Small businesses often face financial challenges when starting up or expanding. Government grants can be a helpful source of funding for entrepreneurs looking to grow their companies.
The U.S. Small Business Administration (SBA) offers grants to support small businesses in certain areas. The SBA doesn’t give grants directly to start or expand businesses, but it funds programs that offer training and support to entrepreneurs. Other government agencies also have grant programs for small businesses in specific industries or with certain goals.
FAQ
What are the four types of grants?
The four main types of grants are competitive, formula, continuation, and pass-through grants. Competitive grants are awarded based on merit through a selection process. Formula grants are distributed to recipients based on specific criteria, often using a predetermined formula. Continuation grants provide ongoing funding for projects that are already established. Pass-through grants are funds the federal government gives to state or local governments, which then distribute to eligible recipients.
How to get money from the government to start a business?
To get government funding for a business, you can apply for federal or state grants, though these are often competitive and specific to certain industries or causes. Alternatively, you can seek Small Business Administration (SBA) loans, which provide financial assistance to startups. Researching grant opportunities through platforms like Grants.gov and looking into local economic development programs can help identify potential funding.
Is the SBA grant real?
Yes, the Small Business Administration (SBA) offers grants, but they are limited and typically reserved for specific sectors like research and development, exporting, or providing disaster relief. Most SBA financial assistance comes in the form of loans, not grants, so it’s important to clarify the type of funding you’re pursuing.
What is the $10,000 grant in Washington state?
The $10,000 grant in Washington state was part of the Working Washington Small Business Emergency Grants program, created to help small businesses affected by the COVID-19 pandemic. The program aimed to provide financial relief to businesses facing severe disruptions, though the availability and details of such grants may change over time.
Does the government give money to startups?
Yes, the government provides funding to startups, though it’s typically available through grants or loan programs like the SBA. Grants are often directed toward specific sectors, such as technology, healthcare, or innovation. Startups may also benefit from local and state-level initiatives that encourage entrepreneurship.
Is the 10k SBA loan a grant?
No, the $10,000 SBA loan is not a grant. It is an Economic Injury Disaster Loan (EIDL) advance that was provided during the COVID-19 pandemic. While this advance did not need to be repaid, it was technically a loan advance rather than a grant, and the overall EIDL program included loans that do require repayment.
What type of grant doesn’t have to be paid back?
Grants, in general, do not need to be paid back as long as the recipient meets the terms and conditions of the grant. Government grants, research grants, and educational grants fall into this category, provided that the funds are used for their intended purpose.
Are all grants given by the government?
No, not all grants are given by the government. Private foundations, corporations, and nonprofits also offer grants to individuals, businesses, and organizations. These non-governmental grants often support a wide range of causes and industries, from education to the arts.
Which type of federal grant is used the most?
Formula grants are the most commonly used type of federal grant. These grants are allocated to states or local governments based on a set formula, often related to population or need. Programs like Medicaid or education funding frequently use formula grants to distribute resources.
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Types of government grants available
Government grants for small businesses come in different forms. Each type has its own focus and requirements. Let’s look at two main categories: federal grants and state and local grants.
Federal grants
Federal grants offer significant funding for small businesses. These grants come from the U.S. government, and they often target specific industries or goals.
The Small Business Administration (SBA) doesn’t give direct grants to start or grow businesses. Instead, it funds programs that help entrepreneurs. These programs provide training and advice.
Other federal agencies do offer grants. For example, the Department of Energy gives grants for clean energy research. The National Institutes of Health funds health-related projects.
To find federal grants, you can use the SAM.gov Assistance Listings. This site shows all available funding programs, allowing you to search and apply for grants that fit your business.
| Pros | Cons | Funding maximum | Eligibility |
| Large funding amounts | High competition | Varies by program | Specific industry or research focus |
State and local grants
State and local grants can be easier to get than federal ones. They often have less competition and focus on boosting local economies.
Many states offer grants to create jobs or help certain industries grow. For example, a state might give grants to tech startups or green energy companies.
Cities and counties also have grant programs. These might help businesses in specific neighborhoods or support minority-owned companies.
To find these grants, check your state’s economic development website. Local chambers of commerce can also be good sources of information.
| Pros | Cons | Funding maximum | Eligibility |
| Less competition | Smaller amounts | Usually under $100,000 | Often location-based |
Best government grants for small businesses
Small business owners can find help through various government grants. These programs offer money to start or grow your business. We’ve listed the best options for government grants for small businesses.
