Free money to start your business – isn’t that every entrepreneur’s wildest dream? It’s too bad that startup grants are so hard to come by. You can think of business grants sort of like scholarships for adults. Just as with a scholarship, you have to convince the grant-issuer that a) you will put the funds to really good use and b) you are more deserving of the money than other applicants.
There are many types of business grants offered by myriad organizations, both public and private. As you might figure, there are different eligibility requirements for different grants. In general, though, only certain types of businesses are eligible for grants. These include businesses belonging to economically disadvantaged demographics such as Native American Indian tribe members, single mothers, and veterans returning to civilian life. There are also grants for innovative businesses breaking new frontiers that benefit society – think tech startups, doctors, and scientists.
In this post, I’ll talk about the types of businesses that might qualify for a startup grant, and give a few examples of organizations that offer grants to these businesses.
If you belong to any of the following business categories, you might eligible for a startup grant.
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Many startup grants are for innovators and businesses which contribute valuable creations to society. These grants are generally for entrepreneurs in the fields of technology, medicine, science, agriculture, education, and research and development. Here are some grants you might qualify for if your business falls into this category.
While this is the one-stop shop for all U.S. government grants, the majority of these grants go toward businesses and nonprofits in science, medicine, and R&D.
Search for grants on Grants.gov or check your eligibility to apply for a grant from the federal government.
From The Small Business Innovation Research (SBIR) website:
The SBIR program is a highly competitive program that encourages domestic small businesses to engage in Federal Research/Research and Development (R/R&D) that has the potential for commercialization.
This US government-funded program awards grants of up to $150K in Phase I of funding. Depending on the results achieved after six months, recipients may receive up to $1 million over the next two years (Phase II).
This is a private foundation offering up to $50K for high-tech companies in the state of North Carolina.
There are some public and private grants for green businesses, including startups. Generally, these grants cover the cost of installing sustainable infrastructure and/or energy systems.
Rural Energy For America Program
As part of the USDA (U.S. Department of Agriculture), this program awards renewable energy systems and energy efficiency improvement grants. Grants are awarded to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements.
Green Technology Business Grant Program
This grant is designed to attract new green technology businesses or to expand existing green technology businesses in the City of Cleveland, Ohio. Eligible applicants may receive grants of up to 0.5% of new payroll to the city for up to five years and may also qualify for an additional $5,000 Moving Assistance Grant.
Various grants aim to stimulate the economy in rural and economically distressed areas. These grants serve to attract new businesses to struggling regions. Depending on where you are opening your business or nonprofit and the specifics of your organization’s goals, you might eligible for some of this grant money.
Rural Business Development
This grant is specifically for nonprofit and public entities. From their website:
This program is a competitive grant designed to support targeted technical assistance, training and other activities leading to the development or expansion of small and emerging private businesses in rural areas which will employ 50 or fewer new employees and has less than $1 million in gross revenue.
From the same agency, rural farmers/agricultural producers might be eligible for the Value Added Producer grant, while for-profit businesses that provide education or health care to rural areas through telecommunications might be eligible for the Distance Learning and Telemedicine grant.
U.S. Economic Development Assistance Grants
From their website:
EDA supports development in economically distressed areas of the United States by fostering job creation and attracting private investment. Specifically, under the Economic Development Assistance programs (EDAP) Notice of Funding Availability (NOFA), EDA will make construction, non-construction, and revolving loan fund investments under the Public Works and Economic Adjustment Assistance (EAA) Programs.
Interested? Check out the EDA’s grantee resources.
There are many business grants you might be eligible for if you are a female entrepreneur. Additionally, some grant money goes to businesses that create solutions that benefit women and families.
Sponsored by SBA’s Office of Women’s Business Ownership, the InnovateHER grant competition is an opportunity for entrepreneurs who create commercially viable products and services that benefit women and families. The first place prize awarded in 2017 was $40,000. There were also grants awarded in the amounts of $20,000, $15,000, and $10,000.
