Getting a small business loan is hardly the only way to fund a business. Whether it’s trying to find capital to start a business or funding for an existing business, one channel that is often overlooked is small business grants.
Across the U.S., on the state, federal and local level, governments as well as public and private organizations offer a vast variety of grants to small businesses and nonprofits. These can be generic small business grants or they can be highly tailored to an industry, to a specific type of technological or research development, to a specific region of the country and more. Read on to find out some of the best small business grants you should apply for that are most applicable to your business. Also, to find it less stressful to form businesses such as LLC's, for example, see here or check out this review. Finally, to make your search less of an ordeal, we have already reviewed services like Nolo (click on link), Rocket Lawyer (find out more), Zen Business (see post), or Incfile (check out here).
1. Small Business Innovation Research Program (SBIR) Grants
The Small Business Innovation Research Program is a popular program that promotes small businesses that engage in research and development that could have or do have commercial potential. The SBIR’s purpose is to encourage technological innovation and scientific entrepreneurship, with the Small Business Administration (SBA) serving as its coordinating agency. In order to be eligible for SBIR grants, your business must meet the following criteria:
Be a for-profit business located in the United States
The business must be more than 50% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the U.S. Alternatively, if your business is more than 50% owned by another for-profit business who’s controlled by those who are citizens of, or permanent resident aliens in, the U.S. you can be eligible.
Maximum of 500 employees
For awards from agencies using the authority under 15 U.S. Code 638, Research and Development, (dd)(1) — an awardee may be owned and controlled by more than one venture capitalist, hedge fund or private equity firm as long as none of these firms own a majority of the stock
Phase I awardees with multiple previous awards must meet the benchmark requirements for progress toward commercialization.
This last criterion is central to the SBIR program, which is to harness R&D towards truly creating something commercial and hopefully, down the line, profitable. Hence, a business can win multiple SBIR awards, but you need to show that you’re making progress towards realizing a commercial output for all your research and funding. According to the SBIR website, Phase I grants can be made up to $256,580, and if your business looks promising, you can move onto Phase II awards, which can be up to $1,710,531. Anything more requires a waiver from the SBA to grant.
2. Small Business Technology Transfer Program (STTR) GrantsThe STTR program is related to the SBIR program and has similar goals. The main difference is that the STTR program requires its small business applicants to formally collaborate with a research institution. This collaboration exists in Phase I and Phase II of the program, so it’s not a permanent partnership between the institution and your business. In forming this collaboration, the STTR program works towards its principal role, which is to bridge the gap between performance of science and commercialization of the innovations that result.
Funding amounts for STTR grants are based on phases. In Phase I, the objective is to establish the feasibility and commercial potential of the proposed R&D plans. Thus, Phase I awards are the smallest, not exceeding $150,000 for one year. In Phase II, R&D efforts are continued, and awards generally max out at $1,000,000 to cover costs for two years. In Phase III, the small business pursues commercialization objectives determined in Phase I and II, and no longer receives funding through the STTR program. However, in this phase, small businesses may be able to get non-STTR funding for R&D or they may start taking government contracts.
3. National Institutes of Health Grants
The National Institutes of Health (NIH), a division of the Department of Health and Human Services, is actually the largest public funder of biomedical research in the world. The NIH invests more than $32 billion a year toward enhancing life and reducing illness and disability. NIH grants project-based for small businesses. By following NIH Funding Opportunity Announcements (FOA), you can find research grants for projects that your small business can do or is already involved in pursuing. To find these FOAs, check out the NIH Guide for Grants and Contracts, which has a massive database of research grant opportunities.
4. National Institute of Standards and Technology Grants
The National Institute of Standards and Technology (NIST) is a physical sciences laboratory and an agency of the U.S. Department of Commerce. Its main purpose is to promote innovation and industrial competitiveness, with its roots lying in establishing a first-rate measurement infrastructure for U.S. businesses back in an era when it lagged behind those of the United Kingdom, Germany and other countries.
The NIST offers a variety of research-based grants, some to academic institutions, organizations and businesses. The NIST recently announced its Small Business Innovation Research Program Phase I for 2020. Science and technology-based small businesses with strong research capabilities are encouraged to apply for the grant. The Phase I grant award ceiling is $100,000, but the estimated total program funding is $1.2 million.
5. Department of Defense Grants
The Department of Defense has a few grant programs. Through the agency, Air Force Office of Scientific Research (AFOSR) is a grant program to help research and development focused on using lasers and other light source technology to develop applications in medicine, photobiology, surgery, and closely related materials sciences, with applications to combat casualty care and other military medical problems. The program is mainly directed toward medical institutions based in universities, but small businesses, nonprofits and other types of organizations are eligible as well.
6. Environmental Protection Agency Grants
The Environmental Protection Agency (EPA) awards government grants for small businesses that focus on advancing green technology and sustainable scientific developments. According to the EPA, as of November 2019, its SBIR program awarded $2.7 million in funding to nine small businesses. These firms have been working on a broad range of topics, such as water quality, air quality, land revitalization, homeland security, manufacturing and construction materials.
