Small business owners have all kinds of ways of getting money to start a business, but one of the best opportunities is free money from grants. That’s why we’re creating grants 101 for small business owners.

We talked to James Hartman, who used grants to help start his beekeeping business and buy equipment. He shared his strategies about how to find grants, how to apply for grants, and how to make the most of free money.

You can either keep reading or click on any of the links below to jump to the section that interests you:

Keep reading to learn more about grants for small businesses.

What is a grant?

Grants are issued by governments or private companies to support social initiatives. They’re primarily based on the issuer’s goals rather than the recipient’s needs.

Most grants consist of “free money” that’s been set aside for a specific purpose. They may have terms and conditions that differ substantially from small business loans.

There are normally three periods within a grant:

• Posting and application: The first phase of a grant is posting the terms and opening the application period. This is sometimes referred to as the pre-award phase. You’ll need to meet all requirements to potentially receive the grant.
• Award phase: This is when the grant issuer decides who receives the grant and provides additional instructions for receipt of the grant.
• Post-award phase: This is the stage after the grant has been issued. There may be implementation, reporting, and closing requirements you need to follow.

There are numerous types of grants that you can apply for depending on your goals and needs. For instance, there are farm grants for agriculture and small business grants to support entrepreneurs.

Case Study: Secret Garden Bees

James Hartman started Secret Garden Bees in 2020 to cope with his PTSD from working in the bomb squad. He launched his business with only $500.

Today, he has 69 hives and makes $41K per month. It costs about $7K per month to keep his small business going, which means he’s earning a profit margin of 83%.

James told us that most organizations miss the programs available for small businesses:

James has purchased all his equipment from the government surplus program. He’s bought trucks for as little as $1,000 through this program for veterans.

Check out our interview with James below:

Types of Grants

There are so many options when you apply for grants. Based on search volume, the most popular grants to apply for are:

• Small business grants
• Grants for college
• Federal grants
• Government grants for women
• Hardship grants
• Farm grants
• Personal grants
• State grants

Let’s look at these types of grants to help you understand whether you should apply.

What are small business grants?

Small business grants are offered by many government agencies, corporations, and states to solve community problems. Some of the most common places to find small business grants include:

• U.S. Small Business Administration: The SBA provides grants to help with research, community development, and entrepreneurship. They also offer grants to help states expand their importing and exporting capabilities.
• Jobber: Every year, Jobber offers $150K in grants to small business owners.
• U.S. Chamber of Commerce: Check out the U.S. Chamber of Commerce’s list of small business grants.

There are many more sites, but these are some of the most useful grant resources for small business owners.

What are grants for college?

Higher education grants that help people pursue college are a major part of the federal grants program. Learn more about Pell grants. There are requirements to remain in good standing and continue to qualify for these grants.

What are federal grants?

Grants.gov is the go-to resource for all grants issued by the U.S. federal government. Grants are often available for small businesses, nonprofits, and even the arts. You can learn about grants, search for available grant opportunities, and apply for grants straight from this website.

However, it’s important to note that President Trump has attempted to put a pause on grants to review whether they support causes that are contradictory to the administration’s goals. There’s still some uncertainty about how grants will be managed going forward.

Government grants for women

Federal, state, and local governments offer both grants and loans for women-owned small businesses. Make sure to check all three levels of government. You might want to start with the women-owned business resources section on the SBA website.

Hardship grants

The U.S. Economic Development Administration (EDA) offers a variety of grants to help preserve or create new jobs. You can learn more on the EDA website.

The government also offers personal hardship grants, which can be found on USA.gov. These are meant to help people make ends meet when times get tough, but new business owners may qualify for some of those benefits.

What are farm grants?

Farmers are eligible for various U.S. Department of Agriculture grants, loans, and insurance. Each program has different requirements. Many involve loans to the states, which then fund local farms in turn.

Unfortunately, this may open the programs to fraud or “good old boy” networks you’ll need to join to get the most benefits.

Personal grants

Some grants are more broadly available, assuming you can qualify for them. There were 47 grants available for individuals at the time of writing. You can see what’s available by sorting for individuals under the eligibility heading on the federal government’s grants portal.

What are block grants?

The federal government awards block grants to local or state governments for specific projects. They’re commonly used by the Department of Housing and Urban Development (HUD) and the Federal Emergency Management Agency to provide housing and disaster relief.

In addition, a block grant normally has looser requirements about how the local government can allocate funding. For instance, a HUD block grant could be used for almost anything related to community development in the area.

What are categorical grants?

A categorical grant has more stipulations on how funds are used. For instance, the Pell grant is a categorical grant from the U.S. Department of Education. Meanwhile, SBA 504 loans are also categorical because they can’t be used for working capital, repaying debt, consulting services, or AI improvements.

