How easy is it to qualify for small business government grants? Since government grants are funded by tax dollars, they require very stringent compliance and reporting measures. This means qualifying is not a simple undertaking.
So what is available in the way of grants for small businesses, and for what purpose? To start, the government does not provide grants for any of the following activities in any industry:
- Starting a business
- Paying off debt
- Paying for operational expenses
The SBA updated a blog earlier this year outlining the challenges your small business is likely to face if you are looking to try and qualify for a grant. It explains the industries that have more success. For example, if you are in the high tech or research and development field, you have a higher chance of qualifying. There are some industry specific business grants available through state and local programs, but these often require the business to match funds or combine the grant with another form of financing such as a loan or line of credit.
The SBA oversees the Small Business Innovation Research (SBIR) program, as well as the Small Business Technology Transfer (STTR) program. If your company is involved in scientific research and development, you may qualify for federal grants. Again, the qualification process is extremely specific, but there are many different federal agencies that participate in the program. Each agency administers its own program within the guidelines established by Congress. Small businesses in specific fields can submit proposals in designated R&D topics. The proposals are evaluated by each agency, and awards are made on a competitive basis. The aim of the program is to help cover the expense of R&D projects so that small businesses are able to compete with their larger counterparts.
Grants.gov provides a list of open government grants, some of which are open for small business. You will see that the list is extremely specific. Many of the charity, corporate and foundation grants are only available for applicants in the non-profit and educational field. While government grants may not be readily available for small businesses, The SBA does have a loan program that is worth investigating. It is important to understand that the SBA does not provide direct loans; rather it provides a guarantee to banks and lenders for any money lent to small businesses.
If your small business is simply looking for financing, there are obviously many opportunities available. If obtaining a bank loan or line of credit is proving to be challenging, there are also alternative forms financing, such as invoice factoring, which allows you to sell your invoices to a factor in return for immediate working capital. Find out how you can improve your cash flow without having to add a burden of debt.