There comes a time in the life of every small business when sales get slower, bills start piling up, and the need for funding gradually manifests into an undeniable must-have. When this happens, the obvious choices for many entrepreneurs are usually business loans or personal savings.
But what happens when you’re hard-pressed for funding but you can’t qualify for a loan, and your savings are far from sufficient? Well, that could finally be the time to let the government help.
Government Business Grants
Local, state, and federal governments run many grant programs that aim to address financing problems among start-up owners. If you’re out of options, therefore, applying for a grant can be an excellent way to secure funding for your business costs.
The best thing about a grant is that, unlike a loan, you won’t need to repay a single cent. Additionally, startups that qualify for grants find it much easier to raise money from other conventional sources down the road. A grant can give you the credibility and exposure you need to convince future financiers to invest in you.
Qualifying for a Grant
Qualification guidelines differ from one scheme to the next, but your chances of receiving a grant will typically be higher if your business falls under one or more of the following categories.
1. Startups that can potentially generate jobs and stimulate the economy.
Most government grants for small businesses are awarded to entrepreneurs whose ideas are good enough to make a significant contribution to the economy in the future. Startups in the tech industry are often favorite candidates in the grant-approval process.
2. Businesses that seek to solve national or global problems
If your idea presents a viable solution to issues like energy conservation, environmental pollution, pandemic management, food shortage, water security, and natural disaster mitigation, applying for a grant is your best shot at getting quick and sufficient funding.
3. Businesses that engage in non-profit social activities
Entrepreneurs that make a notable social impact on society are often among the first applicants to get grants. If you run a purely non-profit organization or your business is making significant efforts towards furthering a social cause, you’re very likely to land a grant.
Applying for a Grant
Grant applications are often strenuous and complicated, but carefully studying the requirements beforehand will minimize the risk of coming up short. Take the time to learn the objectives of the grant, be it creating jobs for the local community or developing environmentally-friendly products, so that you can base your proposal around them.
As with other funding sources, a proper business plan is required in applying for a grant. Don’t forget to elaborate on how the grant will help you to realize your plan.
Grants may be “free money”, but many awarding bodies will require that you prove your commitment to the cause, either by raising a certain percentage of the grant up-front or by proving you have invested a substantial amount of your funds in the business.
If you haven’t invested anything, therefore, expect to provide some money as “commitment fee” before you get the grant. This is done to give the awarding body some assurance that you’ll make proper use of the funds you get.
Lastly, always apply early! You’ll have a better chance of landing a grant if you apply when a program first launches. Grant schemes usually have a fixed pot of money to invest, so applying when there’s still a comfortable amount left will increase your chances a great deal.
Small business grants may be fiercely competitive, but they’re not impossible to get. If your startup is the right type of business and you can effortlessly meet the requirements of the program, you’re a lot closer to solving your funding problem than you think.