It’s in the federal government’s best interest to create a favorable environment for small businesses. That’s because these entities account for a significant chunk of revenue via taxes. They also help in advancing employment, health insurance, retirement, and overall economic growth. For these reasons, the government provides some incentives to benefit your small enterprise. The Small Business Administration contains the resources you need to plan, launch, manage, and grow your trade.
What is a Small Business Grant?
This type of funding refers to the seed money the government extends to businesses that meet particular criteria. As opposed to loans, you’re not required to repay grants. They’re particularly crucial for startups experiencing cash flow and operational hiccups. Examples of small business grants are:
- Environmental Protection Agency Grants: The EPA provides funding for organizations that prioritize awareness about a healthier and cleaner environment. You’re more likely to succeed if your project addresses one of several concerns. They include climate change, green energy investments, environmental justice, and solid waste management.
- Small Business Innovation Research Program (SBIR): This grant also funds broad projects such as land revitalization, safe water, chemical processing, and clean air. SBIR is a two-phase process. The first entails solicitation for viable research proposals on specific topics and offers up to $100,000 for six months. If your application passes the proof of concept stage, you may apply for a further $400,000 in Phase II. This funding allows you to develop and commercialize it, as well as seek third-party investment.
- U.S. Department of Commerce Minority Business Development Agency (MBDA): This grant seeks to promote minority-owned businesses by incorporating them into progressive private and public sector initiatives. The funds also support various research centers that study and propose suitable policies for such organizations.
Additional Funding Options for Small Businesses
Other than grants, you have several other government funding alternatives for your small business. One of them is the Economic Injury Disaster Loan (EIDL) Program. It offers up to $2 million to entities that experience economic harm resulting from declared disasters. It helps you cover business obligations as you would if the calamity hadn’t occurred. Although this loan doesn’t replace lost revenue or sales, it allows you to maintain an appropriate working capital position.
The SBA also has a microloan program that offers up to $50,000 in startup capital and expansion assistance. The amount mainly covers equipment leasing or purchase, inventory, and fixtures. You may also qualify for the Paycheck Protection Program, which incentivizes businesses to keep their employees on the payroll. The Biden administration recently announced plans to make it more equitable. You may apply and qualify for PPP loan forgiveness if you follow the terms of this loan.
Contract Assistance Programs
These programs help your business grow by increasing your chances of winning a portion of federal contracts. The government ensures small businesses clinch at least 23% of these commitments every year. Participating in contract assistance programs enables you to enjoy various benefits. You can receive business mentoring and training on federal contracting procedures, partner with acclaimed contractors, and clinch exclusive contracts.
A key example is the Women-Owned Small Business (WOSB) contracting program. It aims to award up to 5% of annual federal contracting dollars to female-owned organizations. Congress and the SBA recently improved certification requirements to make it easier for more eligible businesses to benefit.
Some grants are tailor-made to spur growth in specific niches. The best example is the Local Initiative Support Corporation (LISC) Rural Relief Small Business Grants. Although LISC isn’t a federal agency, it receives funding from the government, among other institutions. They include banks, foundations, and corporations. This grant focuses on helping businesses located in rural areas, particularly those with 50,000 residents or less. LISC is one of the largest sources of financial assistance for small businesses across the country.
It constantly updates its eligibility criteria in its bid to ensure as many entities as possible receive support. For instance, you should document how your company impacts the community. You’re also currently required to show the ongoing COVID-19 pandemic’s adverse effects on your operations.
If you own multiple businesses, it’s advisable to apply through the largest one. Nonsprofit organizations are not eligible for this particular grant. LISC gives priority to companies owned by women, entrepreneurs of color, and veterans. You’re more likely to qualify if you submit complete and accurate information.
Get the Assistance You Need
In addition to federal programs, states and local authorities also offer financial assistance. You can access free resources on how to apply and qualify for grants and low-interest loans. They include sba.gov, grants.gov, lisc.org, and uschamber.com. Please understand that this is a long process that requires ample research and commitment. Your chances of success will rise if you narrow your search to the programs that fit your industry and goals.