A grant can fund anything from new equipment to general operational costs. In this article, we’ll cover how you can apply for grants and their benefits.
The Basics of Business Financing |
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| So, you’re interested in financing your business? Here are some of the basics to learn: 1. Introduction Into Business Financing 2. How to Prepare Your Business for Financing 3. Equity Financing 4. Debt Financing 5. Grants 6. Crowdfunding 7. Presales (Generating Revenue) |
What are Grants for a small business?
Grants are some kind of financial awards in the form of options given to a company or an individual by a particular entity to encourage and facilitate performance.
Who can give you the grants:
- Local or federal governments
- Profit or non-profit organizations
After receiving a grant, the company has to wait till it can take full ownership of this financial reward. Such waiting periods are called the lock-up, or vesting periods (a common vesting period is usually three to five years). Then the grant holder has a specific period of time — till the expiration date — when he or she has to exercise it. Otherwise, the grant loses its power.
How to successfully apply for Grants
As the criteria for receiving each grant can be different, you should be prepared in advance in order to meet them. Here is the list of tips that can help you to attract interest to you and your company:
- Do proper research. You can find hundreds of grant programs, but not all of them will fit your business. Make sure that you’ve found the right one and go for it.
- Show that your intentions are strong. Let the grant giving entity know how much money you’ve already placed in the project, how much you are planning to invest in the future, and present the detailed management structure of your company.
- Create a resume for your company. Outline the answers to the most common questions such as the time you are in business, monthly or annual revenue, number of employees, etc. To aid you in the design process, you can use a free company profile template for PowerPoint.
- Take your time. Preparation of such documentation shouldn’t be rushed. The competition is not about speed, it’s all about quality.
- Ask for help if you need it. It is better to ask your accountant or other colleagues to help you with the application. Two heads are better than one.
Where you can find grant programs for a small business?
Let’s take a look at the list of potential grant programs that will suit you. As all of them are divided into smaller groups for different spheres and different people, we’ve compiled a list with each of them.
Also, keep in mind that you can apply for more than one grant program.
- SBA Small Business Development Centers. Probably the first must-to in your plan. It can help companies of all kinds locate additional funding opportunities at the national and local levels so that you don’t need to do huge research by yourself.
- Equity Match Grant Program (Connecticut). It offers grants of up to $10.000 to women who run a new business. The application should contain all the information about how you will spend the money, and your plans for the future. The grant funds cannot be used towards operating expenses, payroll, or real estate improvements. This grant opens on September 7 and closes on September 28.
- Walmart Local Community Grants. Local organizations can receive funding from Walmart and Sam’s Club from $250 to $5,000. The process of applying is already going on, but the deadline is only on December 31, so you can check whether your company fits the requirements and take a chance!
- Black Founder Startup Grant. SoGal Foundation and other sponsors (Winky Lux, twelveNYC, etc.) provide grants of up to $10.000 to black women and nonbinary entrepreneurs.
- U.S. Department of Commerce Minority Business Development Agency (MBDA). grants for minority-owned businesses are offered throughout the year. Using the location list, business owners can find the nearest department and contact it for further actions.
The Pros and Cons of Grants for a small business?
| PROS | CONS |
|---|---|
| It is free money that doesn’t have to be repaid | Grants will not help you build your business credit |
| You have detailed information about how to apply for the desired grant and about the grant itself | It’s direct competition — you have to be the greatest |
| If you obtain it once, it is easier to get a grant for a second time | It takes a lot of time, especially with the vesting period |
| You can get a grant regardless of the industry you are in | Even if the money is free, you need to meet a bunch of conditions and requirements |
| Growing prestige when obtaining a grant | You can do whatever you want with the funds |
| You can apply for more than one grant | You need to have a solid and detailed plan |
In this series, we explore some of the most common types of financing that businesses use. Take a look at the next chapter to find out more.
