Fast Break for Small Business, Wells Fargo community giving grants, Walmart foundation grants, and FedEx’s small business grants are examples of easy loans or grants for small businesses in 2023/2023.
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. There’s a lot to do between securing funding, setting up your business entity, and drafting a business plan. 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 and 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. Small business loans enable qualified business owners to borrow money for acquisitions and running costs.
The best small business loans can help you get the money your company needs to flourish, whether you’re just starting or looking to expand.
On the other hand, a grant is a financial assistance that does not have to be repaid. It is granted to a company to assist in growing its enterprise.
Typically, corporations, foundations, governments, or trusts distribute them. Unlike many other forms of business investment, grants don’t have to be repaid, and business owners aren’t compelled to give up stock in exchange for them.
Loans and grants can come from various sources, including the government, banks, and private organizations. So, what are loans or grants for small businesses?
What Are The Difference Between Loans And Grants For Small Businesses?
The first distinction between grants and loans is that loans must be repaid, whereas grants are free from repayment obligations. A company that receives a grant typically undergoes an application process where they demonstrate its eligibility and agree to use the funds according to the grantee’s instructions.
However, unless they break the grant’s restrictions, the companies are not required to pay it back. 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.
On the other hand, a grant 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 restrictions on how the funds can be used.
What Are The Most Common Types Of Loans And Grants For Small Businesses?
A few different types of loans and grants are available to small businesses. The most common are bank loans, credit cards, and government grants. However, several private loans or grants for small businesses are available from organizations and charities that support such businesses.
It’s important to do your research and compare your options to find the best loans or grants for small businesses. And don’t forget to apply early—some loans or grants for small businesses have a limited number of awards available each year.
Also, small business hardship grants are meant for small businesses during difficult periods. An example is the COVID-19 grants for small businesses during the Coronavirus pandemic.
Loans and grant opportunities are available for nearly every subsector of ownership:
How to Find Small Business Loans: A Guide
Although each lender has a different application and underwriting procedure, most banks and lenders adhere to the same broad principles.
Expect to go through the following processes to obtain a small company loan:
- Decide what kind of loan you require: Before asking for a loan, decide how you’ll utilize it because some lenders have restrictions on the sectors they’ll finance, or the ways loan funds may be used.
- Know the details of your credit history: When assessing a loan application, lenders frequently consider the personal credit score of the business owner. For an SBA loan or a conventional bank loan, you need a minimum credit score of 680; equipment financing or business lines of credit must be 630. The qualifications for merchant cash advances and short-term loans are often less strict, with average scores of 600 and 550, respectively.
- Research lenders: Find out if your present bank has small business loans that suit your needs before looking elsewhere for a small business loan. Given that the bank will already have your financial information on file, this can speed up the application process. Next, examine the loan amounts, periods, and rates offered by various banks, credit unions, and internet lenders.
- Gather the necessary paperwork: Each lender has different requirements for supporting documents. However, most lending organizations need a business plan, at least 12 months’ worth of personal and business bank records, at least two years’ worth of tax filings, and specifics on any ongoing and previous business loans. A description of how the loan money will be utilized, information about the available collateral, and copies of pertinent business licenses and legal documents are also required by lenders.
- Formally submit a loan application: After researching the best small business loans and preparing your company for due diligence, you should file a formal loan application. Every lender has a different application procedure, so acquaint yourself with it and ask any queries to customer care.
How to Find Small Business Loans: A Guide
How to Submit a Small Business Grant Application
Work hard and wisely. Instead of submitting an individual grant application, prepare a “resume” for your company outlining your responses to the typical questions business grant-givers ask their applicants. This is what every job applicant does.
Although grants are essentially free money, you still need to put in some effort if you want to benefit from them.
Depending on the specifications, some applications will change. For instance, a grant from a local government will probably call for an explanation of how the expansion and development of your company will directly benefit local businesses. In contrast, a grant from a private company like FedEx might call for a persuasive video.
When requesting a business grant, you might be asked to include the following typical information:
- The time you have spent in business
- Number of employees you have
- Your Monthly or annual revenue
- How will the funds be utilized?
- Your business’s “elevator pitch.”
- Your Employer Identification Number (EIN)
- Your social media handles (LinkedIn, Facebook, Twitter, Instagram, etc.)
- A business plan. You ought to already have one, but if not, speaking with an SBDC consultant or your accountant can help you determine the figures, forecasts, and statistics that show how your firm is now doing and where it can go in the future.
How To Apply For Loans And Grants For Small Businesses?
Applying for loans or grants for small businesses can seem hard, but it doesn’t have to be. There are several 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 businesses, so you can find the right one for you. Each organization has its application process, so 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 businesses to grow your business.
Loans Or Grants For small businesses from Private Corporations
Many firms and large companies’ charitable functions include providing loans or grants for small businesses. Some give these grants to NGOs that serve specific industries solely, while others also provide 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 4. The competition is open to small for-profit enterprises established in the United States that have been operating for at least six months and employ no more than 99 people.
(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 with 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 providing cash to tech-forward startups worldwide in five locations. Applicants must demonstrate how they’ve created a product or service that uniquely incorporates Visa’s products.
Visa will choose the top five regional finalists, and these businesses will advance to worldwide finals. The competition’s ultimate winner receives a $100,000 small-business grant. Second- and third-place finalists, fan favorites, and regional and local champions, receive additional grants.
(5) NASE Growth Grant
Each quarter, the National Association for the Self-Employed (NASE) gives its members $4,000 in Growth Grants. Owners of businesses can utilize the funds for marketing, advertising, hiring staff, building out facilities, and other requirements.
