Finding the right funding is a key step in launching or growing your business. But with so many options – loans, investors, venture capital, and more – it can feel overwhelming to know where to start. One option that many entrepreneurs overlook is business grants. Unlike loans, grants provide funding that doesn’t need to be repaid, making them a powerful way to fuel growth without taking on debt.
In this guide, we’ll break down the world of business grants and how you can take advantage of these opportunities. Plus, we’ll explore another popular yet often overlooked debt-free funding option: Rollovers for Business Startups, also known as ROBS or 401(k) business financing.
Why Business Grants?
While loans and investors frequently steal the spotlight, there’s an often-underestimated path: business grants. Grants are free money: unlike loans, the funding doesn’t ever need to be repaid. These coveted financial aids, free from the obligations of repayment, can be the lifeline small businesses need to move forward free from debt service.
Here, we’ll simplify the grant application process, covering the different types of business grants, how to find the right fit for your goals, and what it takes to submit a strong application. Whether you’re just starting out or looking to expand, this step-by-step breakdown will help you navigate the path to securing free funding for your business.
The Roadmap: Four Steps to Successful Business Grants
There are four major steps to writing and submitting a business grant:
- Identifying grants for which your company is eligible
- Writing the grant application
- Gathering all necessary supporting documents
- Submitting the grant
1. Identifying Grants for Which Your Company Is Eligible
Identifying grants has two components: 1) researching what grants are available and 2) determining which of them your company is eligible for. Both play a crucial role in successfully securing business grants. To see why, it’s important to first understand the key difference between grants and loans. Unlike loans, which must be repaid with interest, grants offer free funding – no payback required.
Loans and grants are given for entirely different purposes. Financial institutions like banks and credit unions offer loans to make money off the interest they will charge you over the life of the loan. Grants, by contrast, are given to meet and support specific goals and objectives of the organization giving the grants, but not (usually) for profit.
Grantors are never financial institutions. Grantors can be governments, nonprofit organizations, and companies. The Federal government is a huge source of business grants, and state and local governments may also offer them. Nonprofits offer grants designed to meet the objectives of the organizations. Some companies also offer grants related to their needs.
The purpose of grants can vary widely, depending on the grantor. Government sources may offer grants to 1) foster the development of businesses in certain communities or industries, 2) support business owners in traditionally underserved groups, such as women and minorities or 3) support research and business applications in specific areas in which the government is active, such as renewable energy or healthcare. Nonprofit grant programs are offered to support the cause of the nonprofit, such as providing access to green energy. Company-sponsored grants can be related to the company’s mission or to areas of charitable giving it is publicly associated with.
The different purposes lead to a third key difference between loans and grants: the way to apply successfully. Lenders are primarily concerned with your financial health, so your application must demonstrate an ability to repay your loan. They will focus on your financial information, such as revenue and credit scores.
Grantors, by contrast, are concerned with how well your company aligns with the goals and objectives for which the grant money is earmarked. If the grantor’s goal is to further the adoption of solar power in specific communities, your grant application must demonstrate that your company can do that to be successful.
As a result, you need to research what grants are available to you, given your product, industry, and qualifications. You then need to choose those whose goals and objectives you can align with.
Where can you find available grants? Here are some popular sources to get started:
- Grants.gov is the central clearinghouse for all Federal grants, including those from the multiagency National Institutes of Health, the Department of Energy and other U.S. government branches and Federal agencies.
- The U.S. Small Business Administration (SBA) offers two grants, the Small Business Innovation Research Program (SBIR) to foster commercial applications for technology in business and the Small Business Technology Transfer Program (STTR) to foster innovative research and development.
- U.S. Business Grants provides a searchable list of nonprofit grants for small businesses, minority- and women-owned businesses and grants intended for companies in specific industries.
- U.S. Chamber of Commerce offers information about a number of grants available to small businesses.
All these sites also provide numerous educational resources about how to apply for grants.
Making Sure You Fit All Criteria
When reviewing the grant application materials, you need to read with a fine-tooth comb to ensure that you and your company meet all the eligibility requirements and the criteria the grantor is looking for. Many grants require that your business be of a certain size or have annual revenue in a specific range. You may need to be located in a specific area or be a member of a historically underserved group, such as a woman or from a minority group. If you don’t meet these criteria, there is no point in making a grant application because it is likely to be rejected outright.