Chicago Foundation For Women
Women living in the Chicago metropolitan area are eligible to apply for a grant to start a new business through this nonprofit fund. Grants range from $15,000 to $150,000. These grants are very competitive and are only available to businesses that benefit women’s economic security, freedom from violence, and/or access to health care.
Nonprofit startups that have 501(c)(3) status with the IRS are eligible for some government and private grant money. In fact, you’re much more likely to be awarded a grant if you run a nonprofit organization, as opposed to a for-profit business. While there are tons of nonprofit grants, I won’t spend too much time on this section, assuming this audience is mostly for-profit entrepreneurs.
These grants, which you can apply for year-round, are mainly for nonprofits and educational programs, though some small businesses may be eligible as well.
As mentioned, Grants.gov is the main stop for government grants, many of which go to nonprofit causes.
Veteran business grant money includes retraining grants for veterans returning to civilian life and grants to nonprofits providing services to veterans. Below are a couple examples.
This StreetShares program awards annual grants to veterans and spouses of veterans who own small businesses. The first place award is $5K, the second is $3,000, and third is $2,000.
StreetShares also offers conventional business loans to some small businesses, veteran-owned or otherwise. Head over to our StreetShares Review for a rundown on their loan services.
Wisconsin Department Of Veterans Affairs Retraining Grants
This program awards up to $3,000 per year for up to two years to veterans receiving job-related training. Most “startups” probably wouldn’t be eligible for this program, but hey, it’s possible.
These grants, awarded through the USDA, go to veteran and minority farmers and ranchers. You might think that most startups aren’t in the farming sector, and you’d be right, but ag-tech startups are gaining prominence – think sustainable farming and other “smart” farming practices now possible with the help of new technology.
While there are grants designed to benefit various non-white business owner demographics – Hispanic Americans, African Americans, Asian Americans, and others – most government grants for minority businesses are specifically for members of federally recognized Native American Tribes. Here are a couple grants that may help fund minority-owned startups.
Healthcare-related small businesses can use this grant for programs that provide health services to minorities.
Native Arts Capacity Building Initiative
Offered through the American Indian First Nations institute, this initiative awards six grants of up to $30,000 each year to Native American institutions that support arts and culture.
Note that while the Minority Business Development Agency offers various resources designed to help minority business owners, this program does not include grants.
Just Plain Amazing Small Businesses
There are a few general small business grants available to any kind of business, but they are very competitive, so you will need a super impressive story to wow the judges. An impressive track record is a particular challenge for a startup business, which is usually defined as a business that’s been around for less than six months. But hey, if you’ve achieved a lot in just a few months or you have an especially amazing idea, you might want to apply to one of these highly competitive small business grant contests.
FedEx Small Business Grant Contest
Any type of small business may apply. To give you an idea of what kind of competition you’d be facing, in 2017 there were 4,500 applicants and 10 winners. The grand prize is $25,000, and the other winners in the top ten get $5,000.
Miller Lite Tap The Future
This grant is one of the few that’s actually specifically geared toward startups. With this Shark Tank-style entrepreneurship grant contest, participants have the opportunity to pitch their business ideas and compete for the grand prize of over $100K.
Visa’s Everywhere Initiative
This contest awards startups with innovative IT solutions, awarding $50,000 to the top three finalists.
Startup Grant Alternatives
Very few private businesses are actually eligible for a business grant. Unless your business or startup is highly innovative and provides a demonstrable benefit to your community or the world at large, unfortunately, you are probably not grant-recipient material. Even if you are eligible for some grant money and you make it through the lengthy proposal process, you may only land a few hundred to a few thousand dollars.
Furthermore, startup grants are particularly hard to come by, as grantees will generally want to see what kind of results you’ve achieved on other projects carried out by your organization. Don’t fall for government grant scams that will have you believe there are piles of free grant money out there for the taking – this is not the case at all.
So, rather than hoping to be among the fortunate few who are granted free money, you might want to look into grant alternatives for your business.
Startup grant alternatives include crowdfunding, P2P lending, online loans, equipment financing, and others. Some examples might include:
For more ideas on how to get the seed money for your new business endeavor, check out our article on the best ways to finance a business startup.