You must be a member of NASE to apply. Fundamental yearly membership is $120. The selection committee considers applications four times a year in January, April, July, and October. You can apply at any time of the year.
Veterans, active duty personnel, or the spouse of a military veteran or active service personnel are eligible for the StreetShares Veteran Small Business Award.
The judges will look at the applicant’s business idea, planned use of the cash, product-market fit, team, and the company’s impact on the veteran or military community. Successful applicants will get up to $15,000.
(7) Nav’s Small Business Grant
Nav has provided a $10,000 small business grant every three months to assist business owners in resolving issues or expanding their enterprises.
(8) eBay Up & Running Grants
There will be 50 $10,000 award winners who will receive money, mentoring, and eBay training. The grant entry window for 2022 is open from May 2 until June 10 at 6:00 PM ET.
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 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. 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 growing and promoting 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 and federal, state, and local business grants. The agency normally organizes a small-business grant contest annually 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 cannot access loans or grants for small businesses, the Small Business Administration has 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 more than you can manage, especially if you’re taking money out of your retirement account early.
You could incur costly costs or penalties and 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 active involvement in the company.
In several ways, venture capital differs 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 than typical funding.
At the very least, almost all venture funders will desire a seat on the board of directors. 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 known as crowdfunders because crowd funders aren’t technically investors because they don’t receive a piece of the company’s ownership and don’t expect a financial return on their investment.
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.
Crowdfunding is also popular since it carries a low risk for entrepreneurs. Not only do you 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 control your company completely 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 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, privately owned and managed investment funds. They make equity and loan investments in qualifying small firms using their money and 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 their development’s early and middle stages. Check to see if the STTR program is right for your company.
Small Business Grants Specifically for Women
There are grants specifically for women-owned businesses, grants provided by private companies, and grants for startups, which are accessible to a wider range of business owners. Women’s business centers can provide you with resources and information, but for now, consider these two grants for female-owned businesses.
Each month, $10,000 in cash is given as part of the Amber Grant to deserving female entrepreneurs. The recipients of monthly grants will have the chance to win an additional $25,000 grant at the end of the year.
(2) Boston Women’s Fund
The Boston Women’s Fund provides seed money, program support, and operational funding for women-led grassroots community initiatives. This page lists its grant programs.
The SBA annually funds the InnovateHer Challenge, a grant program for female entrepreneurs. There are three winners: the first place prize is worth $40,000, the second place is worth $20,000, and the third place is worth $10,000.
It’s a prestigious grant that also garners attention from the beneficiaries’ companies.
To qualify for the national competition, you must first triumph in a local InnovateHer challenge.
Any business can compete, but those focused on women and their social issues typically fare the best.
The Cartier Women’s Initiative Award is a prestigious grant that can significantly improve any small business.
Each of the 21 finalists receives individualized coaching, training, networking opportunities, and media exposure. There are three finalists from each of the seven major regions of the world. That is priceless all by itself.
Additionally, grants are given to each of the 21 finalists. Along with a $100,000 prize, the top 7 also receive tailored business mentoring. The other 14 still receive a payout of $30,000.
What are the benefits and drawbacks of taking out loans or grants for small businesses?
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.
FAQs on Easy Loans Or Grants For Small Businesses
What grants am I eligible to receive for my small business?
Corporations, nonprofit organizations, and federal and state governments offer grants for small businesses. The eligibility of your company depends on its owner and business information.
For instance, some grants target women-owned businesses, while others target technology companies. Make sure to conduct a thorough search to identify all grants for which your company may be eligible.
What can a small business grant be used for?
Grants for small businesses can be applied for several things. In some grant schemes, entrepreneurs are free to use the funds however they see suitable.
Others may impose limitations on the funds and demand that recipients provide documentation regarding how they used the cash (e.g., to pay for equipment, hire personnel, fund R&D, or market their company).
Does the SBA award small business grants?
Usually, small business owners do not get grants directly from the SBA. Instead, it collaborates with local and state agencies to support entrepreneurship and offer programs for small company training and counseling. Additionally, it provides a variety of loans.
Is Obtaining an SBA Loan Simple?
No, and yes. Due to their more affordable borrowing costs, Small Business Administration (SBA) loans are a popular funding source. They provide lower interest rates than many other options since they are backed by the government and are less reliant on your creditworthiness.
In addition, compared to conventional bank loans, the SBA loan program tries to make it simpler for small businesses to qualify.
However, obtaining a loan can be more difficult than obtaining a simple business loan. For instance, you’ll need to submit more paperwork than many simple business loans, such as a business plan, bank statements, and an estimate of your company’s revenue. You’ll also need to raise your company’s credit score. To learn how to establish company credit, read this article.
What SBA Loan Is the Simplest to Get?
Consider SBA microloans if you need an SBA loan but aren’t eligible. You can borrow a lump sum of between $500 and $50,000 to increase cash flow; they are suitable for small business customers who need a lesser loan.
Funding for operating capital, inventory, supplies, and more may be available through these SBA loans. This loan might be the best choice for business owners who don’t meet the lending requirements of conventional financial institutions or don’t have a credit history.
The normal interest rate is from 8% to 13%, which is significantly less than that of other simple company loans. Six years is the maximum amount of time you can repay the debt. To apply, you’ll need to look up a participating company in your area that serves as an intermediary lender for these loans on the SBA website.
Conclusion on Easy Loans Or Grants For Small Businesses
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 is best for your business.
This comprehensive guide will help you navigate the world of loans or grants for small businesses, so you can find the right one for your business and get it off the ground.