This article is part of a larger series on Business Financing.
Grants for small businesses are offered by various government agencies, banks, lenders, and other organizations. They can be very difficult to obtain due to a large pool of applicants and limited sums of available funds in the donation pool. Also, grant offerings aren’t always consistent from one year to the next and are often competitive, with many applicants vying for a limited number of dollars.
Based on the availability of grant programs, the intended market for businesses served by the grant, and the competitiveness of the grant process, we identified the seven best small business grants available in 2022.
Small Business Grant
For-profit entrepreneurs employing fewer than 500 people
NASE members who are generally microentrepreneurs
USDA’s Rural Energy for America Program
Rural small businesses that need energy efficiency upgrades
USDA’s Value Added Producer Grant
Agricultural and rural small businesses
Businesses with fewer than 100 employees
Businesses organized as a 501(c)3
SBIR & STTR Grant
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs were established to stimulate technological innovation through shared research and development between small businesses and larger research institutions. Both the SBIR and the STTR programs provide funding throughout a three-phase process.
Awards for the first phase, covering feasibility and proof of concept, are generally capped at $250,000. Second phase awards, for the potential of commercialization of your concept, don’t exceed $750,000. Should you reach commercialization of your concept, a third phase award that’s outside of the SBIR/STTR program may be possible.
As this is a federal grant, there are several requirements that must be met:
- A for-profit business operating within the United States
- Legally set up as an individual proprietorship, partnership, limited liability company (LLC), corporation, joint venture, association, trust, or cooperative
- At least 50% owned or controlled by US residents
- Employing no more than 500 employees
The Small Business Administration (SBA) provides a detailed list of the eligibility requirements with a thorough explanation of each of the requirements and pertinent definitions. Additional consideration is given to women, veterans, and minority-owned businesses. To find the current deadline and application requirements for either the SBIR or STTR grants, you can search for either program at grants.gov.
National Association for the Self-Employed Grant
The National Association for the Self-Employed (NASE) offers microbusinesses Growth Grants of up to $4,000. Grant proceeds can be used to help your business market, advertise, expand, and hire. Since 2006, the NASE has awarded nearly $1 million through its Growth Grants program.
To be eligible for a small business grant from NASE, you must
- Be a member of NASE
- Have a business need that could be fulfilled by the grant
- Explain in detail how you plan to use the grant proceeds
- Describe how receiving the grant will improve your business
- Provide a résumé and a business plan
To apply for this grant you must be a member of NASE. The cost of a NASE membership varies depending on the enrollment level that you select, and monthly membership costs start at around $12 monthly or $120 annually. Once you have become a member, you’ll have access to the online grant application.
Rural Energy for America Program Grant
The United States Department of Agriculture (USDA) offers Rural Energy for America Program (REAP) Grants to agricultural producers and rural small businesses. These grants can be used to purchase or install renewable energy systems or to make energy efficiency improvements. Grants can be as large as 25% of the total eligible project cost, with a maximum of $500,000.
REAP grant applications are competitively funded. All applications are ranked and scored based on pre-described scoring criteria for USDA grants that are listed in federal regulations pertaining to this program.
Value-Added Producer Grant
The USDA’s Value Added Producer Grant program offers grants up to $250,000 to help agricultural producers enter into value-added activities related to the processing or marketing of their products. These grants are open to independent agricultural producers, agricultural producer groups, and cooperatives of farmers or ranchers.
The USDA defines value-added products or production as having:
- A change in the physical state or form of the product, such as milling wheat into flour or making strawberries into jam
- An enhancement in a product’s value, such as organically produced goods
- Physical separation of an agricultural commodity or product in a manner that results in the enhancement of the value of that commodity or product, such as an identity-preserved marketing system
The applicant producer must supply at least half of the commodity needed for the project and demonstrate that the project will expand the producer’s customer base and increase revenues. Interested applicants should contact their local USDA Rural Development office for more information.
FedEx Small Business Grant
FedEx offers grants through an annual small business grant contest. There are a total of 10 grants available, ranging from $15,000 to $50,000. The basic requirements are that:
- You must be at least 18 years of age
- Your business must be currently active and have all required licenses and registrations;
- Your business must have one to 99 employees on its payroll
- Your business must have at least six months of business operations
To enter the contest for a FedEx small business grant, applicants will need to visit the contest website and submit an entry. Your entry will require short answers to a few questions about your business, including an elevator pitch, what makes your business stand out, and how you would use the grant funds. You’ll also need to provide basic information, such as your business name, address, and contact information. Additionally, you may submit a video up to 90 seconds in length to accompany your application.
The Amber Grant Foundation offers one $10,000 grant each month to a woman-owned business. Each winner is then eligible to be entered into a competition to receive one of the foundation’s two $25,000 annual grants. The application for the Amber Grant is a simple online form, and the advisory board offers tips at the top of the form.
Note there’s an application fee of $15 to apply. This fee helps fund future grants and cover administrative costs for the foundation. The website has a thorough frequently asked questions (FAQs) section that explains what the application fee is used for and answers a variety of other questions about the grant process.
