Starting a business is no easy feat. Also, a lack of funds can kill your business dreams fast. Hence, the need for loans or grants for small businesses.
Between securing funding, setting up your business entity, and drafting a business plan, there’s a lot to do. And that’s before you even start selling your product or service. For small businesses, securing funding can be even more challenging. But don’t worry – we’ve got you covered. In this post, we’ll provide you with a comprehensive list of government grants for small businesses, as well as other loans and grants for small businesses.
What Are Loans And Grants For Small Businesses?
A loan is a sum of money that is borrowed and typically repaid with interest. A grant, on the other hand, is financial assistance that does not have to be repaid. Loans and grants can come from a variety of sources, including the government, banks and private organizations. So, what are loans or grants for small business?
What Are The Difference Between Loans And Grants For Small Businesses?
A loan is a sum of money that is borrowed, often from a financial institution such as a bank. The borrower agrees to repay the loan, with interest, over a fixed period of time. A grant, on the other hand, is a sum of money that is given to the recipient, often by the government, to help finance a particular project or activity. Grants are not typically repaid, though there may be some restrictions on how the funds can be used.
What Are The Most Common Types Of Loans And Grants For Small Businesses?
There are a few different types of loans and grants available to small businesses. The most common are bank loans, credit cards, and government grants. However, there are also a number of private loans or grants for small business, available from organizations and charities that support such businesses. It’s important to do your research and compare your options, so you can find the best loans or grants for small business. And don’t forget to apply early—some loans or grants for small business have a limited number of awards available each year.
Also, there are small business hardship grants that are meant for small businesses during difficult periods. An example is the COVID-19 grants for small businesses during the Coronavirus pandemic.
How To Apply For Loans And Grants For Small Businesses?
Applying for loans or grants for small business can seem hard, but it doesn’t have to be. There are a number of organizations and charities that are dedicated to supporting small businesses in the US. We’ve compiled a comprehensive list of loans or grants for small business, so you can find the right one for you. Each organization has its own application process, so be sure to read the guidelines carefully. And don’t forget to reach out to the lending institution if you have any questions. They’re there to help you get the right loans or grants for small business, so that you can grow your business.
Loans Or Grants For small businesses from Private Corporations
A charitable function of many firms and large companies includes providing loans or grants for small businesses. Some gives these grants to NGOs that serve specific industries solely, while others also provide to for-profit businesses.
(1) Small Business Grants from FedEx
The company’s annual grant competition awards over $250,000 to ten small businesses, with three top prize winners getting a $50,000 grant and $4,000 in FedEx print services and business services. The competition for 2022 is now closed, and voting has been on since March 22. The winners will be revealed on May 4th. The competition is open to for-profit small enterprises established in the United States that have been in operation for at least six months and employ no more than 99 people.
NASE members can qualify for up to $4,000 in monthly small-business awards, as well as an annual $3,000 college scholarship for their dependents, through the National Association for the Self-Employed. Completed applications are reviewed quarterly in January, April, July, and October, and grants are awarded throughout the year.
(2) Fast Break for Small Business
LegalZoom, the NBA, WNBA, and NBA G League have teamed up with Accion Opportunity Fund to provide small-business owners with $10,000 grants and up to $500 in LegalZoom services. This initiative focuses on assisting marginalized and underrepresented populations with their enterprises. Two times a year, applications are accepted.
(3) Patagonia Corporate Grants Program
The Patagonia Corporate Grants Program offers small-business grants to nonprofits working to conserve and protect the environment. The retailer is looking for creative firms that have quantifiable suggested projects with precise goals, objectives, and action plans. These nonprofit awards usually range from $5,000 to $20,000 in value.
(4) Visa Everywhere Initiative
The Visa Everywhere Initiative is a grant competition that provides cash to tech-forward startups from around the world in five different locations. Applicants must demonstrate how they’ve created a product or service that incorporates Visa’s products in a unique way.
The top five finalists in each region will be chosen by Visa, and these businesses will advance to a worldwide finals event. The competition’s ultimate winner receives a $100,000 small-business grant. Second- and third-place finalists, fan favorites, as well as regional and local champions, receive additional grants.
State Sponsored Loans Or Grants For Small Business
This agency of the United States Department of Commerce provides grants, resources, and technical assistance to communities in order to promote economic growth and entrepreneurship.
Each state’s agency assists businesses in obtaining funding (including state or regional grants), securing locations, and attracting employees. You can look for regional offices and local resources in the economic development directory.
