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The Truth Behind Government Grants for Small Businesses

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The Truth Behind Government Grants for Small Businesses

By kmurray, Contributor and Moderator
Published: December 9, 2013 Updated: July 20, 2016

Financing your small business ventures is likely one of your biggest concerns as an entrepreneur. One route you might be considering is to apply for grants, but there are strict guidelines when it comes to being eligible for any government grants. There are some instances that might make you eligible, but it depends on what kind of business you’re in and what the government and taxpayers may receive in return for their investment in your endeavor. Here’s what you should know.

Is my business eligible?

Federal and state governments don’t provide grants to:

  • Start a business
  • Pay off debt
  • Cover operational expenses

Grants from the federal government are authorized through bills passed by Congress and signed by the President – and grant authority varies widely across the various agencies (such as SBA, USDA, DOE, etc.).

Federal grants are typically aimed at specific industries and causes identified by the government. These usually include scientific and medical research, conservation efforts, and so on.

Sometimes at the state government level, business grants or “discretionary incentive grants” are available, but they’re still closely tied to the agency’s agenda. These grants usually serve to advance regional economies and promote causes, such as clean energy development. Unfortunately for small businesses, however, state grants are often geared toward large businesses. They may also require that the grant be matched or combined with other forms of financing such as a loan.

Research-and-Development Grants

If your small business is engaged in scientific research and development (R&D), you may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs.

SBIR and STTR programs encourage small businesses to undertake R&D projects that:

  • Meet federal R&D objectives
  • Have high potential for commercialization

You can explore SBIR.gov to learn more about specific SBIR and STTR programs and opportunities throughout the federal government.

What’s the bottom line?

The bottom line is that if you’re looking for free money, you won’t get it from the government. Unless you can fill a specialty area, you won’t have luck securing funding from a federal grant. In general, if you’re looking to start or grow your business, you should consider exploring other options like loans or maybe crowdfunding.

Want to learn more? Check out grants.gov – a centralized hub of more than 1,000 different grant programs across all federal grant-making agencies – to find out more and apply for federal funding opportunities.

About the Author:

kmurray
Katie Murray

Contributor and Moderator

I am an author and moderator for the the SBA.gov Community. I'll share useful information for your entrepreneurial endeavors and help point you in the right direction to find other resources for your small business needs. Thanks for joining our online community here at SBA.gov!

Comments:

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What is the best resource to find which states have local grant programs? Do I check each state one by one or there is a smarter way?
Thanks for sharing the very useful information as im starting a new business myself
I think people use the term "grant" incorrectly all the time. My business doesn't qualify for grants of any kind.
This is very beneficial. I've heard many people state they'd like to get grants from the government for starting up their businesses, and although of course funding is critical to survival, they have to be realistic about where they'll get these funds. Great article. Very informative.
Im looking for information about gov.grant to start my own business. I want to live the american dream by having my own business and my dream home. Im proud and bless for being a citizen of the United State the land where all youre dream's come true. The goverment provide different kind of help so we can become very sucessfull and provided grants, loans and other services so we can have the opportunity to develop are goals and a better tomorrow. Thank GOD for USA.
Hi! You can use the SBA Loans & Grants search tool to help you begin your research http://www.sba.gov/loans-and-grants. Good luck!
This is a very good one. I got so many questions about grants. Can we publish this in our Quarterly Journal? Thank you Rene R. Calandria [This comment was edited to remove an email address. Please review the Community Rules of Conduct for more information.]
Hi, Rene. We appreciate your interest in publishing this article; because it's public domain, you can reprint with credit given to SBA. Thank you!

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