By Rosalie Murphy
How to get a grant for your business? Know where to look and be prepared to apply.
This article is reprinted with permission from NerdWallet.
Business grants can seem like the holy grail for small business owners because they offer money that you don’t have to pay back.
But finding one can seem as futile as looking for lost treasure.
“Everyone wants to know: how can I get free money for my business? says Jenn Steinfeld, director of entrepreneurship and economic development at the National League of Cities, an organization that supports local authorities across the country. “And the answer I have is: it’s just not that easy.”
That doesn’t mean small business grants aren’t worth pursuing, as long as you manage your expectations. Here are five tips to keep in mind when doing your research.
1. Prepare in advance
Application windows for grant competitions can be short. Prepare in advance so that you are ready to take advantage of the right opportunities.
Salt Lake City-based Niche Snowboards has been in business since 2009, but company executives had never applied for a grant until they heard about FedEx’s Small Business Grant (FDX) contest for just four days. before the application deadline. But they had already invested time and resources into a solid mission statement and marketing assets like photos and videos, which helped them get everything together in time.
“We had all the basics there,” says Ana Van Pelt, Creative Director at Niche Snowboards. “We just had to put them all together for this grant.”
The company won one of three grand prizes of $50,000 in the competition in 2022. It plans to use the grant to develop a manufacturing waste recycling program and invest more in marketing.
When evaluating grant applications, FedEx judges look at a company’s website, social media profiles, sustainability efforts and whether it would make a good mentor to other small businesses. says Kelli Martin, who administers the company’s grant program.
“These are questions you should have answered anyway,” Van Pelt says.
See also: Four ways small businesses can prepare for a recession
2. Understand parameters and requirements
Local governments sometimes offer grants to businesses as part of neighborhood revitalization or economic development programs. Frontage grants and commercial corridor grants, for example, provide funding to help you update things like your storefront and signage.
You might encounter smaller pools of applicants in your neighborhood than in national grant competitions. But these can be matching grants, which means that you have to invest money in the project yourself. They can also narrowly target certain streets or census tracts.
Local government business grants “have a lot of strings attached,” Steinfeld says. “There is a lot of data that [business owners] are going to have to give because this city is going to have to account for how all that money has been used. »
Related: Three alternatives to a small business loan
3. Look in the right places
If a government grant doesn’t fund a goal that’s already in your business plan, it’s probably not a good choice.
But if so, you need to make sure you know it. Sign up for email newsletters, attend networking events, and consider working with a local mentor to find out when these opportunities are available.
“Identify your county’s website, identify your city’s website, meet [the] economic development people in your community…or even attend community or government events,” says Raj Tumber, a Las Vegas-based mentor with small business coaching organization SCORE.
Also connect with your local business development organisations. These organizations can hold pitch competitions, where business owners can try to sell their ideas to investors. Winners may receive a grant or in-kind resources such as business coaching and office space.
Business incubator programs are “the only place I know” that offers real start-up business grants, Steinfeld says.
Find out:How entrepreneurs can raise money for a new business – and the benefits if you’re over 50
4. Beware of scams
Beware of organizations that ask you to pay them and promise to submit your business to grant competitions. They can be fraudulent.
“Anyone looking for a business start-up grant should understand that there are many grant scams out there,” says Tumber.
For a reliable source of information, Tumber recommends Grants.gov, a website that lists available business grants from the federal government. You’ll also find tips on writing grant applications and how to report suspected grant fraud.
5. Look to other funding sources as well
Don’t rely solely on grants to drive your business forward. If you’re lucky enough to get a grant, it may accelerate your growth, but it shouldn’t be the driving force.
Leaders at Niche Snowboards, for example, have turned to friends, family and small business loans for start-up and expansion financing. They also use a business credit card to fill cash gaps.
Steinfeld also recommends establishing a relationship with a local bank.
“They have a lot more underwriting flexibility than you might think … when they understand what you’re doing and are invested in you as a business owner,” she says.
Getting a business grant is exciting. But like so many other aspects of running a business, it’s far from easy. Niche Snowboards was one of 10 winners out of nearly 18,000 entries.
“[Winning] made us cry,” says Van Pelt. “Because, as most small business owners know, funding — and the very nature of small business — is intense.
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Rosalie Murphy writes for NerdWallet. Email: [email protected]
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