How many times have you heard about “free money” available for small businesses through government and other grants? It would be nice, wouldn’t it?
Unfortunately, grants are not a magical, bottomless pot of gold that you just have to follow the rainbow to find. If they were, there would not be an entire profession of grant experts whose job is to find, apply and manage grants.
What grants are is one tool for small businesses that need a boost to startup, growth or emergency capital. They are also an option for projects or businesses that are not a good fit for more traditional funding.
If you are considering a grant for your business, there are some things to keep in mind.
What is a grant?
Grants are money given to you by an organization or government department so you can carry out your business activities. Unlike loans, they do not have to be paid back, and they can be easier to qualify for. Unlike investors or crowd-funding, there is no expectation of earnings or product in return for the money.
It may be helpful to think of grants as a relationship instead of a transaction. In this relationship, the funder is seeking something—innovative ideas that align with their mission and goals. You are seeking funding for your innovative idea. You reach out and share your ideas and how they might mesh. If you both decide you are a fit, you agree to work together toward your shared goals.
How do I find a grant?
There are many grant opportunities for small businesses, especially for women-, veteran- and minority-owned businesses and for businesses in certain fields. In addition, the Small Business Administration COVID relief funding has made a number of grants available for those who need help to pay their employees, those experiencing temporary loss of revenue, and shuttered arts venues.
You can also search for federal grant opportunities at Grants.gov (for federal opportunities) or state opportunities through the Small Business Administration or the Iowa Economic Development Administration office. If you work closely with a specific government agency, it is always a good idea to follow them for funding opportunities as well.
Private grants given by other businesses, nonprofits and individuals can be a bit trickier to find, but they often take less work to apply for and have the added benefit of exposure. Some larger opportunities include FedEx, the National Association for the Self Employed (requires a membership) and the Awesome Foundation.
You can also check grants databases (some of which require a subscription). These databases also have information about the millions of grants for non-profit organizations, so be sure to set your filter to grants that are available to for-profit organizations or small businesses.
How do I write a grant?
There is no simple answer to this question because each funding opportunity is different. However, there are some basic questions you should be prepared to answer:
- What is your business? This is where all that hard work developing a good mission statement and elevator pitch comes in handy. Highlight your major business activities and related programs or projects, bring up successes, discuss who you serve and talk about your role in the industry or community.
- What is your project or idea? Your project description should include not just what you plan to do, but why it is needed. What is the problem you are seeking to address and how does your project align with the goals of the opportunity?
- How will you measure your success? Be ready to talk about how you will know you have achieved your objectives. Your goals here should align with the funder’s goals, and they should be SMART.
- Is your business or idea financially sound? At a minimum, you will typically be asked to provide financial statements and tax filings to prove your business or idea is stable. You will also likely be asked to provide a budget and justification for expenses (especially for government grants).
Other things to consider
Before you even start drafting a proposal, you need to be sure your idea a fit for the opportunity and that you can actually meet the scope of work. (If you cannot, consider partnering with another business to apply together.)
In addition, carefully review the limits on allowable expenses, requirements for matching funds, and rules about conflicts of interest. Grant funds are usually considered taxable income for businesses. Of course, this may vary with each grant (especially COVID-19 grants), so you should always consult a tax professional.
For those who meet the guidelines and are willing and able to do the work of securing and managing them, small business grants can be what gets your business to the next level or keeps it afloat. It is worth your time to consider if grants are the right fit for your business model and strategy. Even if you choose not to apply to a current opportunity, it never hurts to see how your business could benefit in the future.