Are you wondering how to get your hands on small business grants offered by the federal government? Well, the good news is that the money’s out there, but the bad news is that applying for federally funded grants will often involve going through a complicated and time-consuming process.

While the federal government does not directly give out specific grants, various federal agencies do fund lucrative grant programs for small businesses that are overseen by state and local entities, as well as other federal agencies. In short, finding federal small business grant programs and learning how to apply can be a confusing and harrowing process.

Still, in today’s bumpy economy, any chance at getting free money may be worth looking into. So, if you have the time and patience to apply, here are some of the top government grant programs for small businesses this year.

Federal Government Grant Programs for Small Businesses

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBIT)

This grant program funds substantial grants to small businesses in the science and technology fields that are engaging the Federal Research/Research and Development Agency on new products that have the potential for commercialization. The purpose of these programs is to assist new and existing science and technology firms in various industries in commercializing new, innovative technology products and services.

The grants are awarded through 11 federal partner agencies such as the Dept. of Agriculture, Dept. of Commerce and the Dept. of Defense. The US Small Business Administration serves as the coordinator of the program.

The application process is arduous and complex, and the awards come in three phases:

• Phase 1: Small businesses are judged on technical merit and the potential for commercialization of their projects. The award amount varies between $50,000 and $250,000.
• Phase 2: Small businesses are judged on the continuation of their efforts from phase 1, and the award is $750,000 spread over two years.
• Phase 3: There is no dollar award, the goal is for the chosen small businesses to commercialize their product or service.

For more information on the SBIR and SBTT programs and to apply, review the SBIR Website.

USDA Rural Business Development Grants Program

Every year, the US Dept. of Agriculture awards grants of varying sizes to small businesses operating in rural and underserved communities to encourage the economic development of those communities. Through this program, grants are awarded for the following usage categories:

• Training and technical assistance, such as project planning, business counselling and training, market research, feasibility studies, professional or technical reports, or producer service improvements.
• Acquisition or development of land, easements, or rights of way; construction, conversion, and renovation of buildings; plants, machinery, equipment, access for streets and roads; parking areas and utilities.
• Pollution control and abatement.
• The capitalization of revolving loan funds, including funds that will make loans for start-ups and working capital.
• Rural distance learning for job training and advancement for adult students.
• Rural transportation improvement.
• Community economic development.
• Technology-based economic development.
• Feasibility studies and business plans.
• Leadership and entrepreneur training.
• Rural business incubators.
• Long-term business strategic planning.

Interested small business owners can see which grants apply to their businesses through the USDA’s state offices. The USDA defines a rural area as “areas or towns outside the urbanized periphery of any city with a population of 50,000 or more.” To see if your community qualifies as an official rural area, check the USDA’s directory here.

For more information on the Rural Business Development Grant Program, check out the USDA’s website.

US Economic Development Administration (EDA) Small Business Grants

Every month, the EDA administers small business grants in individual states of varying sizes in various categories to contribute to the economic development within various state, local and municipal regions. In addition to grants, state EDA offices can also award generous tax benefits to small businesses engaging in economic development activities such as job creation and building renovations.

The process of finding these grant opportunities can sometimes be confusing, but the place you should start your search is the directory of local EDA offices, as these are the offices that actually award grants. For the types of grants available in your area, visit your local EDA office or check out the US EDA’s website where you can find monthly national grant opportunities.

State Trade Expansion Program (STEP)

Every year, the US SBA funds millions of dollars in grant money to small businesses starting out or expanding into the import/export business through its STEP grant program. Since 2011, the agency has awarded over $200 million to support US small businesses in:

• learning to export products,
• participating in foreign trade missions,
• designing international marketing campaigns,
• developing website globalization and eCommerce capabilities,
• paying for subscriptions provided by the US Dept. of Commerce and other federal agencies, and
• participating in export trade shows and training workshops.

