Government Grants for Small Business—Think you Qualify?

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Government Grants for Small Business—Think you Qualify?

By Caron_Beesley, Contributor
Published: October 17, 2011 Updated: February 25, 2015

Looking for “free money” from the government to start your small business? Then you’ve come to the right place, because I’m here to tell you that – for the most part – there isn’t any.

Despite what you might have heard to the contrary, government grants are rarely available to small businesses. But why is that?

Well, government grants are funded by your tax dollars. Any grants must be appropriated through Congress and The White House and are tied closely to specific agency agendas, such as the Department of Energy or the Department of Agriculture. To further complicate matters, the government has very stringent rules about who it provides grants to and what those funds can be used for.

That being said, certain businesses – particularly those in high tech/R&D fields – may qualify for government small business grants.

To explain more, HERE are answers to the most frequently asked questions about small business grants. I’ll also introduce other, more readily-available, government-backed financing options specifically designed for small businesses.

Can I get a government grant to start and grow my small business?

Let’s dig a little deeper into what government grants are available for business purposes and what aren’t.

Despite what you might hear on TV infomercials or online, the government (federal or state) does not provide grants for any of the following activities:

  • Starting a business
  • Paying off debt
  • Covering operational expenses

However, as mentioned above, there are exceptions. Grants are available to specific industries and targeted causes identified by the federal government, such as scientific and medical research, conservation efforts, etc. This leads to our next question:

What if I’m involved in R&D? Can I get a grant?

Possibly. The federal government does provide grants to small business engaged in scientific research and development (R&D) under the Small Business Innovation Research (SBIR) Program. The program is overseen by the SBA (with participation from lots of agencies) and awards grants to stimulate high-tech innovations. In 2014, for example, SBIR awarded 300 grants with an average funding amount of $624,807.

Eligibility for an SBIR grant is straightforward, but securing a grant takes time and effort. Read more about the process in this post SBIR: How It Works and How to Qualify.

Doesn’t the SBA offer small business financing?

While the SBA doesn’t give money to small businesses to in the form of grants, here’s the good news – it does administer loan programs that make it easier for small businesses to get the capital they need to start up and grow, export, recover from a disaster, and many other use cases.

With SBA loan programs, the SBA doesn’t provide the funds to start or grow; instead, it provides a guarantee to banks and lenders for the money they lend to small businesses owners. This guarantee protects the lenders interests by promising to pay a portion of the loan back if the business owner defaults on the loan. So when a business applies for an SBA loan, it is actually applying for a commercial loan through a bank or authorized SBA lender, structured according to SBA requirements with an SBA guarantee.

Read more about how it all works in SBA Loans Explained – A 101 for Small Business Owners. You can also get help finding the right loan for your business type and needs by checking out this Financing Wizard on

The bottom line

If you need capital, don’t waste your time pursuing “free money.” Chances are you won’t find it. Consider a small business loan or line of credit instead. Credit unions and community banks are especially friendly to small business borrowers and can frequently offer lower interest rates than traditional banks. Read more about your choices in Don’t Qualify for Conventional Business Loan? Understand Your Options.

Don’t forget you can always talk to your local SBA office or Small Business Development Center about which financing options may be right for your business.

About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


I am a divorced African American Women and mother of 4. I am an author artist and designer who needs funding badly. My credit sucks but I got a EIN a DUNs and SAMs numbers, I have a free website and opened up a free business checking. I am on a fixed income and have no assets...Please direct me on what to do next without funding I cannot make a living of my passions.
I manage a small hot dog and hamburger cafe. we generate about 1000.00 to 1200 dollars for lunch ( 11:00am - 2:00pm ) and about 500.00 to 600.00 from 4:00pm to 7:00pm Monday through Saturday.Everything is freshly homemade every morning. fresh cut potatoes for french fries and hamburger are fresh patties everyday, I would like to have my own cafe weather it be I get a loan for the equipment or loan for the land looks like about 50,000.00 would be great, would this be possible and if so what would be my next step?
Thank you for the nice and lovely article, i need help in establishing my poultry farm, since i have bought incubator machine with 5280 eggs capacity and i have already build the poultry farm houses and fenced which can carry up to 800 chicken. my need is usd 2500 so that i can install electricity and start running my business. Can you assist me with where i can get such grant. my current location is Tanzania - East Africa.
Hello Did anyone gets answer? I also would like to know what o where to start, with a grant for my small business.
I have worked in beauty salon business for over 16 years. I love what I do. My back broke and i had back surgery about 9 years ago. the older i get the more my back is in pain. I can't do the work from 9-7 any more. I refuse to go on disability. I am a single mom who had raised two wonderful gifted children and now they are both in UC Schools. I would love to start my own salon business. i am a very hard worker and work very well with others. I do have a lot of clients follow me. I need help with finance to build the business. I know i will success because i know how to run a business and i am great with customer service. i need help. i don't want to go on disability I am still too young to let my dream fading away
I am trying to get funding to purchase a semi truck and trailer. Although I have a trucking business, it has operated for the past 10 years as a contracted driver company that uses other company trucks for loads.The truck and trailer I purchased would be the collateral. I already have a company to sign under. What are my options?
I am a single, Senior, female, a minority, and on a minimum fixed income, looking for assistance to start a small business. I want to build 5 small cabins on 30 acres in a well wooded rural community. Is there ANY way I can appeal for funding or a grant to get established.
Hello. I am looking to start a small house cleaning business in my area. Currently we are a 1 income family and can not spare a penny to get this business off the ground. I am looking for a grant for start up costs (cleaning equipment, advertising, business cards and a used company vehicle) . Our family has 1 vehicle inwhich my husband needs to get back and forth from work. I want tube able contribute to my family,church and community. I really need help. Thank you.
My name is Destiny blake i am 23 years old looking for a small grant to help Start a small business to purchase a food truck.I have a passion in cooking and also a culinary certification.I need someone to point me in the right direction please to recieve help.
Greetings all! My wife and I are looking to start a business in the restaurant/catering/food industry. We are looking to open a take out restaurant that would allow customers to experience different types of cuisine that would normally be offered in a full fledged restaurant setting. We would also like to offer different varieties of cuisine that would normally require customers to visit different varieties of restaurants in order to have their needs fulfilled. We are looking to become the "Walmart" of the restaurant industry. We constantly receive praises for our food whenever we post pictures on social media groups, and receive great reviews whenever people have the opportunity to taste our food. We also receive offers to cater events for people as well as businesses, however we do not have the capacity to fill the orders. We have researched different grants and loans, however we have not been successful in finding the assistance we need. We are looking for assistance in the 20k -25k range that would assist in permits, supplies, location, etc. Are there any loans or grants that are available to assist us with this type of business? Please help!


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