• Grants and government-supported funding programs are specialized financial resources that may not require repayment. They're useful tools in helping to reach your business goals and can work alongside traditional bank loans. Businesses will find federal, state, and local funding opportunities.
  • The Small Business Administration (SBA) offers popular government-backed loans, but other state and local economic development agencies may also have their own loan programs.
  • Being approved for these programs typically requires attention to detail, thorough preparation, and following strict guidelines. The money also often needs to be used for a particular purpose.
  • Traditional banking services, such as small business loans, can help bridge the gap by providing any missing capital needed to achieve your business goals. 

Small business owners are no strangers to the significant financial hurdles in starting, sustaining, and scaling a business. While traditional bank funding is often a go-to source for overcoming these challenges, a diversified financial strategy can offer owners even greater flexibility and opportunity. 

Grants and government-sponsored programs are just two of the additional tools small businesses can use to innovate and create a sustainable growth pathway. Here’s more on where to find these funding opportunities and how to be approved. 

Where To Find Grants and Government Support for Your Business

Sources for grants and government support include federal, state, local, and industry-specific funding programs. With grants, you don’t have to repay the money, allowing you to grow your business while preserving cash reserves for daily operations. 

Government-backed loan programs do need to be repaid, but they may offer more favorable terms than standard financing, such as reduced interest rates and extended repayment periods. This may also help in preserving your business’s cash flow. 

Here are some examples of opportunities in these categories and more:

1) Federal funding opportunities

  • Small Business Innovation Research (SBIR) grants: Provide over $2 million to help small businesses use research and development to take a promising technological idea and commercialize it.[1]
  • Economic Development Administration (EDA) grants: Give varying amounts for businesses working to create jobs in economically distressed communities.[2]

2) State and local funding opportunities

  • Manufacturing equipment grants: Covers new equipment costs for small businesses, such as 50% for Rhode Island businesses.[3]

3) Private grant alternatives:

  • Amber Grants for Women: Awards three $10,000 grants per month and an additional $25,000 Year-End Amber Grant for three recipients.[4] 
  • National Association for the Self-Employed (NASE) Growth Grant: Gives up to $4,000 to members to be used for business needs like hiring, marketing, or facility expansion.[5]

4) Government-backed support programs:

  • SBA 7(a) Loan: Loans originated by financial institutions and lenders under the U.S. Small Business Administration's (SBA's) 7(a) loan program to help small businesses finance certain project costs.[6]
  • State or local economic development agencies: Different U.S. regions have their own business financial assistance programs, which may include low-interest loans, matching grants, and more. For example, there’s the Empire State Development in New York and the Texas Economic Development Corporation in Texas, each providing loans to help businesses scale.[7],[8]

How To Find The Perfect Funding Opportunities

There are several websites and local networks you can tap into to help find grant and government-supported business programs for which you may qualify. Popular time-saving tools to find these resources include: 

  • SimplerGrants.gov: Central database for all federal grant opportunities.[9]
  • SBA’s Lender Match: Shows SBA-approved lenders and programs.[10]
  • GrantWatch.com: Database allowing you to set email alerts for new opportunities.[11]
  • USDA loans and grants finder: Database featuring all programs and services available from USDA Rural Development.[12]

There may also be people in local networks who can point you in the right direction. Some organizations to look into are:

  • Small Business Development Center: Has free advisors who may know about local grants in your area or line of business.[13]
  • SCORE mentors: These mentors are retired executives who may have grant application experience.[14]
  • Industry associations: Industry-specific associations may have member-only grant opportunities or know of grants in your industry.

How Do You Know Whether a Grant or Government-Backed Support Program is Legitimate?

There are several ways to check if the program you want to apply for is legitimate, including contacting the sponsoring organization directly to verify the grant’s details. You can also try to research and talk to past recipients or check domains on government grants. Typically, legitimate government websites have domains that end in ".gov." It’s also a good idea to cross-reference grants with different databases, such as the ones mentioned earlier. 

One thing to be suspicious of is grants asking for application fees. Legitimate grants rarely charge fees, so investigate further if the grant you want charges them.

Do You Qualify? Understanding Eligibility for Funding Options

In general, you’ll have to meet basic business qualifications to be eligible for a grant or other funding options. This may include making less than the annual revenue limit or being in business for a length of time. On the other hand, funding options geared toward startups might only accept new companies. You might also need to be in good standing with your business taxes, licenses, and permits to be approved. 

There is a wide variety of grants and government funding options available from various sources. Eligibility and other requirements vary greatly, but programs generally outline the acceptance criteria, making it easier to know if you qualify. The same is true for traditional small business loans. 

Tips on Securing Funding Successfully

Grants and government-supported programs can be just what your business needs to get off the ground or expand into new markets. However, countless businesses are rejected every year, not because they aren’t a fit for the program, but because of rookie mistakes that take them out of the running. To make sure you have a chance at funding, avoid these application-killing mistakes:   

  • Missing submission deadlines, even by minutes
  • Incomplete applications, including missing attachments
  • Budget numbers that don’t add up or match the project scope
  • Failing to follow formatting guidelines, such as font size, margins, and page limits
  • Not addressing all of the program’s evaluation criteria

Sometimes these mistakes are made when you’re up against a deadline. That’s especially true for grants since they typically have hard cutoff times. It’s recommended that businesses start the application process early, such as 30 or more days before deadlines. It may also be a good idea to:

  1. Include visuals, such as charts and graphs, showing financial projections
  2. Directly address the evaluation criteria using the same language from the grant announcement
  3. Follow up after submitting your application to make sure it was received 

You’ll also want to be sure to include these essential elements in your proposal or business plan when applying for funding:

  1. Clear, measurable objectives for the money received
  2. Detailed, realistic budget, justifying each expense
  3. Strong opening summary showing the overall goal, vision, or community contributions (job creation, economic growth) that the funds would accomplish

How To Use Grants and Loans Effectively

Businesses can consider combining grants and loans to amplify the effects of the money received. For example, grants could encourage innovation in a business, while loans could be used for proven operations. 

You may also be able to apply grant funds toward equity requirements for SBA loans or create a staggered funding strategy that maximizes your cash flow. Be sure to verify that your grants don't contain clauses that restrict their use as equity or in conjunction with other funding sources. Your lender may also have specific guidelines regarding whether your grant can be used for SBA loan equity requirements. If larger initiatives require more capital, combining grant funds with bank financing may provide enough cash injection to start the project. 

Track Your Spending

Remember that if the funding you were given needs to be used for a specific purpose, it’s essential to meticulously track how the money is being used.

Have a physical or digital file of all receipts, invoices, payment confirmations, photos of equipment or improvements purchased, and a detailed record of outcomes. Creating a separate accounting system for grants and SBA loan expenditures could be worthwhile. It may also be helpful to consult an accountant about any potential tax implications before spending any money. 

Building Your Financial Future

Crafting your business’s financial future can involve a variety of strategies, including leveraging a mix of grants and government-supported programs. These funding options can help fuel your business’s growth and maintain a healthy cash flow. However, being approved for funding can require thorough preparation and attention to detail, so give yourself ample time to apply. 

Combining grants and government support programs with other financial resources may help you access the cash needed to rise above today’s competitive landscape. Schedule a meeting with a PNC business banker today to review strategies to fund your next business venture.