Starting a business is expensive. You have to test new products, secure inventory, research market trends, etc. There’s no shortage of costs for a startup business. But if you haven’t even started selling yet, where does the money come from?
Seasoned small business owners might have a network of financiers, but for entrepreneur rookies, securing funding before you’ve had a chance to prove yourself can be tricky.
Every new business can do with a bit more cash, but the application process for government issued small business grants involves more than putting your name on a list and waiting for a deposit. Not every grant is right for every business and understanding how grant-issuing organizations evaluate applicants is imperative to securing the financial assistance you need.
If you plan on investing the time and energy into applying to a small business grant program, it’s important to understand the options available and pick the grant that’s right for your business.
Small business grants are offered by all kinds of organizations, to all types of businesses, with a wide range of values, missions, and functions.
There’s no single set of criteria that can be applied to all grant opportunities, but generally, grant-lenders are looking for small businesses that embody their organization’s stated purpose and add value to a particular community or industry.
Small business grants are not loans, so lenders aren’t expecting to be paid back. They’re not investment capital, either so issuers aren’t expecting to own assets of your business. But that doesn’t mean that small business grants don’t come with expectations and incentives. Issuers still expect a return on their investment, just not a monetary one. Instead, organizations that provide small business owners with grants want to feel confident that your business idea contributes to their organization’s mission—whether it be a common good, innovation in a particular industry, or economic growth in a specific community.
A small business grant isn’t necessarily “free money” either. Grant issuers often have stipulations about how the money can be spent, sometimes even spending the money themselves on specific resources they believe will help your business grow.
If you’re to fund a small business and looking to apply for a business grant, here are some key points to keep in mind:
- Look for grants within your industry: A lot of small business grants are industry specific, so it can help narrow down your search if you focus on organizations and research institutions within your specific industry. Focusing on one industry also builds buzz around your business and can help build connections with industry figures who may be able to offer guidance and investment opportunities.
- Read the eligibility requirements carefully: Read the requirements carefully and evaluate whether you qualify for the grant. If you’re unsure whether you qualify, contact someone from the organization and ask.
- Make sure your business aligns with the organization’s mission: Organizations that provide small business grants do so in the hopes of achieving a specific goal they are deeply invested in. Ask yourself how your business model helps contribute to achieving this goal. If the answer is hard to find, you might want to consider applying for grants with another organization.
- Know what you’ll be spending the grant money on: Have your business plan ready and know how the money will be spent. This will make the organization understand more clearly how your business aligns with their mission.
Focus your pitch on innovation and expansion: Organizations that issue small business grants typically favor business that they see as innovative, forward thinking, and on a path to growth. Focus your pitch on new technologies you might be developing, and what your business can do to help the organization with its mission.