Small Business Startup Series – Grants
This is the third installment in our series on starting your small business, securing funding, and navigating taxes.
All month, we talked about setting up your small business with the right structure.
Having that in place is great, but you’ll also need cash to keep your startup rolling. That’s where small business grants come in handy. They can provide your startup some financial breathing room. Here’s the nitty gritty on what they are, where to find them, and how to get them.
So, what exactly is a small business grant?
Small business grants are seed money gifted to new and established small businesses to help them grow. They aren’t loans, so you don’t have to worry about paying them back. There are some things to look out for, however.
First, grant applications aren’t free money. They take time to complete, and that is an opportunity cost.
Also, competition can be stiff. Each year hundreds of thousands of small businesses try to access these funds. And with interest rates rising, loans look less inviting. So, competition may get worse.
You can expect a little scrutiny, too. If you earn a grant, you’ll probably have to provide updates to ensure the money is being used per the grant requirements. So, be prepared to have a representative check in after the money is granted.
Finally, be aware that most of these grants are considered taxable income. So, Uncle Sam will be coming around for his share.
Where’s the best place to find them?
Getting a grant may not be an easy win, but they are definitely worth the effort. But you must know where to go. One of the best places to start is at the federal level, especially grants.gov. They have a searchable database of several small business grants. You can also check at the state level. The U.S. Economic Development Administration can help you find grants in your state.
Their database is easy to use and links you to regional and state offices that can assist you. Your Chamber of Commerce may also have information on grants at the local level. For example, typing “small business grants” in One Acadiana’s search engine yields a host of helpful articles and resources on grants.
But it isn’t just governments that provide grants. Corporations do as well. And those grants can be substantial. For example, in 2023, FedEx is offering $30,000 grants to 10 small businesses. And Legal Zoom is offering grants up to $10,000.
There are also specialty grants for minority, women, and veteran-owned businesses. Check out this article for a comprehensive list.
Tips on getting one
Getting a big grant will require you to take on lots of competition at the federal or national level. So, don’t be afraid to get some practice at the local level to see if grant-seeking is worth your time. These grants are usually smaller, but the competition isn’t as stiff. The time commitment can be less, too.
No matter where you start, take some time to research past winners. Reverse engineer their process for the greatest chance at success.
The bottom line
Grants can be a huge help for your small business. But it’s important to do your research and weigh the opportunity costs. And if grant-seeking is not a good fit for your business, there are always Small Business Administration microloans to apply for. We’ll look at those next week in our fourth and final installment in the Small Business Startup Series.