If you have a startup or a small business, somebody has probably told you to look for a business grant. It sounds great, it's free money after all! But what kind of grants are out there? If there are different types of grants, which ones are right for you and how do you even find the ones that are? Don't worry, we're here to answer all of these questions.

What is a Small Business Grant?

First things first, what are small business grants and how do they work?

A business grant is a type of funding designed to help businesses grow and thrive. Business grants are typically provided through government agencies, nonprofit foundations, and other organizations that seek to support businesses in their community. Additionally, many corporate sponsors provide grants for specific areas or programs, such as educational initiatives or green initiatives.

In simpler terms a business grant is a gift to your business, a gift that typically doesn't need to be repaid. Some business grants require that the money be spent on specific programs or expenses categories, but many come without any restrictions on use. With grant money comes opportunity, setting businesses up for success on their journey to becoming self-sustaining entities. Unlike loans or outside investment, grants don’t need to be repaid — they’re essentially free money to support your business goals!

Do Business Grants Need to be Paid Back?

We said it before but it's worth repeating, most business grants are 'gifts,' meaning that there is no need for repayment.

However, some grants may have certain conditions attached to them before they can be released, so it's important that business owners understand the requirements carefully before applying. Additionally, some business grants will require monthly or quarterly reporting to make sure that the eligibility requirements are being met. If eligibility requirements are not met, you may be liable to repay the grant depending on the terms and conditions it was granted to you upon.

Though such requirements exist, they should not stop businesses from taking advantage of what is essentially free money to help them reach their goals!

What Kind of Grants Are Out There?

If you've been to our Grant Marketplace you know there are hundreds of small business grants active at any time. So How do you decide which ones are right for you?

To help you understand the landscape, let’s break down the four main categories of grants available to startups and small businesses.

Grants from Nonprofits and Associations

Nonprofit organizations, foundations, and professional associations offer grants to small businesses, often with missions tied to social impact, diversity, or industry advancement. When people hear "business grant" these are typically the first ones that come to mind.

These are usually smaller grant programs that are very targeted toward a specific industry or cause. Examples could include grants for businesses led by underrepresented groups, including veterans, women, or people of color. They could also be for industries related to the organization, including restaurants, hair care, or the arts.

Takeaways

• Best For: Entrepreneurs from underrepresented backgrounds, or businesses aligned with a nonprofit’s mission.

• Takeaway: These grants may be the smallest in size, but they're usually the most accessible to everyday business owners and far less bureaucratic than government or corporate grants. Whenever you find one that aligns with your business, you should absolutely apply

Corporate Grants

Many large corporations set aside funds to support small businesses, often as part of their corporate social responsibility (CSR) programs. Some run nationwide contests or pitch competitions, while others focus on supporting specific communities.

These are fantastic grants — the structure and requirements are clearly defined, the funding amounts are significant, and winning one usually leads to free marketing of your business from the corporate sponsor.

However, there are some caveats that come along with these great benefits. There are three big things to be aware of before applying to a corporate grant.

• Corporate grants are advertised widely. Awareness of these grants is higher than any other typey which makes the application process competitive. Amazon's 2024 small business grant program had tens of thousands of applicants and only 15 grant recipients.

• They require a connection to the corporation. Most corporate grants go to small-business partners of the corporation itself, which can limit your options. FedEx grants go to businesses that ship with FedEx and Comcast grants go to businesses using Comcast Business services.

• They are a marketing tool for the corporation. Corporate grants are a phenomenal resource and help hundreds of businesses in their community. But remember, the corporation is also using this program to promote themselves and their services. They're looking for grant recipients that will be compelling on press releases, websites, and marketing campaigns discussing the grant. Be mindful of this when deciding whether it's worth your time to pursue a corporate grant opportunity for your business. Having a compelling narrative can be just as important for a corporate grant as having a compelling business model.

Takeaways

• Best For: Small businesses with a compelling narrative and businesses that would benefit from the visibility and potential partnerships from a corporate award.

• Takeaway: Corporate grants are large awards but they are competitive and double as marketing opportunities for the corporation. The marketing element is a fantastic opportunity for the winners but it can affect the types of applications which receive consideration. Be mindful of these dynamics before spending time or resources applying to a corporate grant.

State and Local Government Grants

State and local governments often provide business grants to encourage entrepreneurship, job creation, and community development within their geographic region. These grants can be a great resource for businesses located in the specified region. However, they are tied to government development initiatives which can limit the types of businesses that benefit from these grants.

There are a few business categories which usually benefit the most from state and local government grants:

• Manufacturing businesses. Local governments love businesses which employ multiple people and produce physical goods.

• Retailers and restaurants. Cities and states often have geographic corridors that they are trying to revitalize or expand. If you are starting or expanding a retail business within one of these corridors then a local grant can be a fantastic resource to pay for development.

• Real estate. Local governments always want to promote development within their communities. There are often multiple funding sources available for businesses building or improving real estate within target development corridors.

Takeaways

• Best For: Businesses with a physical presence, particularly those creating jobs or serving local needs in a specific state or community.

• Things to Know: These grants may prioritize certain industries (such as manufacturing or tourism) and are usually be limited to residents of the state or city offering the funding.

Federal Government Grants

The U.S. federal government offers a variety of grant programs designed to stimulate innovation, research, and economic development. These grants are usually large in scale but they're highly competitive and focused on specific industries or initiatives.

The biggest thing to be mindful of with federal grants is their industry focus. Each grant is issued by a specific government department and is focused entirely on that department's purview. If your business fits within a target industry then federal grants are an extraordinary resource and its worth remaining continuously up to date on opportunities. In particular, the following industries have regularly updated grant opportunities for small businesses:

• Healthcare & Life Sciences

• Agriculture, Fish, and Wildlife

• Transportation

• Energy

• Information Technology

• Manufacturing & Industrials

The second thing to mind mindful of with federal grants the level of bureaucracy involved with them. This is the federal government after all. Federal grants typically have a very detailed application process and require meticulous reporting of how the funds are used. If you plan to pursue a federal grant, make sure you reach out to the grant administrator before submitting your application. They can ensure that you've completed the application fully and correctly before it's too late to make any changes.

Lastly, be mindful that federal grants can shift quickly with the political landscape. Each new administration will have different priorities and has strong influence over how federal funds are used. If your business is a candidate for federal grants, pay close attention around election times to the types of business initiatives that different candidates are focused on.

Takeaways

• Best For: Businesses in research-heavy fields like technology, health, energy, or transportation.

• Things to Know: Federal grants offer huge amounts of funding but typically require a lengthy and detailed application process as well as strong reporting on how the funds are used. Be thorough researching a federal grant's requirements and restrictions before spending time and resources applying to one.

Final Thoughts

Grants are a powerful tool for startups and small businesses, but finding the right one requires research and persistence.

Federal grant programs may suit innovation-driven companies, while state and local grants support community growth. Corporate and nonprofit grants can provide both funding and visibility for mission-driven businesses but each program will have specific motivations that you should keep in mind when applying.

Find Grants to Grow Your Business

Searching for grants to fund and grow your business? FundingTrail can make finding grants for your business more streamlined and easier than ever before. Search for grants in our Grant Marketplace.