Make sure that you can also submit a grant by the due date. While some grantors have rolling due dates, others must be submitted by a specific date, or the application period is no longer open.
2. Writing the Grant Application
Grant applications vary in requirements and complexity. Part of your research needs to be devoted to understanding the requirements. Once you do, your application has to satisfy all of them.
Some grant applications simply require basic information and a statement of purpose, but others, such as government grants, require statements of purpose, a project narrative describing what you plan to do when you intend to do it, and detailed budget information. In many grants, you will also need a business plan, the history of your business, how your goals fit into the goals of the grantor, and more.
Many grantors, such as the government, provide resources about writing successful applications and following best practices.
It’s a good idea to have several people review your grant application prior to submission for readability, correctness (in spelling and grammar), and completeness.
3. Gathering All Supporting Documents
Many grants require a number of supporting documents. These documents may be needed to show the financial strength of your business, its sustainability over time, the qualifications and background of both you and key employees, your history and track record of providing goods and services, and more.
Some supporting documents are required to demonstrate your ability to do business in a community or industry.
Common supporting documents include:
- Information about company, such as name, number of employees, location, and website
- Business plan, including company’s mission, history, objectives and goals, years in business and key personnel
- Personal narrative, if relevant to grant
- Annual revenue history (usually several years’ worth)
- Annual revenue forecasts (usually two to three years out)
- Bank statements
- Tax returns
- Organizational chart
- Resumes of key personnel
- Lists of any contracts the company holds
- Employer Identification Number (EIN)
4. Submitting the Grant
Many grants have specific criteria for submission. Most grants are submitted online, but some may accept grants via postal mail. Ensure that you know the criteria and follow them because it may affect your chances of a successful application if you don’t.
Getting approval of a grant application is often quite time-consuming and can take months. Many grants are reviewed by a number of people once they reach the grantor. It’s a good idea to get an idea of when you can expect to hear back from the grantor. Keep all documentation related to your submission, such as tracking number or certified mail receipt.
After Submission
Remember: Grants are very competitive! Give your grant application your best shot, but also have a solid plan for moving forward if it doesn’t work out. And don’t be afraid to follow up with the grantor – ask for feedback and see how you can improve for the next round. Many organizations are open to working with businesses that align with their mission, and some even offer workshops or resources to help applicants strengthen their chances next time.
Another Debt-Free Funding Option: ROBS
While business grants are a fantastic way to fund your business without taking on debt, they’re not the only option. One lesser-known – but increasingly popular – way to launch or grow a business debt-free is Rollovers for Business Startups (ROBS).
ROBS allows you to use your own retirement funds to invest in your business – without taking out a loan or paying early withdrawal penalties. Here’s how it works: You roll over funds from a qualified retirement account (like a 401(k) or IRA) into a new retirement plan set up within your business. That plan then purchases stock in your company, giving you access to the funds you need to start or grow – completely debt-free.
It may sound complex, but that’s where ROBS providers like Guidant Financial come in. They handle all the legal and administrative details, so you can focus on building your business. More and more entrepreneurs are choosing ROBS as a way to launch cash-rich and loan-free.
Ready to learn more about 401(k) business financing? Get the full breakdown of Rollovers for Business Startups (ROBS) and how it works here.
Guidant Financial: Your Funding Partner
We’ve helped over 30,000 small businesses find the right funding to start and grow. Whether you’re exploring business loans, alternative funding like Rollovers for Business Startups (ROBS), or a mix of options, we’re here to help you navigate the process. While we don’t provide business grants, we can help you explore other funding solutions that fit your needs. Reach out to chat about your financing goals – we’d love to help you take the next step toward your dream business!
Call us today at 425-289-3200 for a free, no-pressure business consultation to get started — or pre-qualify in minutes for business financing now!
“When Falling Sky Brewing presented itself as a great opportunity for me, I needed the capital. Traditional lenders weren’t going to do it. I took a chance on myself that I could grow my business and my 401(k)… And I thought, ‘You know what? I could do this without overhanging debt.‘”
— Stephen Such, Falling Sky Brewing
Read the stories of REAL small business owners who work with Guidant.
