Small business owners know that funding can be a challenge at times. Although loans or lines of credit can have high dollar amounts, they can also be difficult to obtain for business that are just starting out. For those business owners, grants may be the best place to start.
As a business owner, you couldn’t dream up a better source of funding: Grants are essentially free money. As we look to the new year, it’s important to learn all you can about how this coveted funding source could help your business.
What is a small business grant?
A small business grant is money given to a small business that does not need to be repaid.
Funding can be provided by a government agency, a nonprofit, or a private business. Often, these entities have a cause in mind that their grant seeks to address. Because grants often serve niche needs – such as supporting minority owned businesses or businesses within a certain location – business owners must carefully review grant opportunities to find one that best suits their needs.
Pros of small business grants
The primary advantage of small business grants is that they do not need to be repaid. However, there are plenty of other reasons to pursue a grant.
Grants can be used to supplement other types of funding, like loans, microloans, or lines of credit. Having extra support from a grant can make these other financial opportunities more attainable and less risky for new business owners.
Another main advantage of grants is that many of them are specific to demographic groups, or based on location, or another factor that limits the total pool of business who qualify and put you right in the sweet spot.
Cons of small business grants
While you never have to repay grant funding, you may have to invest a lot of time into the application process. Some grants have an application fee, especially larger grants that are industry specific.
Applications require extensive paperwork. Because the documentation process is so time consuming, it’s important to carefully research available grant opportunities and only apply for grants for which your business meets the exact criteria.
The paperwork doesn't end after you press submit. If you are awarded a grant, be prepared to track what the grant money is spent on. We recommend setting up an additional bank account that is used solely for grant money. This way it's easy to account for purchases made. Some companies do audits, so plan on keeping your invoices, too.
While grants are free money, grants are not quick money. The application process is lengthy and so is the review process. It may take the funding organization weeks or months to arrive at a decision. Applicants are forced to be patient.
Finally, grants are competitive. It's imperative to put your best foot forward in every application, so you and your business stand out from the crowd.
All the reasons above are why Skip offers extensive grant support services. While we can’t make the review process any quicker, we can significantly help reduce the stress – and time – associated with applying to and picking out the best grants for your business.
When you join Skip, our team can find grants for you, walk you through the application process and even help you prepare your written responses.
Where can I find small business grant opportunities?
You can find small business grant opportunities right here at Skip. Every month, Skip distributes $1,000 and $5,000 grants to small business owners as our way of giving back.
You can find out more about Skip grants and apply here.
Lastly, when you join Skip, you get access to monthly roundups of small business grant opportunities. This alleviates the burden of researching yourself by sending grant opportunities directly to your inbox.
What kind of businesses should apply?
Generally speaking, small business grants are ideal for business owners who are just launching their business and need extra support. If you’re not quite ready to take out a small business loan, applying for grant funding could be a great first step in securing funding for your business with less risk. Unlike loans, grants come without risk and you do not have to leverage your financial future or credit in order to secure funding.
Remember that each grant has its own eligibility requirements. Carefully assess whether or not your business would be a good fit for the grant before taking on the application process.
What to know about applying
Grant applications can be challenging, but you don’t have to navigate the process alone. If you want help, our team is here to support you through the entirety of the process, from finding the right opportunity to crafting a stand-out application.
When grant funding is finally secured, it’s well worth the time that went into the application. The right grant can give you the financial footing you need and transform your business in the process.