7. Department of Transportation GrantsThe Department of Transportation (DOT) is another federal department that works with the SBIR program. The DOT provides grants through its transportation systems center, Volpe Center, and accepts solicitations from businesses that aim to improve some aspect of the national transportation system or enhance the ability of the DOT to perform its mission. Phase I grants for this program typically max out at $150,000 for a six-month period and Phase II awards usually do not exceed $1,000,000 for a two-year period.
8. Department of Homeland Security Grants
The Department of Homeland Security offers several grant programs that some small businesses are eligible for. Your business should be involved in work that’s related to border and maritime security, chemical and biological defense, cybersecurity, explosives or first responder group technology. The Department of Homeland Security partners with the Federal Emergency Management Agency (FEMA) to offer its Port Security Grant Program (PSGP), which is focused on transportation infrastructure security.
9. Department of Education Grants
The Department of Education is another one of the 11 government departments that work with the SBIR program. The Department of Education’s grant program operates through its research arm, the Institute of Education Sciences (IES) and offers up to $1,100,000 in funding to small businesses and partners for research and development to translate their innovative ideas into commercially viable products that address educational problems in education and special education. Like other SBIR programs, it works in phases; Phase I offers awards for periods of up to eight months and amounts up to $200,000. Phase II awards are for periods of up to two years and amounts up to $900,000.
10. National Oceanic and Atmospheric Administration (NOAA) Grants
The NOAA works with the SBIR program to offer small business grants through its Technology Partnerships Office. NOAA grant programs focus on developments and research in coastline communities and economies, healthy ocean monitoring, climate adaptation and mitigation, plus other related fields. NOAA Phase I grants can be up to $120,000 for a six-month period of performance, whereas Phase II grants can be up to $400,000 for a 24-month period.
11. Department of Energy Grants
The Department of Energy (DOE) has grant programs for small businesses, though your business will have to be pretty advanced in what it works on. The DOE offers a grant opportunity through the U.S. Industry Opportunities for Advanced Nuclear Technology Development. The basis for this grant is to offer a direct vehicle to support innovative, domestic nuclear industry-driven designed and technologies, with a strong potential to help improve the overall economic outlook for nuclear power in the U.S. The grant award ceiling is $40 million and is open to small businesses and for-profit organizations besides small businesses.
12. Rural Energy for America Program GrantsThe Department of Agriculture conducts the Rural Energy for America Program. Part of the department’s Rural Development division, this grant program provides guaranteed loan financing and grant funding to rural small businesses and agricultural producers for renewable energy systems or to make improvements to enhance their energy efficiency.
In order to be eligible, small businesses must be located in an area other than a city or town with a population of more than 50,000 people outside the urban area of that city or town. Agricultural producers are eligible no matter if they’re in rural or non-rural areas but must show that at least 50% of their gross income comes from agricultural operations. The Renewable Energy Systems Grant has terms ranging from $2,500 to $250,000 and the Energy Efficiency Grant has terms of $1,500 to $250,000. Take note, however, that applicants must provide at least 75% of the project cost if you’re applying for the grant only. If you pursue a combination of a loan and grant, you’re responsible for at least 25% of the project cost.
13. Value-Added Producer Grants
This is another grant program for businesses that are agricultural producers. The Value-Added Producer Grant (VAPG) is offered through the Rural Development division of the USDA. The grant program helps agricultural producers get involved in value-added activities, with the goal being to generate new products, create and expand marketing opportunities and increase producer income. Maximum grant amounts for planning grants and working capital grants are $75,000 and $250,000, respectively.
14. Distance Learning and Telemedicine Grants
The Distance Learning and Telemedicine program is another grant offered by the Department of Agriculture through its Rural Development division. Eligible entities for the grant include small businesses, most state and local governmental entities, federally-recognized tribes, non-profits and consortia of eligible entities. These entities need to be in work that provides education or healthcare through telecommunications, with the overall goal of helping rural communities use these capabilities to connect to other communities and the rest of the world. For the fiscal year 2020 program, awards range from $50,000 to $500,000.
15. Food and Drug Administration Grants
The Food and Drug Administration (FDA) works through the Department of Health and Human Services (HHS) to provide medical-focused grants. Some of these programs include the Integrated Pathogen Reduction Technologies grant for businesses, non-profits, public and state universities and other entities for developing innovative pathogen reduction technologies for whole blood and blood components with the aim of preventing transfusion-transmitted infectious diseases. Grant awards range from $1.6 million to $8 million.
16. National Institute for Occupational Safety and Health Grants
The National Institute for Occupational Safety and Health (NIOSH) is a section of the Center for Disease Control (CDC). They offer the NIOSH Small Research Grant Program, which is open to small businesses as well as a broad range of other entities. The main purpose of this program is to develop an understanding of the risks and conditions related to occupational diseases and injuries. This includes exploring methods for reducing risks and preventing or minimizing exposure to hazardous conditions in the workplace and translating major scientific findings into prevention practices and products that will effectively reduce work-related illnesses and injuries. The program awards grants of between $50,000 and $1 million and the research projects are considered small.
