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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 Business.USA.gov.

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

Contributor

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

Comments:

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I need to acquire about how I can get a government grant to start a recycling program here in Oklahoma that rewards the residents to recycle their aluminum glass and metals. when I lived in California the price of aluminum was a dollar 75 per pound and up here in Oklahoma it is only 35 cents a pound. in California there were little kiosk trailers at every grocery store that would take your cans glass or metals and compensate you well for your contribution in recycling. in Oklahoma people would rather throw away the recyclables then take it to a recycling yard. the rewards and benefits here are a bit of a joke to me because I firmly believe that two thirds of the trash in Oklahoma the dumps can be recycled or could have been.
I am a student and part of our project is to build a business related to health care. My group chose to open up a residential inpatient and outpatient, home for adolescent females suffering from sexual trauma, and mental health disorders. Does anyone know where we could find resources for government grants of funding. Our imaginary business would like to be a non for profit business..
We can give help to any one who is serious in getting a loan from our finance home, you should explain why you need the loan and how long will you pay back.
I am looking for advice on SBA loans or any other start up loans out there.I am a retired Disabled Veteran of 35 years Active & Guard Service.I have been in the automotive restorations business most of my life when not in the service.My last couple business ventures ended either being under capitalized or had to close to go off to Active Duty.I would like to finish out my life working with my 26 year son in this business venture,as he has helped me since he was quite young.I wanted to leave him with something to carry on our legacy.The funding right now is coming out of my pocket at that rate it won't last long.The business is there and the desire is there just not the funding.What if any is there HELP in this matter ? Thanks
I have a cellphone store for the past 3 years ,I did use my credit cards to started,and bussines it's growing but I need a cash flow to expand it ,I went to check with my bank and they said and not making enough,to get small loan ,what I can do,thank you
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Requesting assistance to research and apply for a Federal Grant to purchase our leased building. We currently lease a Natural Health Wellness Center with (1) Yoga Studio (2) Health Cafe (3) Natural Healing Therapists (4) Retail Health Products. Our location provides healing and happiness to our community and the Universe. Can you provide grant search and application assistance? Your efforts are greatly appreciated.
I would like to open a facility to Mentor Counsel to young teen girls & women!
As a speech language pathologist with excellent experience in early intervention, I'm interested in providing language support services for toddlers/preschoolers and moms in a small group setting in local libraries. Target children could be those speaking a non--english language at home or those with disabilities. In our area of Maryland, neither the public schools nor "headstart" programs provide for non-english speaking familites. There are programs for those with disabilities who qualify in the public schools, but programming can be limited. Seeking funds to support this effort.

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