How to Apply for a Small Business Grant

Applying for a small business grant can be a great way to secure some of the funding you need to start a new business or expand an existing one. Grants are available from a number of sources including private foundations, corporate endowments, nonprofit organizations, and occasionally, some state and local programs. The process for applying for such grants is simple in principle, yet if it's not done correctly you'll have a hard time being accepted.

To start, you first need to evaluate what you need the grant for and how you intend to use it. This is an important first step because most grants come with very specific strings attached. In other words, you might find out about a grant from a local business organization that you think might be helpful in getting your new Internet marketing firm online. But once you read the fine print you may discover you're ineligible because the grant money can only be used to purchase equipment you already own.

Once you know the purpose behind applying for grants and how you will use the money, it's time to begin your search.

Searching for Small Business Grants

Small business grants are available from a number of sources as previously mentioned. In fact, the sources are so widespread that it becomes difficult to locate them if you do not target your search. To make it as easy as possible you should begin by using the following resources, sticking with each one until it's been fully exhausted:

It's important to note that none of the resources above provide grants directly. The only exception to that rule is a limited amount of funding that may be available from a state or county agency from time to time. But this type of grant funding is unusual, to say the least. In most cases the resources we've listed simply provide business owners with information on other organizations offering grants. In other words, they can tell you where to go to find grant money; they don't provide it themselves.

This point cannot be emphasized strongly enough, especially when it comes to grants from the federal government. No matter how many times you read a website or hear a television commercial claiming the federal government gives out grant money, don't believe it. The federal government is prohibited by law from giving grants to businesses or individuals. All of their grant money goes to educational institutions, nonprofits, and other entities that serve the public good.

Find out the Requirements

Once you have a list of organizations offering small business grants, you next need to read each grant's description and find out what the specific requirements are. Those grants with requirements you do not meet, and have no likelihood of meeting, you can immediately discard. Concentrate on those grants you already qualify for as a starting point. If you exhaust all of them without success, you can move on to other grants that you could qualify for if you made certain changes.

The types of things you're going to be looking for include:

  • a requirement for your business to be in a targeted geographic location
  • requirements for targeted industries
  • grants based on minority or non-minority status
  • additional funding requirements
  • requirements regarding how grant money can be spent

Write Your Proposal

Although we typically use the word "application" when talking about small business grants, you technically aren't applying for anything. What you're really doing is writing a proposal to the grant maker offering him a "deal" of sorts. You are proposing to spend the grant money in such and such a way and he is, in return, offering the grant money in order to achieve a specific purpose. If your grant proposal shows that the needs and desires of both parties are met, you will probably be put on the short list of possible recipients. From there, grant makers choose their finalists based on the availability of funds and which proposals impress them the most.

Keep in mind that your grant proposal is whatever you make it; there is no scientific formula for a good grant proposal. In fact there are many different ways to put one together. The one common thread they all have is a means of effectively communicating to the grant maker the business owner’s vision, goals, and strategies. If you need help writing your grant, there are free online resources as well as classes you can take at your local community college or continuing education office.

If you're really unsure of yourself in terms of grant writing, you can hire one of the many services that will do it for you. However, they normally get paid by taking so much of the funding you receive. If you decide to go this route be sure you know what their fee will be in advance. You might also look for a grant writing service that promises not to charge you if your grant proposal is rejected.

Include a Business Plan

When you submit your grant proposals make sure you submit a business plan with each one (if you're starting a new business). Hopefully you've already taken the time to put together a business plan before beginning the grant process. Like a grant proposal, there is no set way a business plan must be written. But any good plan will include common elements such as:

  • your company vision and mission statement
  • an explanation of your industry and why you chose it
  • a description of short, mid, and long-term goals
  • a description of your target demographic
  • an explanation of why you believe your business will be competitive
  • any strategies already in place to help you achieve your goals

When you have your business plan and grant proposal complete, you simply send it off to the grant maker along with a cover letter and perhaps a piece of promotional literature if you have it. Make sure that the entire package is not more than 10 or 12 pages. If you can keep it closer to five or six you have a better chance that it will be fully read by those who are reviewing the proposals. Anything over 12 pages will most likely find its way to the trash bin very quickly.

Your final step is to simply wait for a response. If you get rejected, don't give up so quickly. Persevere until you have exhausted all of your grant resources.