Federal grants
Small Business Innovation Research (SBIR) Program
The Small Business Innovation Research (SBIR) program offers grants to help small businesses develop new technologies. This program aims to boost innovation and create jobs.
SBIR grants can provide up to $1 million in funding. You can use this money for research and development of your ideas, with the goal of turning your innovation into a commercial product.
To be eligible, you must be a for-profit small business with 500 or fewer employees. You also need to do your research work in the U.S.
The SBIR program has three phases. Phase I lets you test if your idea is feasible, while Phase II funds more research and development. Phase III helps you bring your product to market.
Many federal agencies take part in SBIR. These include the Department of Defense, NASA, and the National Science Foundation.
| Pros | Cons | Funding maximum | Eligibility |
| Non-dilutive funding | Complex application process | $1 million | For-profit small businesses |
| Supports innovation | Strict reporting requirements | 500 or fewer employees |
Small Business Technology Transfer program
The Small Business Technology Transfer (STTR) program helps small businesses team up with research institutions. It’s like SBIR but focuses on partnerships.
STTR lets you work with nonprofit research groups to turn ideas into products. You can get money to develop new tech and bring it to market.
The program aims to boost innovation and create jobs while connecting small companies with top researchers and labs.
To join STTR, you need a small business and a research partner. You must do joint R&D work with the goal of making something you can sell.
STTR offers funding in phases, with up to $275,000 for early research and more money for later phases to build and test prototypes.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Access to research expertise | Complex application process | $275,000 (Phase I) | Small businesses with research partners |
Community Development Block Grants
The Community Development Block Grant (CDBG) program gives money to cities, counties, and states. This program helps create better communities for people with low and moderate incomes.
CDBG funds can be used for many things, such as fixing up houses, improving streets, and supporting local businesses. The money can also help start new businesses or grow existing ones.
Small businesses can benefit from CDBG funds in several ways. You might get a loan to buy equipment or property, or you could receive a grant to improve your storefront. Some areas use the money to create small business incubators.
To get CDBG help, your business usually needs to be in a specific area. You may also need to create jobs for people with low or moderate incomes. Check with your local government to learn about CDBG opportunities in your community.
| Pros | Cons | Funding maximum | Eligibility |
|---|---|---|---|
| Flexible funding options | Limited availability | Varies by location | Location-based |
| Can help various business needs | May have job creation requirements | Depends on project | Often for low/moderate income areas |
Economic Injury Disaster Loans
Economic Injury Disaster Loans (EIDLs) are a type of government grant for small businesses. The Small Business Administration (SBA) offers these loans to help companies recover from disasters.
EIDLs provide working capital to small businesses and non-profits. You can use the funds for normal operating expenses and other financial obligations, helping your business stay afloat during tough times.
To apply for an EIDL, you must first register with FEMA. You can do this by phone or online. After getting a FEMA number, you can apply for the SBA loan.
The SBA offers different types of disaster loans, some for physical damage and others for economic injury. EIDLs fall into the second category.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Low interest rates | Strict eligibility rules | Varies by disaster | Small businesses and non-profits |
| Long repayment terms | Lengthy application process | Must be in declared disaster area |
USDA Rural Business Development Grants
The USDA offers Rural Business Development Grants to help small businesses in rural areas. These grants come in two types – Opportunity and Enterprise grants.
Opportunity grants make up 10% of the total funding. They aim to create new opportunities for rural businesses.
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Meanwhile, Enterprise grants focus on helping existing small businesses in rural areas grow. They can be used for various projects that benefit these companies.
The grants support things like training programs, equipment purchases, and building improvements. They aim to create jobs and boost rural economies.
To apply, you need to be in an eligible rural area. You must show how your project will help local businesses and create employment.
The application process can be complex. You may want to reach out to your local USDA Rural Development office for help. They can guide you through the steps.
| Pros | Cons | Funding maximum | Eligibility |
|---|---|---|---|
| Supports rural businesses | Complex application | Varies by project | Rural areas only |
National Institute of Standards and Technology grants
The National Institute of Standards and Technology (NIST) offers grants for small businesses through its Small Business Innovation Research (SBIR) program. This program aims to boost technological innovation and research.
NIST releases a yearly funding opportunity for SBIR Phase I projects. These grants help small businesses explore new ideas and test their potential. The focus is on turning innovative concepts into real-world applications.
