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 need help getting a grant for my Non-Profit Organization called Sick N'Tired Sobriety and Transformation Recovery Home (SNT), 1-year program for women 18-older affected by drugs and alcohol abuse in addition to all other substance dependencies. The Home is a Doby home that sits on comercial property with the church. I need help getting is up to code and some repairs. I looked into Habatat Of Humanity, but they wasn't able to help because it's on comercial property. I have my 501 C 3, but most of the grant i've seen you have to be up and running for at least 3-years. I would like to know can the government help me with funding on getting our home up and running for these women that are less fortunate and need help, this is a passion of mine because, i use to be where they are trying to go, God has redirected my steps to have 20-yre clean and it is desperately needed here in the San Bernardino, Indland Empire, Colton and Grand Terrace area. I am in need of fund for a engineer and a construction person and supplies, who can catch the vision and donate their time to help me get our program up and running, any help will be greatly appreciated thank you.
Looking to start a small cleaning business, there is a seminar at the community college that I will be attending next month, and I was told that they would give me the resources I need on how to be successful and where to get the funds I needed for my supplies ( which isn't all that much really, compared to many other businesses out there). Could use some help, if available, sooner. Thank you
I own a small craft store (Crafters bring in their products and I sell it for them)Can I get a small business loan to add a coffee machine and Gelato machine? I've been in business since Feb,2016
Dear Sir/Madam, I need your help in getting a grant to open a car dealer business I hoping to be a successful business women. I always wanted to own my own business someday. I need any information an advice I can get I would be greatly appreciate it. Looking forward to hear from you soon! Thank you!
I am in a tight situation. I don't qualify for an SBA through a local bank or CU because we were forced to file ch. 13 bankruptcy in Oct. 2013. I need $80k to fund my project. My local Regional Development Alliance sounds willing to give me a micro loan of $25k, but won't give any if I don't have the rest of the funding for my project, which is understandable. We (my wife and I) had excellent credit, around 800 each, until June of 2009. Since then I have had a series of unemployment and underemployment which led us to bankruptcy. I have a rock solid business plan in an industry that has way more demand than supply of services. Any ideas what I can do to secure the funds needed? Thank you in advance!
Interested in self-employed business grants in New Mexico.
i do custom clothing thru another company, but i want to start my own company, because im getting alot of customers, and i want to eliminate the middle man. i need the money to buy a direct to garment printer machine, but they cost 10,000 and up. is it possible to get a loan for this.
I'm permanently disabled and on SSD I don't get enough to live on from social security disability and would like to start my own cleaning business, would I be able to get a small business loan or grant to get my business going?
I am a active duty soldier looking to get out and be in the reserve or national guard. Im looking to start a small lawn care business and could use a little help.
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. Federal grant money is typically earmarked for specific purposes, which is set forth in the grant. If you are the recipient of the grant money, you typically have to provide proof to the grantor on how you used the grant money in accordance with the purpose of the grant. Numerous federal grants are available to existing businesses, but not to startup businesses. State government agencies and non-profit organizations are the ideal sources for grant money for startup businesses.


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