What is a Small-Business Grant?
A small-business grant is a financial award bestowed by entities such as companies, foundations, or government agencies to assist businesses in achieving specific goals or incentivizing certain performances. Unlike loans, grants are essentially gifts that do not generally require repayment.
Small-business grants can be used for a variety of purposes, from startup funding to enhancing operational efficiency or driving expansion. Although they present an incredible opportunity, these funds have strings attached—they must be used as specified in the grant terms, or they may need to be repaid.
Key Takeaways
- A grant is a gift to a company that doesn’t need to be repaid.
- The grant process generally involves three stages: pre-award, award, and post-award.
- Primary types of grants for small businesses are federal, state/regional, corporate, specialty, and startup.
- Grants are considered taxable income unless specified otherwise by law.
How Do Small-Business Grants Work?
Grants aim to fulfill specific objectives, making the application process rigorous and exhaustive. Generally, the federal government outlines a
Related Terms: business loan, small-business funding, startup financing, grant applications, SBA grants.
References
- Grants.gov. “The Grant Lifecycle”.
- Grants.gov. “Search Grants”.
- GrantWatch. “GrantWatch: Time to Apply”.
- GrantWatch. “Choose Your Subscription”.
- U.S. Small Business Administration (SBA). “SBIR STTR America’s Seed Fund”.
- U.S. Small Business Administration (SBA). “7(j) Management and Technical Assistance Program”.
- U.S. Small Business Administration (SBA). “State Trade Expansion Program (STEP)”.
- U.S. Small Business Administration. “Small Business Development Centers (SBDC)”.
- U.S. Department of Agriculture. “Rural Business Development Grants”.
- U.S. Small Business Administration (SBA). “Grants”.
- U.S. Department of Commerce Minority Business Development Agency. “Who We Are”.
- U.S. Department of Commerce Economic Development Administration. “Investment Priorities”.
- U.S. Department of Commerce Economic Development Administration. “Economic Development Directory”.
- Citizens Committee for New York City. “Grantmaking”.
- Texas Workforce Commission. “Skills for Small Businesses”.
- DoorDash for Merchants. “Restaurant Disaster Relief Fund”.
- Visa. “Visa Everywhere Initiative 2023”.
- FedEx. “FedEx Small Business Grant Contest”.
- FedEx. “2023 FedEx Small Business Grant Contest Winners”.
- Human Rights Campaign. “Queer to Stay: LGBTQ+ Business Preservation Initiative Application Form”.
- Human Rights Campaign. “Queer to Stay”.
- Second Service Foundation. “Cultivating the American Dream: Military Entrepreneur Challenge Application”.
- Second Service Foundation. “Military Entrepreneur Challenge”.
- Incfile. “Powering Entrepreneurship. Powering People: Fresh Start Business Grant”.
- Black Business Ventures Association. “Sogal’s Black Founder Startup Grant (Up to $15,000)”.
- Cincinnati USA Regional Chamber. “Grant to Support Women, LGBTQ, and Minority Entrepreneurs”.
Get ready to put your knowledge to the test with this intriguing quiz!
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## What does a grant typically refer to in a business or financial context?
- [ ] A financial penalty
- [x] A sum of money given by an organization for a specific purpose
- [ ] A loan that requires repayment
- [ ] An investment in a business venture
## Which of the following usually funds grants?
- [ ] Private individuals
- [ ] Retail businesses
- [x] Government and nonprofit organizations
- [ ] Commercial banks
## What is a key feature distinguishing grants from loans?
- [ ] Grants must be repaid with interest
- [ ] Grants are given for inter-business transactions only
- [x] Grants do not require repayment
- [ ] Loans do not require specific utilization
## For what purposes are grants most commonly awarded?
- [ ] Personal shopping expenditures
- [ ] Purchasing luxury items
- [ ] Paying off personal debts
- [x] Research, education, and public services
## Which type of organization is most likely to provide research grants?
- [x] Federal or national government
- [ ] Supermarkets
- [ ] Commercial banks
- [ ] Individual tax payers
## What is a fundamental requirement for being awarded a grant?
- [ ] Having a large personal income
- [ ] Holding investments in stock markets
- [x] Meeting specific eligibility and selection criteria
- [ ] Purchasing commercial property
## How is the effectiveness of a grant usually ensured?
- [ ] By increasing the owed repayment amount
- [x] Through monitoring and reporting requirements
- [ ] By taking collateral
- [ ] Allowing unrestricted use of the funds
## Which scenario would most likely involve applying for a small business innovation grant?
- [ ] Establishing personal savings accounts
- [ ] Funding daily business operations
- [ ] Importing consumer goods
- [x] Developing new technology-based products
## What essential aspect must grant recipients typically demonstrate?
- [x] Alignment with the granting agency’s mission and goals
- [ ] Ability to generate a large profit
- [ ] Large capital reserves
- [ ] Tangible personal assets
## How can organizations increase their chances of receiving a grant?
- [ ] Limiting their project scope and proposal
- [ ] Relying on verbal application submissions
- [x] Clearly defining project objectives and demonstrating impact in their written proposals
- [ ] Requesting higher funds than recommended
