Grants are free money. In reality, however, they are not easy to find, be applied for, or even win. So many complexities and technicalities surround finding and winning grants. It is very easy for for-profit business owners, small-scale nonprofit directors and even eligible individuals to get carried away while searching and applying for grants.
This piece will be focusing on business grants and how business owners can go about them***
What are Business Grants?
Simply put, business grants are free money given to business owners to start or continue with their business operations. Business grants are either provided by the government, nonprofits, other businesses, or high-profile individuals in society.
Most times business grants are channeled towards a particular set of entrepreneurs. For instance, certain grants can be created for women or African American women. In this case, only black women can apply for these types of grants.
All grants have their eligibility criteria. Some grants cover a lot of criteria and are available to almost the public while some grants have very strict rules and only a few people can apply. It is very pertinent for business owners to find and apply for grants that align with their goals, values, and qualifications to avoid time wastage.
Difference Between a Grant and a Loan
Sometimes people confuse a grant with a loan. The simple distinction between a grant and a loan is that a grant is free money given to an individual or organization and doesn’t have to be repaid.
A loan, however, is an amount of money given to an individual with certain terms and conditions that include the repayment of such amount approved. The repayment can be done daily, weekly, annually, or monthly with interest.
Although, certain conditions have to be met by certain individuals in certain grant awards before the money finally lands in the account of the grantees. None of these terms and conditions will include repayment of the amount granted as it is in the case of a loan.
If a grant requires repayment, then it is not a grant. It is as simple as that.
There have been cases whereby loans granted by the government to certain individuals didn’t require repayment if certain conditions were met. Although they were originally loans, they somehow exhibited the features of grants because the loans can be forgiven.
An example of such a loan is the Paycheck Protection Program (PPP) where loanees are eligible for loan forgiveness if certain conditions are met.
While grants are considered taxable income, loans are not. Also, the competition for grants is usually high compared to applying for loans. Loans are not competitive. All that is required is that the potential loanee pitch and present the necessary documents. Grants on the other hand are not guaranteed even with the best of documents presented.
Types of Business Grants
Just as mentioned earlier, there are different types of grants available for business enterprises. The types of grants we have available for business include:
- Government grants
- Private organization Grants or Foundation Grants
These are grants given by the federal, state, or agency of the government. These grants usually come in large amounts compared to private or foundation grants.
They usually require some sort of technical proposal or filling of numerous forms which can be very overwhelming and exhausting. It is best to work with grant experts when searching or applying for this type of grant.
Government grants can be found on various government agencies’ platforms. Examples are-
- Shuttered Venue Operators Grants for musical and art organizations and individuals.
- New York State Pandemic Small Business Recovery Grants: a grant established by the New York State government for businesses that suffer as a result of the pandemic.
- Small Business Innovation Research Program: a grant program for startups with innovative ideas in important fields.
- National Institute of Health Grants: this agency provides grants for businesses that offer medical services.
- United States Department of Agriculture (USDA) Rural Development Grants: These are grants channeled towards rural farmers and rural business owners.
- Department of Energy: Through the Small Business Technology Transfer Program and the Small Business Innovation Research, the Department of Energy Offers grant programs for organizations that focus on energy and research.
Private Organizations Grants or Foundation Grants
These are grants offered by well-known business organizations. Top companies around the world and in the United States most especially offer grants to small business owners to help them move on to the next level or to keep their businesses alive.
Some of these organizations offer grants from the foundations that they have created while others offer these grants outrightly. Facebook, Alibaba, FedEx, YouTube, Walmart, McDonald and all the top brands in the United States offer grants to United States entrepreneurs.
These types of grants are usually less stressful to complete. Usually involved filling a one-page form. Names, descriptions of businesses, goals, challenges faced, etc. are likely questions to be asked in these types of grants.
The amount offered by these organizations is usually small compared to government grants. Also, these grants are mostly channeled towards a particular group of people. e.g., Women entrepreneurs or grants to people in the same field.
Tips for Winning Business Grants
Grants are not guaranteed. The following tips, however, guarantee the application of grants faster with greater chances of success.
- The business entity should be registered. It is important to get an LLC status as it enables the grantors to trust and provide grants to such businesses.
- The Employment Identification number should always be available. It is usually asked for.
- A professional website that highlights the company’s goals and services should be properly set up.
- A phone number is set aside for the business as well.
- A separate business account for receiving grants. It won’t make sense to receive business grants in personal accounts.
- A well-written business plan.
- There should be a sign of personal equity invested in the business. This builds trust from the grantors.
- A professional photo of the business owners and team members.
- A short video pitch is available.
Due to the highly competitive nature of grants, a business owner seeking grants must be ready to put in the work to stand out while applying for grants. The grammar must be correct. The goals must highlight objectively and emotions poured out in cases that demand a personal story pitch. Good luck and success to every entrepreneur working hard to keep the business moving.