Business grants are not easy to come by for anyone, but for startups, it’s a whole other story. Small business startup grants do exist. However, they are even more competitive than grants for existing businesses. We have put together a list of some of the best options, along with some tips on funding startups if grants aren’t enough.
Are Small Business Startup Grants Always the Best Option?
There are a lot of options out there when it comes to small business grants. Who doesn’t want a grant? After all, it’s free money. You don’t have to pay it back. I mean, what’s not to like?
Truly, grants sound like the perfect solution for business funding. Actually, they are great if you can get one. Yet, there are two cons most don’t realize. Of course they are highly competitive. But also, the money isn’t as free as you may think. Even though there is no interest and no repayment, it often takes a lot of time and effort to apply for a grant. Not to mention, sometimes there is an application fee.
On top of the highly competitive nature of most grants, the result is that you could spend a lot of time and money applying for grants with nothing to show for it.
Why Are Startup Grants Different?
Unfortunately these problems are only magnified when it comes to small business business grants. There are far fewer grants available to startups. That means the competition is even more fierce. Furthermore, most of them are not open to just any business.
There are research and development grants, as well as grants for specific types of business owners.
- And those in low income areas
Is It Even Worth it to Apply?
Due to the fact that it can be very hard to get a grant, you may wonder if it’s even worth trying. That depends. Honestly, If the application process is fast and cheap, then yes, it is likely worth it. Of course, that is assuming you know that you meet all of the requirements.
However, if you are not sure you qualify, and the application process is long or there is a large application fee, it might be best to skip it. Remember, you can use that time and money to pursue other funding options.
Best Options for Small Business Startup Grants
We’ve put together a list of some of the easiest grants to qualify for. Still, competition is still very tough. Also, there are never any guarantees. We’ve divided them into the following categories:
- Open to all businesses
- Innovation and Research
- And veterans
Best Open to Any Small Business Startup Grant
FedEx Small Business Grant Contest
The FedEx Small Business Grant is one of the most popular small business startup grants around. The contest is open to any business that has been in operation for at least 6 months and has 99 employees or less. It awards eight $7,500 grants, one $15,000 grant, and one $25,000 grant to winners each year.
Best for Innovation and Research
Small Business Innovation Research Program
This grant is designed to provide funding for scientific research and development. The business must be an organized for profit, with a place of business located in the United States. In addition, it must be more than 50% owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States. It can have no more than 500 employees.
Best for Women Business Owners
The Amber Grant awards one prize of $10,000 per month to a woman-owned business. One of the recipients also receives an additional $25,000 grant at the end of the year. Applicants only need to tell their story and turn it in with a $15 application fee.
Best for Minorities
The Minority Business Development Agency
The Minority Business Development Agency (MBDA) is operated by the US Department of Commerce. It is dedicated to helping minority-owned businesses access the resources they need to grow and succeed. They provide grants through their Minority Business Centers.
You can find grants available in your area by searching for your local Minority Business Center or visit the MBDA’s website for information on all current opportunities. You also need to have a D-U-N-S number to apply for these grants. Which is necessary for fundability anyway.
Best for Veterans
StreetShares Foundation’s Veteran Small Business Award
The StreetShares Foundation’s Veteran Small Business Award is for individual veterans who are low-income or otherwise lack the financial means to start their own business or nonprofit venture. This grant is also available to surviving spouses and children. The winner must have a positive impact on the veteran community.
The InnovateHER small business challenge is sponsored by the SBA office of women’s business ownership. The program awards three winners $30,000 in prize money for businesses that have an impact on the lives of women. Awards are designed for products that meet certain standards including:
- Having a measurable impact on the lives of women and families (30%)
- Having the potential for commercialization (40%), and
- Filling a need in the marketplace (30%)
What if Grants Aren’t Enough?
It’s almost certain grants will not be enough. Of course, any free money is better than none at all. Still, you cannot rely on grants alone to fully fund your business. Instead, one of the best things you can do for your business is build a strong business credit profile.
A business credit profile is the credit history of the business itself, not the owner. It includes all business information and the business credit report, which reflects the business credit score.
To establish a business credit profile your business needs to be fundable. As a startup, this means starting now. Get an EIN, incorporate, make sure you have a physical business address and open a separate, dedicated business bank account.
Honestly, these things are good to have for a grant application anyway. After you establish a business credit profile, look for vendor credit that will report payments to your business credit report. Most importantly, always pay everything on time.
Business Funding With Business Credit
In time, you will have a strong business credit score. Then, you can apply for business loans and lines of credit using your business information, and your business can basically fund itself. Any grant money you can get will be icing on the cake.