Wells Fargo Community Investment Grant
Wells Fargo offers a community investment grant to community-based nonprofit businesses. The goal of these grants is to help strengthen and revitalize communities. Specific grant opportunities and requirements vary by state. Wells Fargo aims to align the requests of the grant recipients with the bank’s giving priorities, with requests that most closely match those priorities most likely to receive funding.
During the early stages of the COVID-19 pandemic, Wells Fargo expanded its community investment grant program to include for-profit small businesses. However, the focus of their grant primarily is on nonprofits and community-based organizations.
To find out the specifics of grant opportunities and requirements available in your state and to apply for a grant from Wells Fargo, you can visit the Wells Fargo community giving page on its website. Once on the page, select your state to review Wells Fargo’s giving priorities for grants and to view eligibility requirements.
We’ve listed the most common small business grants provided by the federal government. However, there are many more that are less common and very specific with regard to who is eligible. Grants.gov lists approximately 1,000 grants that are open to small businesses. Grant eligibility will vary widely, with many grants only eligible to specific industries or businesses in a defined geographic area.
How to Apply for a Small Business Grant
Most grant providers will tell you what you need to do to apply for their grant and what documentation you need to include. Depending on the grant that you’re applying for, it could be as easy as answering a couple of short questions about your business on a website or as difficult as putting together several pages of business documents with pro forma budgets, appraisals, and market studies.
To apply, follow the directions provided by the grantor. If the task seems too difficult or confusing, you may want to consider contacting your local SCORE office to set up an appointment. The SCORE advisors can help you navigate the process. If you’re applying for a federal or state grant that has a detailed application, you may also consider hiring a grant writer to ease the administrative burden of applying.
How to Increase Your Odds of Getting Small Business Grants
Finding a grant that you qualify for and completing the application process can be a daunting task. As soon as you realize that a small business grant would be ideal for your business, you should begin looking into your options.
Keep these tips in mind to help you in your grant search:
- Look early—and look often: Grant opportunities can sometimes seem to appear out of nowhere. A local agency may receive a community development block grant and suddenly be offering small business grants in your community. Start your search as soon as possible. If there isn’t anything today, there may be something tomorrow.
- Allow yourself plenty of time to complete the application: Once you have found a grant that you want to apply for, look for the application deadline. Allow yourself adequate time to fully prepare your application before the deadline.
- Recheck the requirements: Before submitting your application, review the requirements a final time to make sure you have included all of the necessary documents.
- Submit your application on time: Don’t miss the deadline as doing so will cause your application to be rejected automatically.
How to Keep Your Small Business Grant
Being awarded a grant and receiving the funds aren’t always the end of your grant journey. Many grants, especially those issued by federal or state governments, have additional requirements that you must continue to meet after the grant has been issued. Be certain that you understand any stipulations that accompany the grant offer. If you miss a requirement, you may have to repay the grant.
- Read your grant agreement: Your grant agreement will tell you all of the terms and conditions that you need to meet to avoid having to repay the grant.
- Clarify those terms you’re uncertain about: If there’s anything in the grant agreement that you don’t understand, seek clarification from the grant provider. If you’re uncertain that you’ll be able to meet all of the requirements, you may choose to decline the grant.
- Keep track of requirements and deadlines: Some grants require you to report certain information back to the grant provider within a specific timeframe. Missing a reporting deadline could negate your grant agreement.
- Use grant funds only for their intended purpose: The use of grant funds may be limited to only a certain purpose. If this is the case with the grant that you received, keep detailed records of how the grant funds were used and ensure they align with what the grant requires.
Alternatives to Small Business Grants
If chasing down a small business grant doesn’t appeal to you, there are other sources of funding for your business.
Small Business Credit Card
If your business needs less than $10,000 in funding, a small business credit card can be a relatively cost-effective way to finance your business expenses. Many business credit cards offer introductory periods with a 0% annual percentage rate (APR) and valuable cashback or rewards programs. These rewards can be beneficial for your business if you utilize credit cards regularly. A business credit card can serve as a quick source of funds and is a common financing tool for small businesses.
Personal Business Loan
A personal loan can provide your business with the funding it needs. It’s based on your personal credit and therefore doesn’t require business plans and projections. As an example, if you’re a homeowner with some equity in your home, you may be able to get a home equity line of credit (HELOC) to use towards your business.
Small Business Loan
Small business loans come in various forms and can be obtained through either a traditional bank or an online lender. There are even providers that will lend based on your online marketplace receivables. SBA loans are government-backed and come with long terms and low rates, while online lenders have relatively lenient qualification requirements and simple application processes.
Lendio lets borrowers shop around and find the best loan rates and terms, which is attractive for business owners who have the flexibility and time to find the best possible offer. Its ability to connect businesses to more than 70 different lenders helps business owners find the financing they need.
Business grants are highly sought after as a source of funding for startups and emerging small businesses because they don’t require repayment. However, grants can be very difficult to obtain, aren’t always consistent from one year to the next, and can be rather competitive.
There are many grant opportunities available for small businesses. Some are very niche-oriented while others are open to a wider audience. To find a grant for your small business, put your best effort into the application and rejoice when you get funded. However, given the competitive nature of many of these grants, have a backup plan for funding if you don’t get the grant.