Navigating the world of grants can sometimes be overwhelming for small business owners. It’s not just the number of available grants that can be confusing, but the rules associated with them. Read on to learn what a business grant is and is not, and how one might help your small business.
1. What Is A Small Business Grant?
A small business grant is money given by private business or corporation, federal, provincial, or local government, for a specified purpose or project to a small business. It does not have to be paid back unless the small business breaks the conditions laid out in the agreement.
2. What Are Some Advantages To Small Business Grants?
Money: You get money for your project(s). This can range from several hundred dollars to hundreds of thousands of dollars to use towards a specific project or an aspect of growth.
Validation: You get the validation that a large organization has looked over your project and has decided your achievements and ideas are sound enough to warrant funding. Winning a grant will give other investors and banks more confidence in your company.
Equity: You don’t have to give up equity to shareholders. Also, you don’t need to compromise your plans with shareholders.
3. How Do You Get a Business Grant?
You must have detailed business plans, follow those plans, deliver regularly and on time, and report on your progress. This means you will gain or maintain high levels of structure, which can help keep you on track.
Certain organizations that offer research and development grants will sometimes do your patent search for you, which will save you both money and time.
Once you’ve earned one grant, it becomes easier to get another. You will have developed contacts within the funding organizations and you are much more familiar with the process compared to someone who has not gone through the same experience.
4. What Are Some Disadvantages Of Small Business Grants?
Amount of Money: Some grants expect you to have at least some of the money for the project yourself. Sometimes as much as 50%. If you don’t stick to the plans laid out in your proposal you might have to pay back anything you’ve been given.
Flexibility: You have less flexibility since you have to adhere to your original plans, unless agreed upon otherwise. Sometimes, you can only get the money after a certain segment or percentage of work is done; this means you will need enough funds in the bank to cover your costs until that point. The money has to be used on a specific project, not spread around your business however you choose.
Time: Researching which grants you are eligible for will take a good chunk of time, or you will have to pay a consultant to do the legwork for you. In addition to the time spent applying for the grant, you will also lose a lot of time waiting to hear if you’ve been approved. This can be frustrating, particularly if you don’t have the funds yourself to move forward.
5. How Do You Get Your Grants Approved?
You will often have to show a benefit to the business community or wider geographical community in your application. This might be environmental, social, economical, or otherwise. This can be hard, although the mere fact of providing employment opportunity through growth might be enough. No matter what, just try applying and don’t give up!