17. Agency for Health Care Research and Quality GrantsHere is another grant program that comes out of the HHS through the Agency of Healthcare Research and Quality. This is the AHRQ Small Research Grant Program, which is open to wide pool of applicants, including small businesses and for-profits other than small businesses. The grant has an award ceiling of $100,000 and is designed to support a variety of health services research projects, including pilot and feasibility studies; secondary analysis of existing data; small, self-contained research projects; development of research methodology; and development of new research technology.
18. Regional Food Systems Partnerships Grants
The USDA’s Agricultural Marketing Service (AMS) offers the Regional Food System Partnerships grant program. This grant is eligible for small businesses and many other entities, including government organizations and nonprofits, that work on projects that support partnerships to plan and develop local or regional food systems. The grant is administered through two project types, Planning and Design, with awards ranging from $100,000 to $250,000, and the Implementation and Expansion phase, with awards ranging from $250,000 to $1 million.
19. High Energy Cost Grants
Another USDA-sponsored grant program is its High Energy Cost Grants. Also called Assistance to High Energy Cost Communities, this program helps energy providers and other eligible entities to lower energy costs for families and individuals in areas with very high per-household energy costs, equivalent to at least 275% of the national average. Grant awards range from $100,000 to $3 million. The funds can be used for a variety of energy-related work, such as electrical generation, transmission and distribution, natural gas distribution and storage, petroleum product store and handling, renewable energy and more.
20. FedEx Small Business Grants
The FedEx Small Business Grant isn’t a government grant, coming from the private sector, the FedEx company. Whereas government grants often are more project-based, the FedEx Small Business Grant is focused on the individual businesses who apply. Plus, the FedEx Small Business Grant has an element of crowdfunding to it: You campaign for votes toward your grant application profile. In total, there are 12 winners: one grand prize winner who gets $50,000, plus $7,500 in FedEx office services; one silver prize winner who gets $30,000, plus $5,000 in FedEx Office services; and 10 bronze prize winners who get $15,000 plus $1,000 in FedEx Office services.
21. Visa Everywhere Initiative Grants
Another cool private sector grant is the Visa Everywhere Initiative, which offers grant funding for small business startups and fintechs that help solve payment and commerce challenges of the future, further enhance their own proposed products and provide visionary solutions for Visa’s large network of partners. The overall winner gets $50,000, the audience favorite $25,000, second place $15,000 and third place $10,000.
22. Comcast Innovation Fund Grants
The cable and internet provide Comcast offers a couple of small business grants. One of them is the Open Source Development Grants, which is for business owners who are developing the best open-source software. Other grant programs include Research Grants, which can be general or targeted research; and Useful and Interesting Things Grants, which fund work that contributes to the internet in novel and useful ways.The areas of interest for this Comcast grant include network and user security, Internet of Things (IoT), video-related work, content delivery networks, user authentication, broadband internet and much more. There’s no award figure on the website, but Comcast doesn’t anticipate individual grants exceeding $150,000. In order to apply, each applicant must create a Comcast Innovation Fund account, select a grant, submit a CV, provide a description of their project or research and the goals.
23. National Association for the Self-Employed (NASE) Growth Grants
If you’re self-employed, a great grant available to you is through the National Association for the Self-Employed (NASE) and its Growth Grants program. In order to qualify, you do need to be a member of the NASE and be in good standing for three months before submitting your applications. The NASE grant is designed to help small businesses and freelancers develop and grow their ventures. Criteria to be eligible include your ability to demonstrate a business need that could be met by the grant, provide a detailed explanation of how you plan to use the grant money and show how the grant will improve your business’s growth and success.
24. ActivityHero Business Grants
The ActivityHero Grant Contest offers eight startup businesses cash and prizes, with the stipulation that your business must provide children’s camps, classes or activities at locations in the U.S. The grant awards cash and prizes worth $10,000 to the overall winner, with $5,000 in cash and $5,000 in services. For the seven finalists, they receive $500 each in services. You apply by filling out an application, getting three family reviews and then boost your odds by getting votes from customers.
25. 4.0 FellowshipsFellowships are typically geared towards universities or their students. With 4.0 Fellowships, education and schools are the main focus of the fellowship, but the eligibility requirements are more open than other fellowships. To be eligible, you need to either be a school or a business that provides a program, service, tech tools or physical product in service of learning and meant for children, families or educators. 4.0 offers the Essentials Fellowship and Tiny Fellowship. The Essentials Fellows receive $300 to run their first pop-up operation followed by another $300 once they’ve completed their first so they can expand to operate more pop-ups. Tiny Fellows receive $7,000 to run their pilot and an additional $3,000 after they’ve completed this to develop their idea further.
When it comes to small business grants, you have plenty of potential options to pursue. What’s more, there are many, many more grants beyond those on this list. States, cities and local authorities and organizations also offer a variety of small business grants. There are also small business grants that are specifically created for women, minorities and veterans. Government grants tend to offer the most money, but either way, public or private, small business owners have a large catalog of grants that they can apply for to get the funding they need.