Starting a business takes money – but unless you’ve got a significant cash cow or massive line of credit, you might be a little strapped for cash when you’re first starting out. It’s not an uncommon problem; in fact, a recent nationwide survey by EY and EIG found that 42% of Millennials cited lack of cash as the biggest obstacle to starting their own business.
It’s not just Millennials who are struggling; even startups are finding it difficult to manage cash when just starting out. Thirteen percent of startups that fail do so because they just don’t have enough cash for that first pivotal year.
Fortunately, there’s a way to get your hands on money that doesn’t require taking out loans or increasing your credit card debt: small business grants.
These grants – which can be offered by corporations, non-profits, and even the government – provide funding for small businesses without requiring repayment. That means as long as you meet the criteria of the grant provider, you could get access to funding without adding to your debt load.
Want to see how you can get a grant – and where you should look to apply for them? Here are three steps to help you do just that:
Step 1: Understand the Grant-Giver
The first step in getting a small business grant is to choose a grant-giver who aligns with what you do and what you hope to achieve with the funds. Grant-givers have a very specific concept of what they are looking for. Your grant proposal must show that you share that concept, that your request for funds concords with the organization’s mission statement and overall purpose.
It goes without saying, but choose a grant that fits your business. If you are in retail, don’t choose a grant directed at high-tech innovation (unless part of your offer involves new tech). If you’re providing B2B services, look for grants that recognize the kind of work you do best. And, of course, choose a grant whose purpose will help to build your small business.
Step 2: Write a Business Plan
The business plan is the most critical component of your grant application. In it, you’ll make your case for how your business will develop, as well as what you want to achieve with the small business grant.
The plan should start with an executive summary, which should pull together all the most important points in your business plan. Keep it limited to two pages, as it should be exactly that: a summary. This may be the only part of your application that some reviewers read, so you want to make your point with a lot of punch here.
Not sure how to create an executive summary? Here’s a quick outline to help:
- What your business is. What is its mission, what is the product or service you’re providing to the customer, and how will the grant project help you achieve your mission?
- Your market. Explain the type of market, its size, demographics, how you fit in, and how you plan to expand your market share using your competitive advantage.
- Management and operations. Give a brief outline of how your business works, how many employees you have, their experience and what do they do, and your choice of location.
- Show projected income and cash flow forecast for the next three years.
- Be sure to outline how your business will look at the end of the grant project!
The rest of the business plan should provide a detailed look at the various sections in your executive summary. Start by explaining in greater detail your mission, customer benefit, and what you expect from the grant project. Expand on all of these sections with graphs, competitive research, and anything else that helps prove why your business deserves that grant.
Grant providers tend to fund projects with a clear and developed vision, so you should ensure that your detailed plan communicates that vision.
Step 3: Nail the Small Business Grant Package
While the business plan is a critical part of your grant application, the next part is just as important: addressing the grant package. This is where you show how you share the vision of the grant provider and how your project achievement will fulfill the provider’s program.
On the grant application, there will be a series of questions that you must answer. It is important to take these questions one by one, and to give the most thoughtful reply you can make.
Again, this probably sounds much harder than it actually is. If you have chosen a small business grant that corresponds well to what you do – and if your vision matches up with that of the grant provider – you should be able to easily and authentically respond to these questions.
Running into trouble? Here’s a tip: Read the language of the grant description carefully. Then try to use the same language in your replies to the questions. This often makes the grant provider feel as though you’re on the same page. Plus, if the grant provider uses software to parse through the applications, using those keywords can help you get noticed.
Finally, make sure you have all the documents that the grant application requires. There is nothing worse than applying for a grant, only to get rejected for an incomplete application.
Okay, you’ve got the grant application part down – but if you’re wondering where to go to actually find these grants, take a look at a few suggestions:
- Grants.gov: This national site makes it easy for small business owners to search for thousands of grants on offer at both the federal and state levels.
- USA.gov: Another national site where small business owners can search for grants, in addition to loans and other benefits.
- Challenge.gov: Small business owners can browse a list of contests and prizes, many of which include grants of more than $20,000.
- NASE.org: The National Association for the Self-Employed offers multiple small business grants for $3,000 to $4,000 each.
- Women’s Business Centers: If you’re a female entrepreneur, there are dozens of Women’s Business Centers in the United States that can help connect you and other small business owners to loans and grants.
From the federal government to states and private companies, there are hundreds of possible opportunities for small business owners to find grants. It does require a lot of work to create and send out those applications, but it’s worth it. After all, just think of what some extra funding – with no repayment obligation – could do for your business!