Jump to Main Content



Government Grants for Small Business—Think you Qualify?

Comment Count:

Comments welcome on this page. See Rules of Conduct.

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 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


"If you need capital, don’t waste your time pursuing “free money.” Chances are you won’t find it.” This not necessarily true. For if one has a science or technical background there are plenty of R&D grants. Furthermore, one can always hire someone with the technical background, if necessary.
Many of these comments appear to be scams with generic email address and bad use of the English language which often points to foreign scams. I am a forensic investigator and work on these cases. Be advised, don't deal with anyone that you don't verify as having a legitimate U.S. based business, has a physical address, and can be verified with a taxpayer ID number, registration through state commerce department, etc. If you can physically visit the place this is best. Never give out information or send money to anyone you have not verified.
I have been raising meat for 3 years, this is our first year getting it to the public. we raise, pork,beef, chicken and lamb, it is all home grown with no gmo, antibiotics or hormones in it. We have been going to farmers markets for the last 6 weeks. we had 1000lbs of meat and it is all gone, that all came out of my husbands paycheck to get started, now we need to get more meat out of the butcher and get mor4e animals to raise, but we financially can't afford to keep taking from my husbands paycheak to pay our bills. what kind of grant or even a loan can we get. we tried a few places for loans but d/t poor credit from being behind on our bills because we were taking money from his paycheck to get the business started we are behind, this business has a great opportunity to bring a great product to the community at a good cost, but need help to get started
I have been a master stylists for 30 years and dream of having a mobile hair salon. It will be handicap accessible for my older clients at assisted living and in simple but elegant fashion. The mobile salon will have many advantages, time saving and convince for many clients. And the mobile salon will let me have a since of secruity , so i can be my usual creative self. I have a passion for styling hair and feel my mobile salon will be a success! The only problem is the lack of funds.
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.
California also charges a premium on each container to encourage recycling.
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


Leave a Comment

You must be logged in to leave comments. If you already have an SBA.gov account, Log In to leave your comment.

New users, Register for a new account and join the conversation today!