The Benefit of Grants for Small Businesses
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If you are a newer business, you may be searching high and low for any sources of startup capital that you can find. This is a smart move; however, the problem is that many small business owners just aren't sure where to search, or where even to start such a search. There is a lot of money available for businesses at every stage of their life cycle; it's a matter of knowing exactly where to look and what to look for. In this article, we examine the benefits of getting a grant for your small business and consequently discuss how and where to start your search for these grant opportunities.
One of the main things you need to be concerned about when applying for grants is the criteria required of that particular business grant opportunity. All are different and thus all have different standards and benchmarks which you must meet. It doesn't make sense to put in the time and energy if your business, in the end, won't qualify.
Understanding Small Business Grants
Many times, startups will apply for grants to help them get the organization off the ground. The great thing about getting grants for business versus a loan is that grants do not have to be paid back. Think of it as free money in a sense. So unlike a loan, you don't have to come up with a down payment, there is no collateral requirement, and generally no credit score requirement; this makes grants very attractive to small business owners. Especially for startups, not having to pay the money back can be a huge incentive to apply for grants. That said, they can be fairly competitive.
The other thing to keep in mind is that grant money for business may have to be used for a specific purpose, one that you will have had to detail as part of your grant application. Some grants may stipulate that the funds be used for technical purposes for example. If the money is not used for this purpose, then the grant committee could demand that you return the funds as the purpose stated on your application would ultimately be considered fraudulent. This is why you want to be as thorough as possible when it comes to detailing what any grant money received will be used for.
You will likely have to abide by reporting and accounting guidelines as outlined by the funding committee and therefore submit to them any relevant documents to show that you did use the money for its specified purpose.
Do You Qualify for a Small Business Grant?
If you are a startup, it could be more difficult to find grants. Most government grants for instance are not available for launching a new business, though there are exceptions as far as medical research, the tech sector, and education are concerned. Also, if you're a profit there may be grant opportunities even for early-stage nonprofits. Additionally, as far as startups are concerned, there are a few industry types that can potentially qualify for government-funded grants. Such areas include innovation, eco-friendly businesses, rural companies, women, and minority-owned businesses, among some others.
To find specifically what grant opportunities for business are available about your company and field, you could do an online search. Odds are however, you need to know where to search rather than just doing a blanket keyword search. You are likely going to need to visit specific sites such as grants.gov for example to finetune the list of grant opportunities for which you might be eligible.
Applying for a Small Business Grant
The question is what can you do to position your business in the best possible light when applying for and consequently receiving a grant. There are several steps you can take and things you might do to make our application as attractive as possible and thus give yourself a competitive edge.
Keep in mind that a grant application along with assembling the supporting material could take quite a long time. Make sure you prepare well in advance of the deadline. And give yourself plenty of leeways to prepare all necessary materials. Often, grant committees will also ask for financial materials related to your business. Many firms will hire an accountant to help them prepare said documents, again, it is about giving yourself the best chance possible for success. The key to applying to any grant for business is to be sure and follow all guidelines and parameters, otherwise, your application may be null and void before it ever gets reviewed by the grant committee.
Keep in mind too that some companies will send representatives to grant writing classes to learn more about how to apply for grants and how to optimize their grant application package. You could also look into hiring a professional grant writer to help with your packet.
One of the most important things about applying for a business grant is that the grant must align with what your company does and the intended purpose of the grant funds. And you also need to be prepared for the lengthiness of the grant process. Unlike a business loan, it is not only longer in terms of applying, but also in terms of waiting for the committee's decision and also receiving the funds. That said, grants can be hugely rewarding, especially for smaller newer companies who may not have a ton of financial resources at their disposal. Grants do not have to be paid back, which could be an ideal solution for those looking to get their company off the ground.
First Union Lending is here to help. We offer several financing solutions for a variety of businesses throughout the US. Offering short-term loans, merchant cash advances, and lines of credit, among other programs, we likely have a solution to fit your specific needs. Call today and let's get started together!