You can apply for NIST grants if you’re a small business owner with groundbreaking tech ideas. The grants cover various fields like advanced manufacturing, cybersecurity, and more.
To apply, you’ll need to submit a proposal that outlines your project and its potential impact. Make sure to follow NIST’s guidelines carefully when preparing your application.
| Pros | Cons | Funding maximum | Eligibility |
| Supports tech innovation | Competitive process | Varies by project | Small businesses |
| Helps turn ideas into reality | Limited funding cycles | U.S.-based companies |
State Trade Expansion Program grants
The State Trade Expansion Program (STEP) helps small businesses grow internationally. It gives money to states and territories to support small companies that want to export their products.
STEP grants can cover costs for trade shows, missions, and export services. This makes it easier for small businesses to enter new markets abroad.
You can use STEP grants for things like:
- Going to international trade shows
- Joining trade missions to other countries
- Getting help with export services
The program has helped thousands of small businesses since 2011. It aims to remove barriers that stop companies from selling overseas.
To apply, check with your state’s international trade office. They handle the applications and decide who gets the grants.
STEP is run by the U.S. Small Business Administration. In 2024, they gave out $20 million in grants to 43 states and territories.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Covers export costs | Limited funding | Varies by state | Small businesses |
Small Business Development Centers
Small Business Development Centers (SBDCs) offer free help to small business owners and entrepreneurs. You can get advice on starting, running, and growing your business. SBDCs are part of a national network supported by the U.S. Small Business Administration.
At an SBDC, you can meet with experts who understand local business needs. They can help you with business plans, marketing, and finances. You can also learn about getting loans and grants.
SBDCs provide one-on-one counseling tailored to your business. They also offer workshops on topics like accounting and social media. Many centers have special programs for women, veterans, and minority business owners.
You’ll find SBDCs at colleges, universities, and economic development agencies. To use their services, you just need to be a small business owner or planning to start one. The advice is confidential and often available in multiple languages.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Free services | May have wait times | N/A (advisory services) | Small businesses and startups |
Shuttered Venue Operators Grants
The Shuttered Venue Operators Grant (SVOG) program helped many small businesses during the COVID-19 pandemic. It gave money to eligible performing arts venues, theaters, and similar places that had to close.
The U.S. Small Business Administration (SBA) ran this program. They gave out over $16 billion in grants to more than 10,000 businesses. This money was a lifeline for many live entertainment venues.
The SVOG program is no longer taking new applications. But if you have already applied for or received a grant, you can still use the SVOG portal.
These grants were part of bigger laws to help the economy. They came from the Economic Aid Act and the American Rescue Plan Act.
| Pros | Cons | Funding Maximum | Eligibility |
| Emergency assistance | No longer accepting new applications | Varies | Performing arts businesses |
Veteran-owned small business grants
The government offers special grants for veteran entrepreneurs. These programs help vets start and grow businesses. You can find many options to get funding for your company.
The Small Business Administration (SBA) supports veteran-owned businesses. They give money to groups that offer training and advice. You can get help with business plans and government contracts.
Some states have their own grant programs for veteran business owners. For example, Maryland gives interest-free loans up to $50,000. Check what’s available in your area.
Private organizations also provide grants to veteran entrepreneurs. The Stephen L. Tadlock program gives $1,000 to 25 vets each year. These smaller grants can help with specific business needs.
To find more opportunities, look at Grants.gov. This website lists many federal grants. You might find funding for your specific industry or business type.
| Pros | Cons | Funding Maximum | Eligibility |
| Free money for your business | Competition for grants can be high | Varies by program | Must be a veteran or service-disabled veteran |
Minority Business Development Agency grants
The Minority Business Development Agency (MBDA) offers grants to help minority-owned businesses grow. These grants support businesses owned by people of color, women, and other underserved groups.
MBDA grants can fund many business activities. You might use them for training, marketing, or buying equipment. The agency aims to boost minority businesses and create jobs.
Grant amounts vary but can be substantial. In 2021, MBDA awarded $13.9 million to 35 recipients. This shows the agency’s commitment to supporting diverse entrepreneurs.
To apply for MBDA grants, you’ll need to meet certain criteria. Your business must be at least 51% owned by minority individuals. You should also have a solid business plan and growth strategy.
| Pros | Cons | Funding maximum | Eligibility |
| Targeted support for minority businesses | Competitive application process | Varies by program | 51% minority-owned businesses |
Understanding government grants for small business
Government grants can provide valuable funding for small businesses. These programs offer financial support without requiring repayment, but they come with specific rules and requirements.
