Are Grants and Free Money Available to Small Businesses? Yes, But...

Grants for small business
6
min read
May 3, 2021

Over at USA TODAY, I have written a Q&A column for small business owners for years and a question I am regularly asked is: “Are there any small business grants available? Can I get free money for startups, growth, etc.?”

The short answer is that small business grants are available, but, as they say, if it sounds too good to be true, it probably is.

Not surprisingly, free money isn’t always free. Eligibility is limited and the process is arduous and so yes, while there is grant money and free money available, it is not easy to get and it is limited in scope.

Federal Grants

For example, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs has a grant program for small businesses that engage in, and create products via, federal research and development. Phase I awards top out at a whopping $1,730,751. SBIR says on its website that “by including qualified small businesses in the nation’s R&D arena, high-tech innovation is stimulated, and the United States gains entrepreneurial spirit…”

Great, right? Yes, but.

SBIR also says this on its website, “Of course, nothing is really free in the business world. The indirect costs of time and effort to find the right grant, complete the application and manage the process, even if you win, can be substantial” The post goes on to note that:

But the good news is that SBIR isn’t the only game in town when it comes to federal and government grants. As we all know, the federal government is big and accordingly, each federal agency has substantial budgets for their various needs, some of which are earmarked as grants for small business.

For example, the Department of Agriculture has something called the Agriculture Trade Promotion Program that provides “cost-share assistance” to agriculture related businesses for things like advertising, PR, participation in trade fairs and exhibits, market research, and so on. You can find other such programs in the Department of Energy and so on.

The best place to start your research into federal grants is over at Grants.gov. This clearinghouse of information on government agencies is really quite valuable. For starters, it links to each federal agency with grant money available. Grants.gov also has an excellent page that shows you eligibility requirements and how to apply for federal grants and what to expect in the process. You can find it here.

Small Business Administration Grants

You might be thinking that the Small Business Administration would be a good place to find free money for small business and this is true, but only in a very limited sense as any no-strings-attached free SBA money or grant is tied to some sort of disaster relief.

For instance, we have all heard about the much-maligned Paycheck Protection Program (PPP.) While the PPP was a bit of a disaster itself when rolled out, it is much better now and is one way for a small business to get free federal assistance. The program allows qualified small businesses to apply for, and get, Covid-related relief loans that are 100% forgivable. You can find a lender in your area by going to the SBA’s Lender Match page.

The SBA has a variety of other programs designed to give small businesses financial relief due to Covid, such as:

State and Local Government Grants for Small Business

Many states have programs designed to support entrepreneurship. While most often this local government assistance comes in the way of small business loans, on occasion these funding opportunities take the form of free state grant money. You should begin your research to see what grant opportunities are available in your state by going to either the U.S. Economic Development Administration website or to your own state’s Secretary of State/Department of Corporations.

On the local level, state and city governments and agencies have a vested interest in attracting and supporting businesses to their area. As such, they often make funds available to do just that.

For example, a few years ago, Portland, Oregon wanted to attract more startups to the city, so it launched the Portland Seed Fund. The city’s government launched the fund with a half-million dollars from the general fund and then asked different stakeholders in the city to contribute, eventually resulting in a startup fund of over $2 million.

Such funds are available in various locales, so check with your city and county to see what might be available in your area.

Private Grants for Small Business

Along the same lines, a trend that has caught on recently are business plan competitions. Many cities and universities host such programs. Typically, a startup business would apply and compete through various rounds of competition before a panel of judges, with the winner getting anywhere from $10,000 to $100,000 or more.

Think Shark Tank and you get the idea.

Does it work? Consider this from an article in Inc.com: Alison Alvarez and Tomer Borenstein needed money for their high-tech startup, BlastPoint. So starting in 2016, they entered as many business plan competitions as they could find. “In the past four years, the company has won four such competitions, ranging in size from 201’s UpPrize, which came with a $160,000 reward, all the way to a small $2,000 payoff in the GSV Labs A.I. Pitch competition in 2020.”

An example is the Women’s Founders Network Fast Pitch Competition. Compete for more than $30,000 in cash awards and $50,000 in professional services.

Additionally, many corporations and non-profits offer free grant money to small businesses. The ones to check out are:

Coronavirus Relief Small Business Grants

Finally, fortunately, there are a couple of Covid relief grants still available:

Applying for a Grant

All of these grants have specific criteria that must be followed closely if you are to receive a grant, so be sure to look at the rules and application process for each grant and each institution carefully. In addition, the application and process will likely be lengthy and involved, so be prepared for that.

The bottom line is that while yes, there is free grant money available to small businesses, it can be difficult to come by, especially on the federal level. Local governments, corporations, and non-profits really are your best bet.

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