Farwah Jafri | November 28 2021
While the very thought of someone giving your small business ‘free money’ is attractive, you might feel deterred by the somewhat lengthy and complex process of applying for a business grant.
However, do not lose heart!
Despite the rigorous criteria and eligibility for acquiring a grant, you will find that it is much more appealing than traditional funding options. Business grants are no-strings financial rewards that can be used as seed capital for funding your startup or for expanding your business further. If you think that a grant can benefit your startup idea or a small business venture, read on to fully grasp what grants are, who gives them, and how do you qualify for one.
When applying for a grant, it is important to consider whether your business is eligible for one or not. Being able to obtain a grant can depend on various factors, such as the type of business (green business, technology startups), the location of the business (rural business), type of owners (women, minorities), and the business orientation (nonprofit organizations).
Usually, government organizations, and those based in sectors such as education and public housing, as well as non-profit organizations, are much more eligible for grants than commercial businesses. The SBA (Small Business Association), for instance, gives preference to educational institutions, training and counseling startups, and resource partners and does not offer grants to start or expand a for-profit business.
Similarly, when applying for a grant, it is also important to remember the purpose of why we are seeking a grant. Grants are not approved for matters such as paying off debts or covering expenses. They expressly fund ideas, projects, and startups that stimulate the economy or have some positive impact on it, such as creating more jobs or providing a social service.
Businesses that aid in furthering government objectives are also favored. Unlike loans and debt financing, grants are offered for very specific reasons, such as economic development in rural areas, environmental conservation, and medical research. When deciding whether a business is eligible for a grant, the government usually determines how well the business in question aligns with those reasons.
More recently, the pandemic breakout has led to an upsurge in the unconventional forms of financial aid to help small businesses deal with unprecedented economic crises. The Vermont Humanities and Vermont Arts Council have introduced the Vermont Covid-19 Cultural Recovery Grant Program. While all sorts of businesses can be eligible, grants do tend to favor scientific organizations and those that provide some kind of social benefit.
The pandemic has left many small and medium enterprises crippled and adversely affected, some even going into losses or bankruptcy. Financial aid programs like the Vermont Grant have been especially useful in providing the much-needed relief in the form of business grants for small businesses in the USA as recovery grants, loans, vouchers, and schemes.
Now that we have discussed what grants are, what they do, and under what circumstance a business is eligible for them, let us move on to the top 5 U.S small business grants that have been instrumental in providing financial support and pandemic stabilization to the sector.
Founded in 1998 to honor Amber Wigdahl, the Amber Grant Foundation offers grants to businesses owned by women, particularly small businesses, to get them settled and going. Founded to honor the memory of young Amber Wigdahl, who died at the age of 19 and couldn’t fulfill her entrepreneurial objectives.
The Amber Grant offers up to 10,000$ in grant money monthly to small businesses in the USA alone. At the end of each year, the foundation awards a $25,000 grant to women-owned businesses and plays a vital role in helping them to flourish. The Amber Grant requires a business to be at least 50% led by women to be eligible. This grant has immensely helped U.S. small businesses started by women, to realize their dreams.
The Shuttered Venue Operators Grant was created specially in response to the outbreak of the COVID-19 pandemic which led to hundreds of small businesses to go insolvent and close down. Administered by the SBA itself, the grant offered over $16 billion to small businesses in the U.S. in funding and stabilization efforts.
As of August 20, 2021, no new applicants are being accepted for the grant. However, this grant helped many startups to overcome many insolvency challenges. Eligible applicants were able to apply for a grant as much as 45% of their total revenues and included live venue operators, producers, and museum operators.
The SVO Grant targeted and helped those hit the hardest by the pandemic, with the top priority given to those that suffered a 90% loss in revenues.
While a bit unconventional, the Targeted Economic Injury Disaster Advanced Grant is a loan of $10,000 to $15,000, awarded by the SBA for emergencies. It is one of the most well-known USA small business grants providing economic relief to SMEs and nonprofit organizations.
The most interesting thing about this initiative is that if a business spends the funds granted on the most pressing financial obligations that it owes, the repayment is foregone, effectively turning it into a business grant.
This grant is particularly aimed at helping those small businesses in the USA that were seriously affected by the Covid-19 epidemic. The eligibility criteria for this grant were designed keeping small businesses in mind so that the grant would not be taken advantage of. Businesses looking to apply must first prove that they are operating in an impoverished area and have suffered sizable losses, 30% or more decline in revenues.
The NASE Growth Grant is an initiative by the National Association For the Self-Employed Growth Grants Program (NASE) which was founded in 1981. This grant is awarded to small businesses in the USA each year to help business owners finance a particular business need, such as acquiring farm equipment, procuring raw materials, or recruiting part-time help.
The NASE itself is an organization solely centered on supporting small businesses through multiple US small business grants. Since the creation of the initiative, the NASE has offered up to $1,000,000 in grant money.
The SBIR or Small Business Innovation Research program is an extremely competitive federal grant aimed at small private-sector businesses working in R&D. Led by the United States Government, the SBIR initiative offers US small business grants to startups that help address social needs in the areas of health, environment, energy, and security.
Roland Tibbetts, also known as the father of the SBIR program, saw the growing importance of technology on a global scale and sought to leverage small business innovation through early-stage financing. As such, SBIR is the largest source of high-risk, seed capital fundraising for grants for small businesses in the USA. The program provides impressive funding starting at $150,000, however it is very competitive and the process of acquiring one can be a very lengthy one.
Grants are funds given to a person, business, or project by local, state, or the federal government meant to aid businesses and boost economic development at the grassroots level. A grant can be awarded for disaster relief, business emergencies, innovations, and research and development. They can also be granted for assisting in social work, such as the Amber Grant. To secure one for your business, carefully choose the grants you can apply for, and make sure that you fulfill all directions and requirements.
Did this article answer any queries you had about grants? Are you looking for more articles that provide useful information on sources of startup funding, or other areas such as accounting, bookkeeping, and key concepts that help you run a better business?
At Monily, you’ll find detailed guides and articles that will give you tons of information on accounting practices, startups, investments, and small business grants.
Farwah is the Product Owner of Monily. She has an MBA from Alliance Manchester Business School, UK. She is passionate about helping businesses overcome challenges that hamper their growth, which is why she is working at Monily to facilitate entrepreneurs to efficiently manage business finances and stay focused on growth.