4 Things to Know About Grants
November 26th 2023
Although they can be difficult to find, small business grants are out there. They are frequently harder to track down than other financing options because grants offer free money, often without strings attached. Unlike loans which have to be repaid over time, grants are effectively gifts, as long as you agree to use the money as the granting organization stipulates. That is, if you’re offered money to buy new equipment for your business, you need to buy new equipment and not go on a cruise or pay down personal debt.
To be given serious consideration for these grants, however, there are four important things you should keep in mind as you decide whether to apply for one.
1. Confirm you are eligible
Read the fine print in the grant information to be sure you or your business qualifies for consideration. There is no reason for you to waste precious time and money applying for a grant for which you have no chance of winning. Invest your resources elsewhere, rather than trying to convince the grant committee to change its requirements.
For example, are there geographic restrictions? Some U.S. grants target small business owners in particular cities or counties. You have to live or work there in order to be eligible. Similarly, the Amber Grant is open to women business owners in the U.S. and Canada, so if your business is not based in one of those two countries, don’t bother applying.
Another frequent qualifier is revenue. Many grants put an upper limit on revenue. Other grants may list a number of employees as a qualification. Some grants may want to see that you have employees other than yourself, and others may want to see you have fewer than 50 or 100, especially if the grant is to nurture micro businesses.
Other criteria could include gender, industry, number of years in business, or type of product or service.
2. Understand the grant’s purpose
Be clear about the purpose of the grant or the mission of the organization providing the funds. The grant description may not come right out and say it, but you can often get a sense of who the funding source is trying to help by reading the About section of the organization’s website.
The eligibility description is one indicator of who the grant is trying to help, but take a close look at the history of the grant, too. Why was it originally established? That can provide a big clue as to what the grantor hopes the money will do for the grantee (the person given the money).
Some grants are given to help turn a community around following a natural disaster, for example. If so, you would want to highlight how you and your business were affected by that disaster.
Other grants are given to help small businesses grow faster. In that case, you’d want to spend time describing the growth path your company is on and how the grant funds could help you scale or expand faster.
Sometimes corporations establish grant funds to help pull up smaller players in their industry. If that’s your situation, try to draw parallels between your business’s trajectory and that of the sponsoring organizations. Try to show them that you aspire to follow in their footsteps.
3. Check what is being awarded
While most business grant programs offer some type of financial reward, some include business services as part of the package or as a prize for some of the top candidates. Verify that the prizes offered will be useful for your business.
Sure, most companies could use some cash to fuel their business’s growth, but if the cash amount is small and the bigger prize consists of products or services, decide whether your business needs them. There is little reason to apply for a grant if the majority of the awards are not relevant to you or your situation.
For example, if a grant program offers a small cash award and a major overhaul of the business’s website, and you just invested a ton of money in designing and launching your new site, this grant may not be a fit for you right now. If you’re not interested in revamping your website, don’t bother applying.
Or if one of the prizes accompanying the grant is participation in an accelerator thousands of miles away and you know you can’t split your time between your home and the accelerator, don’t spend time applying. Find other grants that are closer to home or that don’t have that requirement.
Unless you need and want all of the awards being offered, think long and hard before you spend hours drafting a grant application.
4. When is the deadline?
As soon as you learn of a grant that might be appropriate for your business, check the submission deadline. Is it realistic to apply this year, given the other work you have on your plate? Do you have enough time to compile the financials, to pull together the background information required or the growth plan requested? Be realistic, rather than rushing to squeeze it into your already packed schedule.
If you believe you have the time, work backward from the deadline to map out a plan for getting all of the information submitted well in advance.
And if not, put it on your calendar for next year, so that you can plan ahead.
Finally, it’s also important to know that many grant programs exist to help small businesses grow and thrive. Grant committees want to find companies whose growth is being limited by their access to capital and that could immediately benefit from a cash infusion. Few grants exist to help prop up failing businesses, however. If you need money to stay afloat, a grant is unlikely.
Most grant committees want to see that you have a product or service that has demonstrated product-market fit. Meaning, that there are customers willing to pay money for your product or service. If your business is struggling because you don’t have enough customers, or enough customers willing to pay your rates, you may need to pivot your business model before you’ll qualify for a grant.
When writing your application, focus on your strengths, your accomplishments or milestones to date, and how the grant money will help your business be even more successful.