October 26th, 2021
Grants and Programs That Can Help Business Owners Get Funding for Their Startups
Money is the fuel that drives an idea to become a revenue-generating business. Without capital, a startup cannot innovate, grow, and compete in the market. Unfortunately, accessing financing is often a difficult and drawn-out process for many entrepreneurs. A business owner is forced to overcome several hurdles before accessing most of the funding options available and is still expected to pay back the money.
What if you could fund your startup with free money that you don’t have to repay? That would be wild. Such funding comes in the form of a startup business grant. You can get a grant from a private or public entity, but as you might figure, it is not easy to come by. There are eligibility requirements and a lengthy application process.
This post -- from That Social Geek -- looks at how grants and programs can be used by business owners to fund their startups. Keep reading to find out how you can access this type of funding.
What are grants?
The biggest difference between a loan and a grant is that you do not have to pay back the latter. You also do not have to put up any collateral or pay fees or interest. Essentially, you get free money to fund your business, but you may also get guidelines on how you may use it. Failure to follow the funder’s accounting and reporting guidelines and you’ll have to pay back the money or face prosecution for fraud.
Available grants and programs
The first step towards applying for a grant is learning about available options. The main grant options for business startups can be broken into four sections:
- Federal grants
- State grants
- Local grants
- Corporate grants
Business types that qualify
Unlike business loans, grants have a narrower scope and not all business types qualify. Various aspects are considered, including the problem that the grant is trying to address, the demographics of the business, the industry, and the location of the business. Common categories of business types that qualify include:
- Green businesses: These grants typically cover the cost of installing green energy systems and sustainable infrastructure.
- Innovation: Innovators and entrepreneurs in medicine, technology, science, education, agriculture, and research and development
- Rural businesses: In an attempt to stimulate rural economies, business startups in struggling rural regions are provided access to grant money by the government.
- Women-Owned Businesses: Female entrepreneurs and businesses that create solutions for women and children qualify for grants for women.
- Veteran-Related Businesses: Nonprofits providing services to veterans and veteran-related businesses.
- Non-profit organizations: Nonprofit startups with a 501(c)(3) status with the IRS qualify for grant money from the government and private sector.
- Minority-owned businesses: Businesses with at least 51% minority ownership.
- Small businesses: Small businesses with an amazing idea and impressive track record qualify for the highly competitive small business grant contests.
In addition to your business qualifying for a grant, you have to stand out from other applicants. This means convincing the issuer of the grant that you are more deserving and that you will put the funds to better use than your competitors.
The first step after finding a suitable grant for your business is gathering everything that is required for the application. Requirements include detailed financial data. To start, you'll need a well-constructed budget. If you aren't good with numbers, research a certified bookkeeper salary, and if it works with your budget, consider hiring a bookkeeper to help assemble all of the necessary financial details for your application. Doing so can help you ensure you’ve covered all the bases. You’ll also need an outline of your proposed work and projected outcomes. Filling out a grant application may take weeks. You are required to follow the parameters of the application and check that you do not leave out any detail to avoid disqualification.
Since most financing options are difficult to access, forming a Limited Liability Company (LLC) is an effective strategy to reduce business costs. An LLC gives you flexible management options, reduced paperwork, legal protections, limited financial responsibilities, and favorable tax benefits. It also allows you to use a formation service to avoid hefty lawyer fees. You can look for suitable business grants to cover the startup and operation costs of your LLC.
Photos by Alexander Mills from Pexels
Written by Julie Morris
Julie Morris is a life and career coach. She thrives on helping others live their best lives. It’s easy for her to relate to clients who feel run over by life because she’s been there. After years in a successful (but unfulfilling) career in finance, Julie busted out of the corner office that had become her prison.
Today, she is fulfilled by helping busy professionals like her past self get the clarity they need in order to live inspired lives that fill more than just their bank accounts. When Julie isn’t working with clients, she enjoys writing and is currently working on her first book. She also loves spending time outdoors and getting lost in a good book. Contact Julie on her website here.