Like most federal small business grant programs, the SBA does not directly provide grants, rather, state and local affiliate offices do. The grant amounts vary in size. To find out if your business is eligible, check out the SBA’s website page on the STEP program. Interested small business owners can also watch the SBA’s Global Expansion Webinar to see if they qualify.

Government Grant Resources

If you’re confused about where to start looking for government grants, there are public and private websites that can make the process less confusing. These sites allow you to search for government grants by category and funding amount and put you on the right path. These include:

• gov. Grants.gov provides education on government grants and several clickable portals that will lead you to state and local government grants that may pertain to your business.
• USA Grants. USA Grants will guide you to available state grants in specific categories, such as women- and minority-owned businesses.
• Candid Learning. Candid Learning offers state-by-state directories of departments that can lead you to federally funded state grants.
• Grantify gives you step-by-step instructions on how to navigate your way through the complicated task of applying for government grants.
• gov. The US SBA offers several grant programs, and it’s best to search its website to see if there is one you qualify for.

Tips When Applying for Government Grants

Government grant programs are typically very specific in the types of small businesses that they allow to compete. Government grants are also much more difficult to find, and the application processes are usually far more complex than they are for private grants. These grants are very competitive, so if you are willing to apply, make sure you try to differentiate yourself and your business when and where you can during the application process. Here are tips small businesses should follow when applying for government grants.

• Confirm your eligibility. Government grants can have long application processes, so you could save yourself a lot of time by double-checking whether or not your small business is eligible for any specific grant. Doing this also gives you more time to focus on grants you’re qualified for.
• Have your required documents ready. From business licenses to tax returns, make sure you have all your required documents handy while applying to make things easier on yourself. By having all your materials ready, you won’t get partway through the application only to realize you don’t have a required document.
• Consider contacting a professional. Individuals or organizations could help you with the application process, providing guidance or steering you toward grants or resources that you might find useful.
• Follow up after applying. Once you send your application, follow up with the grant agency to check that they’ve received it. They may provide feedback or point out if you forgot to submit materials.
• Stay patient. Grant applications take time and effort, but don’t lose your patience! Government grants are tremendous resources for small businesses, so think about your goals to help keep you focused.

Government Grant Alternatives

Winning grant money, especially from the government, is no easy task. There are other ways, however, to get the funding that you need to help your business grow:

National Private Grants

If you don’t want the extended paperwork of applying for a government grant, you should know that national private small business grants are typically easier to apply to. For a list of private small business grants, click here.

SBA Loans

The SBA guarantees billions of dollars in small business loans every year for just about every type of small business and for every type of need. Some of these loans, such as SBA 7(a) loans, do have stringent requirements, while others, such as the CDC/504 loan, do not. These loans are offered through intermediaries, private banks and alternative lenders. Carefully examine the SBA’s website to learn more about its loan programs.

Small Business Loans

There are several lending products offered by both commercial banks and alternative lenders that are specifically designed to help your business grow and manage cash flows.

Government Grant FAQs

Where Can I Find Government Grant Opportunities?

As mentioned above, your best bet is to first examine the websites of federal agencies that offer grant programs. These sites often will lead you to a directory of state or local agencies that actually administer the grant, so finding them can sometimes be a confusing process. It’s important that you do your research carefully.

If I Win a Government Grant, Do I Have to Pay it Back?

No, you don’t have to pay back the money you were awarded through a government grant program. You may, however, have to pay taxes on it and be required to spend that money in certain ways according to the rules of the specific grant program, so read the fine print carefully.

Are Government Grants More Difficult to Apply for than Private Grants?

In general, grant programs offered by federal agencies are far more difficult to apply to than private grants. One of the reasons for this is that you have to find out which local or state agency in your area is actually administering the grant. Additionally, this is the government we’re talking about, so the paperwork involved in applying for a government grant is often far more complex (and sometimes confusing) than one for a private grant. It is imperative that you make sure your business meets all of the qualifications for a grant application so that your time and effort aren’t wasted.