How to Apply for Grants

The grant application process is similar regardless of whether you apply with a government agency or a corporation. You’ll want to follow these steps:

1. Learn about grants.
2. Search for grants.
3. Check eligibility requirements.
4. Register for the website.
5. Fill out the application.
6. Submit documentation.
7. Track your submission.
8. Accept grants you win.
9. Fulfill the terms of the grant.

Let’s look at each step in more detail.

Step #1. Learn About Grants

You’ll want to learn more about how each organization offers grants. As mentioned earlier, you can learn how to apply for federal grants on the government’s grants portal. They explain the process you’ll go through and how it can take months.

Step #2. Search for Grants

Search for the type of grants you’re looking for. In general, I recommend only using:

• Official government sites
• Websites of well-known entities
• References from trusted sites

Following this suggestion will prevent you from sharing private information with individuals or companies that may be operating fraudulently.

Step #3. Check Eligibility Requirements

Eligibility requirements dictate who qualifies for a grant. Grant eligibility is divided into eight main categories:

• Government organizations
• Education organizations
• Public housing organizations
• Nonprofit organizations
• For-profit organizations
• Small businesses
• Individuals
• Foreign applicants

Each organization has different requirements. Find out what type of organization you are.

Step #4. Register for the Website

You’ll need to register to apply for grants. When applying for federal grants, you must register for both SAM.gov and Grants.gov. Registration on SAM.gov can take up to 10 business days.

Pro Tip: Make sure to save the file they send you somewhere safe so that you can use it to gain access to the applications on Grants.gov.

Step #5. Fill Out the Application

Once you’re registered, you can start your application. Each application will be different.

You’ll need to review the application carefully and answer all questions. Failure to do so will cause the application to be rejected. You should be able to save your work on the application as you complete it.

Step #6. Submit Documentation

Many grants require a long list of documentation, including items such as:

• Business documents
• Principals’ CVs
• Names and backgrounds of people working on the project
• Proof of business insurance
• Tax returns
• Business plans
• A budget for use of funds

Other documents may be specific to each submittal, but these are some common requirements. Once you have all the documents and the application in the order specified by the agency, you can submit it.

Step #7. Track Your Submission

Your application will be reviewed programmatically to ensure it meets all the requirements. Then it will be sent to the proper agency. The agency will manually review all the applicants who followed directions.

As you progress through the application process, you may receive requests for information, rejection, or approval. If you receive requests for information, make sure to respond to them in a timely manner.

If you receive a grant, you’ll receive a notice of award (NOA), which triggers the next step in the process.

Step #8. Accept Grants You Win

Once a grant is approved, you’ll be notified. Sometimes, you’ll have to accept the award (as I’ve had to do with the Department of Education). Funds will be dispersed, and then you can begin completing the project.

Step #9. Fulfill the Terms of the Grant

Throughout the project, you may need to submit reports, audits, and other documents to prove that you’ve performed tasks as promised. Make sure to comply with all requests.

The contract will end when you’ve completed all tasks required for the grant to close out.

Common Mistakes to Avoid

Small businesses often make mistakes when seeking funding through a grant program. Follow these best practices to avoid common mistakes:

• Don’t apply if you’re ineligible: Small businesses should only apply for funding if they meet all the eligibility requirements. It’s a waste of resources to apply for projects when you can’t win.
• Follow all instructions: Programs automatically reject businesses that don’t complete the process based on their instructions.
• Fill out every answer: Incomplete proposals will be rejected as well. Make sure to provide all the requested documentation. Explain how choosing your business will help the community and program goals.

Consider Alternative Funding Sources

Don’t tie your small business concerns to receiving a grant. Grants support research and development but are highly competitive.

You’ll also want to pursue other forms of financing to help meet your organizational goals. Consider some of these options for small businesses:

• Small business loans
• Crowdfunding
• Venture capital (for scalable businesses)
• Angel investors
• Microloans

Grants FAQ

Small business grants span all fields, but small businesses in healthcare, real estate, agriculture, and tech are the most likely to benefit from grants. Small business opportunities in these fields tend to stimulate economic growth more than other industries.

What’s the difference between a grant and a loan?

Small businesses can apply for both grants and loans, but there are some major differences between them. Small business grants are often aimed at supporting technical assistance and community development. Loans can be for almost anything that will help small businesses make more money.

More importantly, unlike loans, small business grants don’t have to be paid back. This is a tremendous benefit to small businesses because they can focus on meaningful initiatives without having to worry about repayment.

What are the eligibility requirements for Small Business Administration grants?

The U.S. Small Business Administration has numerous grants available. To qualify for an SBA grant, your business needs to:

• Be operational
• Make a profit
• Be based in the United States
• Meet SBA size standards
• Be an eligible type of business

How do I get a community development block grant?

