Government grants can be a wonderful thing for your small business—that is, if you know how to get one. With all the rules and regulations, it may seem easier to find mall parking on Black Friday than get approved for a grant. Hopefully by the time you’re finished reading these nine tips, you’ll be halfway there.
Be prepared to work for it
Nothing good ever came easy, right? Repeat that mantra to yourself when you’re in the midst of applying for government grants. The process of finding and applying for the right one is a long and arduous one—it will take time and resources. There’s a lot of misinformation out there; old websites, complicated restrictions, lengthy fine print, and counterintuitive databases.
Most grants are for specific groups in specific places doing specific things, often abundant in industries like agribusiness, environmental technology, and biotechnology. There are very few simple, no-strings-attached grants out there, and many of the programs involve matching contributions.
But guess what? It’s all worth it if you get through.
Have your business plan ready
The likelihood of getting approved for government assistance to start a business or help manage it is directly related to the work you put both into your research and your business plan. If you want to be considered for funding, you’ll have to prove that you understand every aspect of your business and its ability to generate profit. What’s your product or service? Who is your target market? Your competition? How is your business different than everyone else’s? (This guide to market research will help if you don’t already have the answers to these questions.)
Your business plan needs to be a well-written document that describes your business objectives and strategies, your financial forecasts and the market you’re targeting. You should also include these reports:
· Personal financial statement
· Cash flow forecast and cash flow statement
· Income statement
· Accounting ledger
· Supporting documents for taxation, insurance, real estate, etc.
Become familiar with the requirements
As you’ve probably guessed by this point, these grants aren’t easy to come by. It requires patience, planning, and a little luck. The following list will give you an idea of the types of things the government is looking for when going through applications.
· Location (e.g. New York, Oakland, etc.)
· Level of government (e.g. federal, state, local, etc.)
· Industry type (e.g. agriculture, technology, tourism, etc.)
· Business structure (e.g. non-profit, corporation, etc.)
· Stage of business (pre-startup, startup, existing, etc.)
· Investment (e.g. 50% contribution from the business itself, etc.)
· Type of activity (e.g. hiring staff, research and development, etc.)
· Demographic group (e.g. youth, women, people with a disability, rural, etc.)
· Availability (e.g. funds available for disbursement, total number of applications, etc.)
· Additionally-specified purposes (e.g. wage subsidy, reduce pollution, export, etc.)
Know what to search for
The phrase “small business grants” is rare on government websites, so search for small business financing, awards, contributions, shared costs, subsidies, rebates, tax credits (or tax rebates) or non-repayable loans. These terms may refer to funding that your business doesn’t have to pay back—and that’s exactly what you’re looking for!
Figure out where (or if) your business fits into the government’s priorities
Some small businesses are in a grant-rich industry or area, and some industries fit well with government objectives and are targeted for funding. Unfortunately, some fit into neither category. For example, government grants for retail businesses are notoriously scarce. And there are many more assistance programs for small businesses in certain parts of the country than others. Government priorities (e.g. natural disaster assistance, new regulations/legislation, etc.) will also affect the availability of grants for businesses outside of those areas.
Look within your particular industry
There are many small business grants and assistance programs that are specific to particular industry sectors, so it’ll be helpful to narrow your search by looking in your specific industry. To figure out exactly where your business fits in the industry classifications, finding its North American Industry Classification System (NAICS) code will make it easier to find government assistance programs available for that particular industry. Once you figure that out, start searching specifics. Government hub sites come the closest to providing a full listing of government assistance, including small business grants.
Personal investment is your friend
You’ve heard the phrase “you have to spend money to make money,” right? Well, adjust it slightly and it will apply to government grants, too. “You have to spend money to get free money.” It sounds like the math doesn’t make sense, but what it means is a business owner must have funds available to invest in order to receive something in return. You should have a safety net so that your business can survive even without the assistance of grants and subsidies. If you find a grant that you’re eligible for, complete the application process, and get approved, there will likely be strict conditions placed on the funds and how they’re to be used.
Watch out for scams
Believe it or not, there are many scams out there from private businesses posing as government grants. Like anything else in life, if it sounds too good (or easy) to be true, it likely is. If you spend money on these promises, you’ll probably be disappointed. You can find more information about these types of scams here. (And while you’re at it, check out this post on other scams affecting small businesses.)
Find great resources (and use them)
Here are some to start with:
- Grants.gov: Use this comprehensive site to learn more about available eligibility and application processes for various grants administered by different government agencies.
- USA.gov: This government site provides resources for starting small businesses and links you to GovLoans, which provides information on all sorts of federal loans available for businesses.
- Small Business Innovation Research (SBIR): This competitive awards-based program enables small businesses to engage in federal research/research and development and awards grants to stimulate high-tech innovations.
Many business owners miss out on government grants and their true funding potential because they aren’t well-informed, but this doesn’t have to be your story! Spend the time to do it right, and hopefully you’ll find a way to make government grants a reality for your small business. And if not, there are always other funding options.
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.