The U.S. Small Business Administration (SBA) is a government agency that has been in existence since 1953. Its purpose is to lend financial and other types of support to small business owners. With an annual budget of $710 million (at least during 2015), they work hard to help small business all around the US:
- training and educating business owners
- allowing them to get government contracts
- they help them get financing through loans and grants
SBA grants can provide you with the money you need to take your company to the next level.
But what exactly are SBA grants, and how do you qualify for one?
Are they readily available?
What can you use the money for?
In this post, we’ll answer these questions. We’ll also look at how you should approach the grant application process. Finally, we’ll furnish a list of some of the SBA grants that are available to small business owners.
SBA Grants vs SBA loans
Before we come to the nitty-gritty of SBA grants, let’s understand the difference between a grant and a loan.
Loans need to be repaid to the lender. Grants do not. When you receive a grant, the money is yours to keep forever.
Of course, it isn’t easy to qualify for a grant.
It’s a long-drawn and laborious process. Even after you receive the funds, there are many conditions that you need to abide by.
The U.S. Small Business Administration provides loans as well as grants. We’ve already mentioned that it can be challenging to get approval for a grant. However, even their loans have strict requirements.
For example, you need a credit score of at least 680 to qualify for an SBA loan. Borrowers have to provide collateral, as well.
What do I need to apply for an SBA grant
Individual SBA grants carry specific requirements. For example, there are SBA grants for small businesses engaged in scientific research and development.
Small firms could qualify for federal grants from one of the following programs:
- Small Business Innovation and Research (SBIR)
- Small Business Technology Transfer (STTR)
These programs provide funds to companies to carry out scientific research. The objective is to develop products or processes that could be commercialized.
What’s the difference between the SBIR and STTR programs?
As similar as they may sound, the SBIR and the STTR programs are quite different:
SBIR encourages small businesses to conduct research and development in areas that the federal government targets.
The STTR program, on the other hand, promotes public/private partnerships between small businesses and nonprofit research institutions.
Who’s eligible for these SBA grants?
To be able to apply for an SBA grant, you would need to meet the following conditions:
- You must be a Small Business as defined by SBA regulations.
- Your application for the grant must be in response to a specific agency solicitation.
- Nonprofits aren’t eligible. However, they can be minority investors in the project.
- You must have an EIN/TIN.
- SBIR and STTR work must be performed in the US.
How to apply for an SBA grant
Before you begin the process of applying for an SBA grant, you should know that quite the lengthy process. Additionally, there are stringent conditions to be met.
The first thing that you need to do is to study the solicitations carefully. Do you meet all the conditions? Remember that there’s intense competition for SBA grants. You must comply with all the requirements.
Here are some of the things that you must remember to do:
- Read the grant application carefully. Make a list of the instructions and ensure that you follow each of them.
- Complete your application well in time. There is no point in spending months on preparation only to be disqualified because of late submission.
- Pay special attention to your business plan. Describe how you will use the funds you receive. You must point out the money will be spent to fulfill the specific goals of the grant.
If you do decide to apply for one… what are the first steps you should take?
Search for the complete details about how to apply for SBA grants. And then go to the Search Grants page to see a list of the SBA grants that are currently up for grabs.
Here’s a list of some of the SBA grants that are available:
Small Business Innovation Research Program (SBIR)
This is for companies that have research and development strengths. The program aims to provide funds for the development of new technology and processes.
Small Business Technology Transfer Program (STTR)
This program is parallel to the SBIR. As its name implies, its purpose is to transfer the technology developed by research institutions to small companies.
State Trade Expansion Program (STEP)
STEP has been designed to help small businesses export the products they make. Between its year of launch, in 2011, and 2019, the program has awarded $157 million in grants to promote exports.
Plus: SBA loans
If you realized the SBA grants are not what you need or what you were looking for, don’t worry, you could still apply for an SBA loan. These programs can help entrepreneurs in other ways.
Just keep in mind that the requirements and processes are as strict as the ones for a grant.
This program is targeted at small disadvantaged businesses. To qualify, the applicant business must be at least 51% owned by US citizens who are socially and economically disadvantaged.
The 8(a) program sets aside 5% of all federal contracting dollars for small disadvantaged businesses. The first step is to get certified as an 8(a) business. You can do this by following the instructions on certify.SBA.gov.
SBA’s program targeted at Women-owned businesses
SBA’s district offices provide business training, counseling, and access to capital to women entrepreneurs.
Aspiring business owners can register on DreamBuilder as a first step. This is an online training program that offers 13 modules on different business subjects. It’s in both English and Spanish. Although designed for women, anyone can take it.
What’s the best financial option for your business?
Getting an SBA grant isn’t easy. But it could be worth the time and effort. It will give your company the additional funds it needs for expansion.
Other initiatives like the SBA 8(a) Business Development Program could help you secure lucrative federal contracts. Although this could be a lengthy process, the long-term benefits could be tremendous.
But… what if you need funds and can’t find a suitable grant?
Don’t forget that you have other options, as well. Camino Financial offers small business loans that are available in a matter of days.
And it’s far, far easier to qualify for a Camino Financial loan than for an SBA grant.
We provide collateral-free loans and a quick turnaround. When you apply, you’ll receive an instant loan quote. If you’re approved, and you accept our loan conditions, we can directly deposit funds in your account within two days.
Remember that at Camino Financial, our motto is “No business left behind.” Our small business loan specialists will guide you through every stage of the borrowing process. We’ll ensure that you get the lowest-cost funds in the least possible time.
Apply for a business loan and find out how borrower-friendly we are!