Grants are a form of funding awarded by a private foundation, or a federal or state government department or agency. They are based on a competitive process with strict guidelines for applying and using the funds. Grant funding agencies us grants as a way to accomplish a specific goal that the organization wants to achieve. Funder's goals can be relatively specific, such as research into a cure for a certain disease, or they can be more general, such as encouraging development of nonprofit support programs for certain segments of the population. A grant can be a wonderful way to finance a business, given that what you need is in alignment with what the funding organization wants to support.
Grants do not have to be repaid, but they do require a considerable amount of paperwork. You may want to take a look at the article on grantwriting to give you an idea of the process before you take the leap. In addition to the initial grant application, each organization will have substantial reporting requirements on how the money is used. It also might be helpful to look at some sample grants to get an idea of what is involved in writing a grant application.
Federal and state governments are the most commonly known sources of grants, but there are also a wide variety of private organizations that fund grants. Most libraries have reference books with information on private funding organizations and how to contact them for more information.
The Foundation Center Online provides information on a wide variety of privately funded grants.
Are grants available to start small businesses? The U.S. Government does not offer grants to start or expand small businesses, although it does offer a wide variety of loan programs. While the Small Business Administration does offer some grant programs, these are designed to expand and enhance organizations that provide small business management, technical, or financial assistance. These grants generally support non-profit organizations, intermediary lending institutions, and state and local governments. Some of these programs are the Federal and State Technology Partnership Program and the New Markets Venture Capital Program.
State governments are more likely to give start up money. Many of their programs are focused on specific areas of commerce that they are trying to nurture as a way to expand their state economy. Many of these grants are high-tech related, although that is not true of all states. Take a look at your state to see what it is currently funding.
The most promising path to getting grant funding is to identify a need that one of the federal government agencies are trying to meet that fits with the business or product development that you are pursuing with your business. Various agencies of the federal government provide grants for specific activities that they wish to see developed. Identify the federal agencies that are most likely to be interested in the development of your particular goods or services. Then look over what types of grants they are offering.
Additionally, in the annual federal budget process, Congress passes laws making money available to the various government agencies for doing major projects designed to assist various sectors of the economy. To find out more about federal grant opportunities, visit the Small Business Notes federal grants page.
If you are thinking of applying for a government grant, consider carefully the requirements that need to be met. This is not a free handout. There are many hoops to jump through with serious implications if you do not follow them appropriately. If you think a grant is for you, developing a grant proposal gives you an overview for how to go about finding the right funding and putting a proposal together. If you are looking for federal funding, this outline provides a step-by-step process for finding the right grant for you.
Writing the grant itself can be a major hurdle. There are specific formats that need to met, depending upon the agency funding the grant. I have provided some general grant writing guidelines, but it is important to follow the agency format to the letter. Many good grants do not get funded simply because something important to the agency was overlooked. If you have any questions or doubts about how to handle the application, do contact the agency. Almost every funder welcomes questions. They do want good applications and can be very helpful in helping you put your best foot forward.