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Eligibility criteria
To get a government grant for your small business, you need to meet certain criteria:
- Business size: Your company must be small, as defined by the Small Business Administration (SBA). This often means having fewer than 500 employees.
- U.S.-based: Your business must operate in the United States.
- Ownership: More than 50% of your company should be owned by U.S. citizens.
- Industry focus: Many grants target specific sectors like technology or research.
- Purpose alignment: Your project should match the grant’s goals.
- Financial need: You may need to show why you need the funding.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Free money | Strict requirements | Varies by program | Small U.S. businesses |
| No repayment | Competitive process | 50%+ U.S. citizen-owned | |
| Growth opportunity | Limited availability | Specific industry focus |
Choosing the right funding option
When looking for money for your small business, you have many choices. It’s important to pick the one that fits your needs best.
Think about how much cash you need and when you need it.
Look at your business plan and money situation. This helps you see what kind of funding works for you.
Some options are better for quick cash, while others are good for long-term growth.
Check if you qualify for different types of funding. Some require good credit scores or collateral. Others look at your business income instead.
Here are some common funding options to consider:
- Bank loans
- Banks offer traditional business loans with set terms.
- Often, they have lower interest rates for those who qualify.
- It can be hard to get approved, especially for new businesses.
- A solid option for established businesses with good credit.
- Bank loans are best for businesses with strong financials and credit history.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Lower rates | Strict requirements | Varies | Good credit, collateral |
- SBA loans
- Government-backed loans with favorable terms.
- Lower down payments and longer repayment terms.
- Lots of paperwork, and it can take time to get approved.
- Offers great rates for those who qualify.
- SBA loans are best for small businesses looking for larger loan amounts.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Good terms | Long process | $5 million | For-profit business, good credit |
- Online lenders
- Fast, alternative lending options for businesses.
- Quick approval and funding process.
- Can have higher interest rates than traditional loans.
- Good for businesses that need money fast.
- Online lenders are a good option for newer businesses or those with less-than-perfect credit.
| Pros | Cons | Funding Maximum | Eligibility |
|---|---|---|---|
| Fast funding | Higher rates | Varies | Flexible, based on revenue |
How to apply for government small business grants
Applying for government grants can greatly benefit your small business. The process requires careful preparation and attention to detail.
Application process
Start by researching grants that fit your business needs. Visit Grants.gov to find federal grants. Read the grant objectives carefully. Make sure your business meets all eligibility rules before you apply.
Create an account on Grants.gov. This lets you use their Workspace tool for applications. Fill out all required forms completely. Double-check for errors before submitting.
Write a strong proposal that shows how your business will use the grant money. Explain clearly how your project matches the grant’s goals. Include specific details about your plans and expected results.
Highlight your business’s positive impact on the community. Show how the grant will help you create jobs or provide needed services. Use facts and numbers to back up your claims.
Submit your application before the deadline. Keep track of your application status using the Grants.gov tracking number. Be patient, as the review process can take time.
Some tips to improve your chances:
- Follow all instructions exactly
- Use clear, simple language
- Get feedback on your proposal
- Include a detailed budget
- Show why your business is a good investment
| Pros | Cons | Funding maximum | Eligibility |
|---|---|---|---|
| Free money for your business | Competitive process | Varies by grant | Depends on specific grant |
| Can fund specific projects | Time-consuming application | ||
| Boosts business credibility | Strict use requirements |
Conclusion
Government grants can give your small business a big boost. They offer money you don’t have to pay back to help grow your company.
Many grant options exist at the federal, state, and local levels.
Looking for grants takes time and effort. You’ll need to research carefully and prepare strong applications. But the payoff can be worth it.
Free funding could help you launch a new product, hire staff, or expand your operations.
Don’t get discouraged if you don’t succeed right away. Keep trying and improving your applications.
Even if you don’t win, you’ll gain valuable skills in the process.
Remember to:
- Check if you qualify before applying
- Follow all instructions exactly
- Meet every deadline
- Explain clearly how you’ll use the money
- Show why your business deserves the grant
With persistence and a solid plan, you can find grant opportunities to support your small business goals. The extra funding could make a real difference in helping your company thrive and grow.
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