash flow. If you know how to manage debt, you’ll be able to grow your business with various forms of financing.