Grants for Small Businesses
Contrary to popular opinion, the Small Business Administration (SBA) does not offer federal grants or loans directly to startup businesses. Traditionally, federal business grants are only available to non-profits, businesses engaged in government-sponsored scientific research, or local and state governments. Although there are loan guarantee programs aimed at making it easier for small businesses to obtain startup and expansion loans, these are typically provided by local, state, and federal agencies. Business owners can seek assistance in finding federal sponsored loans and grants through sources such as Grants.gov.
Small business grants can be an excellent opportunity for those interested in starting or funding a small business.Tweet This Unlike loans and credit cards, grants do not need to be repaid. Free money for starting a business is a rather attractive prospect to entrepreneurs, many of whom struggle with getting their business off the ground.
Of course, it’s not quite that simple. Finding and qualifying for grants requires more work than simply waltzing up to the counter and holding out one’s hand. So, where can small-business owners find grants that they qualify for? What is required to qualify?
Don’t Be a Victim
When searching for small business grants, don’t fall prey to internet hype. For every real small business grant out there, it seems there are 10 websites promising free and easy money. The problem is that many of them really only deliver smoke and mirrors.
Small business owners should never pay for grant information. All the information necessary is free and publicly available. Grants are typically offered by state, county, and local governments, as well as private organizations. No matter the source, though, those Internet hucksters do not offer any hidden advantage. They have access to the same information you do.
Where can small business owners find legitimate grants that they qualify for? First, they should figure out whether they might qualify for federal grants, based on special certifications. Businesses owned by veterans, minorities, women, or by those located in economically disadvantaged areas often have an edge in qualifying for federal and state grants.
Once any special business certifications have been determined, small business owners who are seeking grant money should pay a visit to Grants.gov, the database for federal grants. Small businesses will likely have a tough time qualifying for these grants on their own, but they may be able to latch onto larger organizations and receive grant money as a subcontractor.
Non-federal government websites (state, county, and local) are other places to research grant opportunities. Many governments offer grants to assist small businesses with hiring more workers, becoming more sustainable, or improving economically depressed areas.
Once an individual has located grants that they feel their business venture might be qualified for, the next step is to submit a grant proposal. There are likely too many applicants for any given grant, so it is important to draft a proposal that will increase the odds of approval. How can this be accomplished?
- First, make sure that the grant is well-suited for your business. The criteria for most grants are quite stringent, and submitting proposals for grants that are only a partial match is likely to be a waste of time.
- Second, follow the directions. This goes without saying, but failure to follow the guidelines provided in the funding notice is a surefire way not to get approved.
- The objectives stated in the proposal must be smart. The purpose of most grants is quite specific, so vague, unmeasurable goals, slated to be met at some non-specific future date simply will not cut it.
- Be specific about how the money will be used. Grant funders want to know exactly how their money will be spent.
- If you’re not confident in your abilities to write an airtight grant proposal, consider enlisting the services of a professional. Grant consultants are not cheap to employ, but their expertise may prove well-worth the expense, especially if consulting with them makes the difference between approval and denial.
The Grant Lifecycle
The grant process is a lifecycle that starts with finding a funding opportunity and moves through three phases that include applying for the grant, making award decisions, and successfully implementing the grant.
The pre-award phase represents the beginning of the grant lifecycle, which includes announcing opportunities, submitting and reviewing applications.
Finding Funding Opportunity Announcements
Grant-awarding agencies announce Funding Opportunity Announcements (FOA) based on legislation and respective budgets. An FOA includes the information and requirements for an applicant so they can determine their interest in the grant based on the requirements for eligibility, competency, and more.
Once you find a funding opportunity you want to apply for, there are two crucial steps to complete before submitting:
- Registering to apply for grants
- Completing your application
Registering & Getting a D&B D-U-N-S® Number
If you’re using Grants.gov to find FOAs, there will be several steps and types of registration required, including getting a D&B D-U-N-S Number, registering with SAM.gov, and getting a Grants.gov account. It can take up to 30 business days to receive a D-U-N-S Number if you do not already have one, so you’ll want get started as soon as possible. You don’t want to miss any grant application deadlines and lose your funding opportunities because you did not have the proper registrations in time, so start the registration process early.
Completing & Submitting Your Applications
You’ll need to do a lot of prep work for your application, including making sure you are eligible and outlining exactly how you will use the grant money. The planning process will include developing ideas, conducting research, writing your proposal and more, similar to writing a business plan.
Once the review process is complete, the award phase of the grant lifecycle begins. This where the awarding agencies officially select the organizations that will be receiving grants.
Notice of Awards for Receiving Grants
Once final award decisions are made, a Notice of Award (NOA) is sent to the organizations chosen for grants. The NOA is a legally binding issuance of the grant. When you accept the grant, either by signing the NOA or by using the funds, you are then obligated to carry out the full terms and conditions of the grant.
Post Award Phase
The work doesn’t stop once you receive the grant; you’ll also need to implement the grant, report progress, and complete any closeout requirements. The federal agency that granted you the award should be able to assist you and help make sure you comply with terms and conditions.
The Reporting Process
Your agency will monitor your progress and spending to help prevent fraud and abuse of funds. You will need to have reports that detail your conduct and how you are allocating the grant. Your reports will be reviewed by your awarding agency who may also make visits to your organization. You should establish a relationship and line of communication with your agency and grant manager so you can ask questions and prevent issues before submitting reports. You will also be audited by multiple offices, including The Government Accountability Office (GAO), Office of Inspector General (OIG), and various departments within each Federal agency.
The Closeout Process
When your grant is over, you will need to complete the closeout phase by submitting final reports. You must submit all required reports within 90 days after the grant award expires or is terminated. Your awarding agency will need to confirm that you have completed all of the required work and tasks, and until it does so, you are still obligated to fulfill the terms of the grant. The closeout process can be lengthy, depending on whether or not there are concerns or questions, so be prepared to continue fulfilling the terms of the grant past its termination date. Afterwards, hang on to your reports — most agencies require you to keep them for at least three years.
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