Small businesses and aspiring entrepreneurs can get help from your local SBDC. They’re frequently linked to local colleges or a state’s economic development agency, and many can help you get small-business grants and other forms of finance, as well as advice, coaching, and technical support.
The MBDA manages a nationwide network of business hubs devoted to the growth and promotion of minority-owned small enterprises. These hubs assist entrepreneurs in obtaining funding, securing contracts, and competing in new markets.
You can get advice from your local MBDA center to apply for debt-based funding as well as federal, state, and local business grants. The agency normally organizes a small-business grant contest every year and keeps track of the results on its website.
Other Loans Or Grants For Small Business Avenues from the SBA
If after trying you still could not access loans or grans for small business, the Small Business Administration have some ideas for you, on other avenues that might help you achieve your dreams. The following are avenues recommended by the Small Business Administration to help you get alternative funding:
Self-funding, often known as bootstrapping, allows you to use your financial resources to finance your firm. Self-funding can take the form of borrowing money from family and friends, putting money in savings accounts, or even taking money out of your 401(k).
You keep entire control over the business when you self-fund, but you also take on all the risk. Make sure you don’t spend any more than you can manage, especially if you’re taking money out of your retirement account early. You could incur costly costs or penalties, as well as jeopardize your ability to retire on time, so consult your program’s administrator and a personal financial expert first.
Venture capital investments are a type of money that investors might provide to help you launch your firm. Typically, venture capital is offered in exchange for a share of ownership and an active involvement in the company.
In severalnumber of ways, venture capital varies from traditional finance. Typically, venture capitalists:
- Focuses on high-growth businesses
- Rather than debt (it’s not a loan), it invests capital in exchange for equity.
- Takes more risks in exchange for the possibility of larger gains.
- Invests for a longer period of time than typical funding.
Almost all venture funders will desire a seat on the board of directors at the very least. As a result, be prepared to give up some control and ownership of your business in exchange for funding.
Crowdfunding is a method of raising finances for a business from a big group of people known as crowdfunders. Because they don’t receive a piece of the company’s ownership and don’t expect a financial return on their investment, crowdfunders aren’t technically investors.
Instead, crowdfunders anticipate receiving a “present” from your company as a thank you for their support. The present is frequently the product you want to sell or other special privileges, such as seeing the business owner or having their name in the credits. Crowdfunding has become a popular choice for people who want to create creative works as a result of this.
Crowdfunding is also popular since it carries a low risk for entrepreneurs. Not only do you get to have complete control of your business, but if your plan fails, you technically do not need to repay any of your contributors.
Consider a small business loan if you want to keep complete control of your company but lack the necessary capital to get started.
You should have a company strategy, expense sheet, and financial projections for the next five years to improve your chances of getting a loan. These tools will help you figure out how much money you’ll need and will show the bank that you’re making a good decision by taking out a loan.
For SBA-backed loans, go to Lender Match here
5. SBA investment programs
Small Business Investment Company (SBIC) SBA licenses and regulates SBICs, which are privately owned and managed investment funds. They make equity and loan investments in qualifying small firms using their own money as well as monies borrowed with an SBA guarantee. Find out more about SBICs to see whether your company qualifies.
(a) Small Business Innovation Research (SBIR) program: Small enterprises are encouraged to participate in federal research and development that has the potential to be monetized under this initiative. Check out the SBIR’s competitive awards-based initiative to see whether it’s right for you.
(b) Small Business Technology Transfer (STTR) program: This program provides money for government innovation research and development projects. Small enterprises that qualify for this initiative collaborate with nonprofit research organizations in the early and middle stages of their development. Check to see if the STTR program is right for your company.
What are the benefits and drawbacks of taking out loans or grants for small business?
There are several benefits to taking out a loan or grant for your small business. The most obvious is that you’ll get the money you need to grow your business. This can help you take on new projects, expand your product line, hire more employees, and more.
Another big benefit is that you often don’t need collateral, and the approval process is relatively simple. However, there are also some drawbacks. The most important is that you’ll need to make sure you can repay the loan or grant on time—if you don’t, you could face penalties and interest charges. And, if you’re not approved for a loan or grant, it can be tough to find another source of financing.
Loans and grants can be lifesavers for small businesses, providing the much-needed funding to get a business off the ground or keep it running.
However, it’s important to understand the differences between loans and grants, and which one is best for your business. This comprehensive guide will help you navigate the world of loans or grants for small business, so you can find the right one for your business and get it off the ground.