The Community Development Block Grant (CDBG) helps communities provide affordable housing. State and local governments are eligible to apply. If you aren’t a government entity, you may be able to work on related projects by collaborating with your local government.

These grants are for construction-related activities and are commonly misused. For instance, one project in Las Vegas received an amount that was enough to solve the affordable housing problem but created less than 1,000 apartments.

What grants do I qualify for?

You might qualify for any number of grants, but you can narrow down the list by asking a few questions:

• Do you qualify as a minority? Many groups offer grants to help women and minorities achieve more in business.
• Are you in healthcare? The National Institutes of Health is one of the largest issuers of federal grants.
• Do you live in agricultural zones or rural communities? Rural.gov helps rural communities with funding opportunities. If you meet the requirements, there are more than 64 open grants.
• Has your local area been through a disaster? At the local level, you can often qualify for grants if your small business has been damaged by a natural disaster.

Are there other government programs to help small businesses?

Government agencies offer numerous free and low-cost training programs to help small business owners succeed. There are training programs for technical assistance, exporting, and government contracting.

Who qualifies for the DHHS grant program?

The U.S. Department of Health and Human Services (HHS) grant program applies to many types of organizations, including:

• Nonprofits: The grant program was created specifically to help nonprofits and government agencies.
• Government agencies: Federal, state, and local agencies may qualify for HHS grants.
• Education: Colleges, universities, and other educational organizations may qualify for HHS grants.
• Tribal organizations: Native American tribes that are recognized by the U.S. government may apply for grants.
• Healthcare professionals: Small businesses and medical professionals who are taking a novel approach to improving health in their communities can apply for these grants.
• Researchers: Research into curing diseases or improving health outcomes are also eligible for grants.

How to write a grant proposal

You should include the following information when writing a small business grant proposal:

• Cover letter: The cover letter introduces your small business and helps the funding group understand how your project fits into their goals.
• Executive summary: The one-page executive summary should summarize the main details that are documented in the rest of the pages.
• Organizational information: You should explain your mission, current services, goals, and assets that will help your small business fulfill the program requirements.
• Objectives: Include your project goals, target market, and expected results.
• Statement of needs: Discuss why you need financing and how it will help society.
• Methods and strategies: Focus on explaining how you’re going to meet the funding organization’s goals and address the problem you’re trying to solve.
• Evaluation plan: Your small business needs to define the milestones the project will complete for each subsequent stage of funding.
• Project budget: Document how your small business will spend the money and how long it will take.
• Financial sustainability plan: This shows how your small business will continue to succeed once the grant funds run out.
• Contact information: Include information about the team and how to contact you.

How do I know if a grant is legitimate?

You have to be careful while searching for grants because fraudulent companies try to rip off entrepreneurs by offering lots of funding in exchange for a small application fee. A legitimate grant will always be posted on an official government or company website.

Grants from reputable sources won’t require you to pay an application fee. Additionally, reputable grants for small businesses are never listed as educational or personal grants.

Lastly, government agencies will never call asking for your personal or business information.

How to apply for a minority-owned business grant

To apply for a minority business grant, you’ll need to follow the process below:

1. Register your business: Many small business grants use SAM.gov’s unique entity ID to identify small businesses. Make sure to register with them.
2. Research the small business grant: Review the grant’s website to establish whether your small business qualifies, the requirements to apply, and the application deadline.
3. Download the application: Filling out a small business grant application is often easier on paper due to the length of the application. Make sure to download all the necessary forms to apply for funding.
4. Apply for the grant: You’ll want to fill out every space in its entirety. Put N/A if a question doesn’t apply. Most grants will ask for documentation of your business insurance, licenses, and employees who will be working on the job. Once you have filled out everything, submit the grant application and required documentation.
5. Wait for a response: The grantor will review your application and update you on its status. This part of the process can take some time.

Some of the most common places entrepreneurs can apply for minority-owned business grants include:

• Grants.gov: This is the main grant portal for the federal government. You can search for funding opportunities by industry, agency, and eligibility.
• Minority Business Development Agency: This federal agency helps minority business owners with grants. Apply through Grants.gov.
• Galaxy of Stars: The Accion Opportunity Fund offers a $2,750 grant for minorities and women to start or grow a business. This is a paid membership organization.
• Impacto Hispanic Business Accelerator: Hispanic food and beverage business owners can apply for a $10,000 grant that comes with coaching, mentorship, and digital resources.

Conclusion

You should now have a better understanding of how to find and apply for grants. We started by explaining what a grant is. Then we discussed how Secret Garden Bees has used grants and other federal government initiatives to save thousands.

Next, we discussed 10 common types of grants and which ones are available to small business owners. We also covered how to find and apply for grants.

There are plenty of grants available for small business owners. Take the time to research opportunities to help your small business save money while developing community and creating jobs.

What other questions do you have about small business grants? Let us know in the comments below.