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What are the Different Types of Business Grants?

Dana Hinders
Updated Jan 24, 2024
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Business grants are commonly misunderstood by aspiring entrepreneurs. While it's true there are many different types of small business grants, nobody is handing out "free money" to anyone who asks. In many ways, business grants are like college scholarships. Grant money does not need to be repaid, but you must still meet all of the program eligibility criteria and agree to follow specific rules for how the money can be spent.

There are no federal U.S. grants for people who want to start a small business, but there are many state programs available. Most are administered through the economic development agency, which is a good place to begin your research into available funding opportunities. Your local Small Business Administration (SBA) office may also be able to provide suggestions on who to contact to learn more about available small business grants.

If you're not set on a particular location for your business, you may be able to increase your grant eligibility by choosing to set up shop in a rural area. Smaller communities often have aggressive efforts to help new businesses become successful, especially if they believe the business in question will help to generate job opportunities for local residents. Aside from grant funding, there are also a number of tax breaks you may be offered if you agree to stay in the area for a certain time period.

Some types of business grants are awarded based on the background of the person looking to start the business. For example, there are business grants for women as well as for minorities and people with disabilities. In some areas, welfare-to-work programs are even experimenting with providing grant funds to low income people who wish to pursue self employment in areas as daycare, landscaping, or housecleaning. These types of activities are often referred to as microenterprises because they involve five or fewer employees and require start up funds of less than $35,000 US Dollars (USD).

If you find business grants that you believe you are qualified to receive, it is important to fill out the program application very carefully. Do not omit any information, since this could result in you being disqualified from the program. Provide as many relevant details as possible and have at least three people proofread your application. If you can afford it, you may even want to enlist the assistance of a freelance grant writer. A professional with a proven track record is likely to be able to provide tips that can increase your chances of getting the funds you need.

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Dana Hinders
By Dana Hinders
With a B.A. in Journalism and Mass Communication from the University of Iowa, Dana Hinders brings a strong foundation to her work as a freelance writer. After discovering her passion for freelance writing following the birth of her son, Dana has been a vital part of the WiseGeek team. She also showcases her versatility by creating sales copy and content for e-courses and blogs.
Discussion Comments
By golf07 — On Jun 29, 2012

I have recently become aware of a few small business grants that I can apply for. Some of these grants are given every year, and if you don't qualify one year, you can keep trying.

I just don't have any idea where to start. Would it be worth hiring someone to do all the leg work for me? I don't have much extra money to do this, but also don't know how much extra time it would take.

I imagine there are some tips and tricks that could make a big difference in whether or not my small business grant would be awarded or not. A friend of mine who just started a detail business was awarded some type of small business grant.

I don't know what specific category he applied for or why he qualified, but I do know this is something that would probably be worth looking in to.

By Mykol — On Jun 28, 2012

I have applied for more than one small business grant, but have never been awarded one yet. It can be overwhelming trying to sort through all the information and submit all the proper paperwork.

If I ever apply for another grant, I think I will hire someone to do it for me. I know they have people who make a living doing this, and I can understand why. The process can be very time consuming and overwhelming.

When I first opened up my business I applied for a business start up grant, but was never awarded any money. I think the odds of being able to receive a grant for a small business are greater if you have a professional fill out the paperwork for you.

For someone just starting out with a small business, receiving even a small amount of grant money would take a lot of pressure off.

By julies — On Jun 27, 2012

@honeybees - That is a good tip about checking with foundations that might award grant money. There are also many major corporations who give grants to help a small business get started.

All of them have their own specific restrictions and qualifications, and you are usually competing with other companies, but it never hurts to try.

My sister-in-law received a minority business grant when she opened up a day care. Not only did this provide a much needed service in the community, but it also provided jobs for several staff members.

By honeybees — On Jun 26, 2012

I have some personal experience writing grants, but have never done this for a living. When I took a class on grant writing when I was in college, I never realized how many different opportunities there are out there for business grants.

Even though the government does not specifically give federal government business grants to a small business, many times they will give it to a foundation. This foundation can then channel the grant money to a small business.

I grew up in a rural area and know how important it is for small business owners to be able to thrive and make a living. There are a lot of grant possibilities available, but it can be time consuming trying to narrow them down.

When my brother opened up a small business in my home town, he spent time when he wasn't working to pursue grant possibilities. His work eventually paid off and he was awarded a $10,000 grant which was a big boost to his business.

Dana Hinders
Dana Hinders
With a B.A. in Journalism and Mass Communication from the University of Iowa, Dana Hinders brings a strong foundation to...
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