Let’s say you’re a small business owner looking to build out your enterprise. You’ve looked into loans from private lenders. You’ve spoken with investors. Recently, in a Google search, you stumbled across an article heralding the availability of government grants for small businesses.
You wonder: “Does the federal government really award money to people running small businesses?”
As we have written before on this blog, federal grants are designed to benefit the public by funding pre-approved programs and projects. So for a commercial business to be eligible for a grant, it would need – first of all – to qualify for a specific public program or project defined by Congress.
Additionally, the Small Business Administration (SBA), an authority on this topic, states, “The government (federal or state) does not provide grants for any of the following activities: starting a business, paying off debt, or covering operational expenses.” So, most businesses simply do not meet the criteria for grant programs.
But I’m looking for funding to help with research and development (R&D)…
If this is the case, you could be in luck. The federal government does have grant programs to support R&D by small businesses. One example is the Small Business Innovation Research (SBIR) Program that is overseen by the SBA and a range of other agencies.
It’s important to remember, though, that the R&D must align with a government interest that will be outlined in a funding opportunity announcement. Browsing the SBIR open and recently closed opportunities listings will give you a sense of the R&D the federal government is interested in funding: aerodynamic missile domes, insulation for solid rocket motors, software assurance tools for cyber security, and expeditionary medical refrigeration unit – just to name a few.
So the SBA does not provide grants to launch a business or cover operational expenses?
Correct. The only grants the SBA offers are for non-profit and educational organizations that provide counseling and training. Congress does not give the SBA the authority to make grants to small businesses.
However, the SBA does administer loan programs for small businesses. These programs support a range of activities, including starting a business, growing a business, exporting goods, recovering from a disaster, and more.
Note that the SBA does not lend the money directly to the small businesses: “Instead,” the SBA website explains, “[the SBA] provides a guarantee to banks and lenders for the money they lend to small businesses owners. This guarantee protects the lenders interests by promising to pay a portion of the loan back if the business owner defaults on the loan.”
Are there any other government bodies that provide grants to small businesses?
You do have a few other options to explore, although you will need to focus your attention at the local level – with state and city governments. Federal funds are sometimes awarded to state and city governments to be allocated at the local level for specific purposes. Examples identified by the SBA include “grants for expanding child care centers, creating energy-efficient technology, and developing marketing campaigns for tourism.”
There are also some grant opportunities available for women- and minority-owned businesses through the Minority Business Development Agency, which is under the Department of Commerce. These grants are designed to encourage and support business development among certain minority groups. Small businesses that do not qualify will not be eligible to receive such grants.
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19 thoughts on “Exploring Eligibility: Can Small Businesses Receive Federal Grants?”
I never knew that there were grants available to women starting a business. I know I would like to eventually start my own business, so this is definitely good to know. Thanks for sharing.
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Also, I’ll like to know; what citizens can benefit from this grant?
Thanks for your question! Every grant opportunity has specific eligibility requirements. So, the first step is to locate a specific grant using the Grants.gov Search tool. Next, read the fine print on the grant’s Synopsis tab to make sure that you qualify as an eligible applicant.
Its a nice post. But I also want to know that how much grants can be received by Small Businesses.
Thanks, Jason. It really depends on the industry of the small business, as well as other factors. You can always see the latest grant opportunities for small businesses by ticking the small businesses box on the Grants.gov Search page: http://www.grants.gov/web/grants/search-grants.html There are currently over 1,000 open opportunities that eligible small businesses may apply for.
You have to pay, to receive that money?
No, the federal government will not charge you a fee to receive a grant. For more about grant scams, check out this latest post on the topic https://blog.grants.gov/2017/02/13/gift-cards-for-grants-no-thank-you/
Are there any grants for someone to start a new business? Right now working out of home, but need to be in public.
