If you want to get started with running a business, you'll need several ingredients. First, you will need an idea for services or goods, which you may have already found on our site. Secondly, you will need free time and some knowledge. The last but not the least factor is money. Although there are businesses that do not require a large investment to start, in many cases you still need even a little money. And this is what small business grants exist for.
What are grants?
You have probably already heard about grants. It's a form of support, usually financial, for a specific person, company or organization to help them achieve a goal. Grants and subsidies are awarded by institutions at various levels, from the European Union and the United Nations, to governments and state and local authorities. There are also grant programs organized by companies, but they mainly focus on supporting scientists and artists.
Grants for small businesses are usually assigned by local authorities and some private equity funds, which usually expect something in return. Many countries also have startup incubators.
Why are there grants?
As we have already mentioned, grants are allocated to achieve a specific goal. While on the surface this is purely a loss for the grant-making bodies, the reality can be quite different. Any business that makes money pays some kind of taxes and drives the economy. Grants for small businesses are a good investment, because in most countries around the world, small businesses are responsible for a significant portion of tax revenues.
State aid also helps bail out the economy in times of instability. The COVID-19 pandemic proved to be a test for many businesses. Hotels, restaurants and cinemas had to close to limit the spread of the disease. Grants for small businesses saved many companies, allowing them to operate during the most challenging times.
What can they be used for?
The rules for using grants and subsidies largely depend on the country you live in. In the United States, the largest institution supporting small businesses is the Small Businesses Administration. On their website we can read that public subsidies are allocated for research, development, management and technical support. The SBA does not give money for starting and growing a business.
Other restrictions are being imposed in Europe. Although in many countries it is possible to get a grant at the very beginning of a business, it often cannot cover all expenses for a particular investment. Supported expenses include:
- Research
- Know how
- Licenses
- Copyrights
- Audits
- Prototypes
- Patents
In addition to grants small business sector can also receive very favorable loans and credits. Such arrangements are used by the European Union, among others, and frequent beneficiaries are farmers and companies in the food production industry.
Examples of grants for companies
Small business innovation research (SBIR) - is a program that supports small businesses based on research. The money is allocated by 12 federal agencies, including NASA.
State trade expansion program (STEP) - organized by the SBA, an export development program for small businesses
National Association of the Self-Employed (NASE) - offer up to $4,000 a month to a lucky group.
State trade expansion program (STEP) - organized by the SBA, an export development program for small businesses
Innovate UK Smart Grants program - organized several times a year, it's worth finding out as much as possible about it
Seed Enterprise Investment Scheme (SEIS) - up to £150,000 for startups.
Of course, this is only a small part of the grant programs. If you're interested in any of the grants we've mentioned, be sure to learn more about them!
Conditions to be fulfilled
Not everyone can get a grant. Of course, each program has its own specifics and its own requirements, but there are some general rules.
- Your business should be growth - oriented. If you are involved in cutting-edge technology and doing something groundbreaking, getting funding should not be difficult. More and more corporations and governments appreciate the role of innovation
- Your company must already be operating. If you are looking for small business grants, you must already be a business owner, although there are usually no requirements for cash flow or profits.
- Everything must be legal. Before you start applying for a grant, make sure your company doesn't raise any objections
- You must be patient. There is a wait of up to a year for grant money. Many people give up on getting public assistance precisely because of the waiting time and a lot of red tape.
How to apply for a grant?
You already know almost everything about grants for small business, you already have your company that you set up based on THIS guide. Now it's time to get the money.
- Find a grant program.
- Find out about deadlines and requirements.
- Register with the government or on a website. In the US, this is Grants.gov
- Apply
- Follow the recruitment process
You can also use the services of one of the companies that assist in obtaining grants. Your attorney friend may also be able to help you.
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