Getting access to capital is the biggest challenge facing small business owners, according to an OnDeck Capital survey. 55 percent of business owners surveyed sought financing, but of those who applied, 64 percent failed to get any sort of financing, and 82 percent were turned down by their bank. Fortunately, there are other ways to finance a small business than getting a loan. For certain types of businesses, applying for a government, nonprofit, or private grant may be an option. Here’s how to go about getting a grant without having to borrow money.
1. Know What Types of Grants Are Available
The first step is learning what types of grants are out there. Grants are available from three main sources: government agencies, nonprofit foundations, and private businesses and corporations.
Government grants include federal, state, and local government resources. As the Small Business Administration explains, federal government grants come from programs that have been authorized by Congress and the President, and they are geared towards specific federal government initiatives and agencies. For instance, the Small Business Innovation Research Program awards grants to small businesses engaged in scientific research and development. Some states award grants for purposes such as creating energy-efficient technology, providing child care centers, and developing marketing campaigns to support tourism.
Nonprofit foundations award grants that serve their organization’s mission. For example, the Robert R. McCormick Foundation awards grants that support its key areas of assistance for disadvantaged communities, early childhood education, journalism and the First Amendment, serving veterans, and youth civic engagement.
Private businesses and corporations award grants that serve their organizational missions and community outreach campaigns. For instance, each year the FedEx Small Business Grant Contest awards a total of $50,000 to six deserving U.S.-based entrepreneurs and small business owners.
2. Research Prospective Grant Resources
Your next step is to research online databases and library references to find prospective grant resources for your business. Grants.gov provides an online resource for searching federal government grants. State & Local Government on the Net provides a tool for searching state government grants. The Foundation Center provides one of the largest online databases of grants available from philanthropies and offers a subscription-based Foundation Grants to Individuals Online database of 10,000 programs. BusinessGrants.org lists grants available specifically for small businesses. The Open Education Database provides a list of more than 100 different grant resources. You can also research library reference resources such as The Foundation Directory, which now also has an online counterpart.
3. Match Your Goals to Your Grant Prospect’s Mission
The third step is finding a good match between your business goals and your grant prospect’s aims. To do this, you must thoroughly research your grant prospects and their grant application criteria and instructions. The best way to do this is to contact the organization via their website, email, or phone and request their basic application guidelines.
4. Follow Application Instructions
Finally, once you’ve found some good grant prospects, follow their application instructions carefully. If you need help, you may want to engage the services of a professional grant writer. Some organizations such as Resource Associates offer free grant writing services to certain qualifying organizations, or you can hire a grant writer from a source such as the American Grant Writers’ Association.