Hi Robert, as stated in this article, for a business to be eligible for a grant, it would need – first of all – to “qualify for a specific public program or project defined by Congress.” Additionally, the Small Business Administration (SBA), states, “The government (federal or state) does not provide grants for any of the following activities: starting a business, paying off debt, or covering operational expenses.” So, most new/small businesses do not meet the criteria for grant programs.
hi my name is Kim and I just started my first business on my own which is called Street Eats&Sweets, I just started this in May with my own money I purchased my vehicle I paid for everything I purchase my equipment and now I am out of money I am a woman who is the Widow I lost my husband a couple months ago and I am on my own and I don’t know what to do or where to go from here I need help with Finance so that I can further continuing to work in the winter months rather than just the summer months I have something that I want to patent for my line of ice cream for animals and some other things that I would like to patent for my business just need some help I’ve applied for Social Security and was denied I have rheumatoid arthritis I have herniated and bulging disc in my back I have asked you arthritis and psoriatic arthritis I would love to enjoy the rest of my business in the time that I have as I would like to pass it on to my children that was my dream business and they say that women can’t do it well I got it started I just need help with finishing it please help me thank you Kim or Ps just get me in the direction that I need to be in and ASAP because we’re already in the end of August ice cream trucks usually stop and I don’t know how to stop because I won’t have any money to even eat that’s the only income I have thanks again for listening.
Hi Kim, we recommend that you complete the Benefits Finder tool on Benefits.gov to see if you are eligible for federal assistance: https://www.benefits.gov/
Please provide me with information of grants that are available to assist in opening a business to provide close-proximity to local residents of a rural community for purchase of food and goods. These foods would be organic, healthy and affordable, grown locally by farmers and producers of organic farms. This business would also provide income and increase in production for the farmers and producers, tax revenue for the community, growth and development opportunities for the community, additional business opportunities, jobs, and revenue from tourism, as the business will be built on a major interstate highway in Texas. It will be woman owned and bring educational opportunities and income to an area that qualifies as a low socio-economic community and school district.
Thank you for any assistance or information you are able to provide.
Aspiring Business Woman
Hi Susie, if you haven’t already, please read the blog post for an explanation of what types of businesses may or may not be eligible for different forms of federal financial assistance. For example, “the Small Business Administration (SBA)…states, “The government (federal or state) does not provide grants for any of the following activities: starting a business, paying off debt, or covering operational expenses.” So, most businesses simply do not meet the criteria for grant programs.”
You may search for currently open federal grants in the Search Grants tab on Grants.gov: https://www.grants.gov/web/grants/search-grants.html
You may search on the Small Business Administration website for more information on other forms of federal financial assistance related to businesses: https://www.sba.gov/
I have a commercial building with 3 offices and 2 residential buildings with 2 duplexes in each building. Due to Harvey we have all of the above vacant to repair the 3 ft of water damage. Although I have ins including wind and hail I am not able to give a eta on when I can allow buisness owner’s or tenants to return. The damage far exceeds my budget. Is there a type of Grant we could be eligible for to house and get buisness owner’s back in their units?
Please go to https://www.disasterassistance.gov/ for disaster recovery information and assistance.
My husband owns a small telecommunication business that specializes in the installation of fiber optic cable and the restoration of existing communication cable. I have been doing some research on your website and trying to make sense of it all. Where do I begin on trying to find some grants for his company? We do some work for the state of Tennessee, as a subcontractor, as well as work for a few of the local telephone providers in our area. With us being a small business, could we get awarded the grants- or would the state get awarded a grant and disperse it our way? We are in the SAM database, and meet small business guidelines with the SBA. I am not sure where to begin! I hope this makes sense, as I am a beginner here!!
Hi Neeli, to find current federal grant opportunities, go to the Search Grants tab on Grants.gov. Please note that this does not mean the federal government has a “grant” to support your mission or goals. As the blog post outlines, there are relatively few federal “grants” for business enterprises. To explore federal funding opportunities (e.g., loans or grants in some cases) for small businesses, please go to the Small Business Administration (SBA) website: https://www.sba.gov/blogs/government-grants-small-business-think-you-qualify
I need help to get help with a new roof, ceilings, door and windows. I am on SSI disability
We recommend you complete the Benefits Finder tool on Benefits.gov to see if you are eligible for federal financial assistance: https://www.benefits.gov
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