Federal and State Small Business Grants That Can Help You Grow

• Reading Time: 5 Minutes
• Published: April 6, 2022
• Last Updated: January 14, 2025

Funding is vital for every firm, mainly small-scale businesses. It enables companies to run their operations smoothly and avoids a shortage of resources. You might need funds for growing your business, expansion plans, tackling debt, or as simple as providing you with the ability to hire services like marketing services or bookkeeping and accounting services for small businesses. Raising finance and funds from any source can be time-consuming and complex. Seeking equity, preference capital, debentures, bank loans, and other liabilities come at a cost. While raising capital requires brokerage and additional associated fees, availing of loans from financial institutions and debentures bears a fixed interest charge. It becomes challenging for small firms to get adequate funding due to these issues. That is where small business grants come into the picture.

Although if anybody offers you free money, you must say ‘no’ because it is a scam. But small business grants provided by the US government are legal and ethical and are present to offer small businesses encouragement. Small business grants mean getting funds from federal, state, local government, or private agencies with no interest charge and complete business ownership. You do not have to repay these amounts. It does not hurt your credit score. However, these grants do have some hidden costs:

• Time required to identify the applicable grant
• Time is taken in the application and waiting process
• Restrictions concerning using grants money in a prescribed manner

There can be penalties if you do not work per the prescribed rules. The grants are available in two forms: Government and private.

Federal or government grants are available on government databases, including Grants.gov and SBA.gov, based on location and industry. However, these services do not have proper organization and are outdated. Also, there are many applicants, but not enough grants. Their application process is rigorous, but competition is high. You can also receive grants from a charitable foundation which counts as a private grant. We will be discussing federal and state grants only in this blog post.

How to Apply for a Small Business Grant?

Although small business grants are free money for businesses, it is a lengthy and complex process that requires determination and perseverance. Since competition can be high in the application process, you need to stand out. The following points can help you in availing of grants:

1. Every small business must understand the details and strict requirements of grant applications. It will be a waste of time and effort if you do not comply with these requirements. Some grants support minority businesses, while some support businesses with a positive environmental effect. You may need to be operational for a particular time. In any case, read and analyze the applicability of each term to your business before filling out the application.
2. Read the application thoroughly and do not miss any information. Do not over or under-write your application and comply with the given requirements. Fill in all necessary data in the application; otherwise, your application will not reach the screening process.
3. Gather as much information as possible by contacting the grant officer. Learn what they want to know and focus on providing that.
4. Devise your business plan well. It should specify how you will be successful, how you will use the funding to strengthen your operations, and how you will be using the money to satisfy the specific purpose.
5. Follow up with the grant officer without intruding in their operations and satisfy their queries, if any.

Federal Small Business Grants

Federal grants are highly competitive as many applicants are applying for these grants all over the country. A few notable agencies providing small business grants are as below:

Small Business Innovation Research Program: SBIR is a competitive grant to encourage research and development in small businesses. A small company with less than 500 employees, operates for-profit and satisfies other requirements is eligible for this grant. The high-tech innovators receive awards from the US SBA.

Small business Technology Transfer Program: STTR provides funds for innovation R & D for federal agencies. STTR is similar to SBIR in its eligibility requirements, competitive base, and focus on research and development. Although both programs concentrate on research partnerships, STTR requires every applicant to collaborate with a non-profit research institute for the first two phases of the program.

You can check out Grant.gov and search for grants offered by different government agencies. Challenge.gov is another prominent site that can prove to be helpful. Challenge.gov encourages innovation and provides a list of competitions and prizes run by various federal agencies.

State Small Business Grants

Since federal grants are highly competitive, you can look into state or municipal-level grants to access less-known opportunities. Some of these include:

Economic Development Administration: It is a US-based department of commerce offering grants, resources, and technological assistance for entrepreneurship and innovation.

State Business Incentive Database: It is a valuable national database for economic developers, finance professionals for business development, and economic researchers. You can gather data for incentives in different US states in a single place.

Small Business Development Centers: SBDC enables companies to survive in the challenging market. It connects with financing, networking, and business mentor opportunities.

Conclusion

The grants allow small businesses with limited resources to improve performance, strengthen their position, and optimize workflows by fulfilling the money shortage through free grants. Companies can avail of corporate or government grants, providing stringent eligibility and application requirements. Small firms use the free money with no charges only to work on a specific pre-negotiated contract. Keeping up to date with government grants can be time-consuming, but it is worth the fund you might receive, which you can use for growing your business. We will share a list of private and industry-specific grants in our future blogs. Make sure to keep yourself updated.

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