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Starting a business

Grants to start a business: Where to find funds

Obtaining new business grants, which essentially offer free money and financial assistance, can greatly influence your experience as a new small business owner. As you’re going through the process of getting your business idea off the ground, having capital upfront is essential, and new business grants can become paramount in the success of your venture. Luckily for you and your business idea, governments and independent financial bodies put new business grands up all the time!

In this guide, we'll explore the why, the what, and the how of new business grants to help you secure your funding. More specifically, you’ll learn about the following topics and questions:

Why should you consider applying for a grant?

Many small business owners opt to pursue grants to start their businesses without incurring any debt from alternative methods of business financing.

Grants allow new small business owners to gain the backing they need to cover their initial operational expenses, such as their research and development efforts, marketing campaigns, accounting and bookkeeping services, and other things essential for business growth and development. Additionally, getting a grant is a way to show potential customers and other finance lenders that your business is credible, helping you to attract more investment and interest in the future.

Types of grants for starting a business

While government grants are commonly sought after, there are plenty of other grants for new small businesses that work for different business types. Let's define some of the more popular types:

Government grants

Government grants, offered by local, regional, or national government bodies, aim to boost economic growth and create jobs for local communities. You can apply for a grant through your government accounting body. Check out what they offer for your business type, and make sure to spend time doing your research before applying to make sure that it’s suitable. 

Grants for women starting a business

Aspiring female business owners can tap into grants aimed specifically at them. Grants tailored for women offer a powerful avenue for financial support and empowerment, with various global organizations and foundations champion gender equality.

These grants cover a spectrum of needs, from new business funding to operational expenses, to fostering a more inclusive community of business owners. This type of small business grant caters to the unique requirements of women-owned enterprises.

Prestigious recognitions like the "Women's Initiative Awards" and programs such as the "Cartier Women's Initiative" go beyond financial support, offering mentorship and networking opportunities. If you’re a woman navigating these opportunities, we recommend doing thorough research prior to applying and crafting a compelling application with the help of established female entrepreneurs. 

Going to networking events, staying informed about ongoing initiatives, and fostering collaborations among other female-led small businesses will also give you the best possible chance of being approved. 

Social impact grants

Social impact grants are geared towards businesses that prioritize social and environmental impact. If your business has a strong focus on sustainability or community development, these types of grants might be a suitable option.

Technology and innovation grants

Business grants for new businesses in the technology or innovation spaces are available to encourage research, development, and the implementation of cutting-edge technologies.

Grants for minority-owned businesses

Financial organizations will often promote diversity, equity, and inclusion by offering grants to businesses owned by minorities. These grants aim to address historical disparities. 

Industry-specific grants

Some grants are industry-specific, catering to businesses in sectors like healthcare, agriculture, manufacturing, and hospitality. They may sometimes include mentorship to help smaller businesses thrive in their industries. 

Eligibility and requirements

Before applying for any of the‌ above grants, you need to understand the eligibility criteria and gather the necessary documents for application day. Doing this will also help you assess how much it will cost to start your business. You should aim to gather: 

  • Business proposal: Provide detailed information about your business. You’ll need to provide evidence of the business structure you’ve chosen and how you plan to make a profit in the future. A business proposal helps grant providers gain a better understanding of what makes your idea stand out against other applications. 
  • Cost breakdown: Clearly outline the costs you're seeking funding for. This may include equipment, marketing, research, or other specific needs.
  • Financial statements: Some grants may require recent financial statements to assess your business's financial health.
  • Business plan: A well-structured business plan can strengthen your grant application. You can take the opportunity to showcase your vision and how your strategy will lead to success in the future. Use our business plan template to help you get the right information across. 

Grant vs loan: what’s the difference?

A small business loan and a grant may seem similar, but there are plenty of differences. Unlike loans, grants do not require any form of repayment, nor do they accrue interest, which makes them an appealing way to get funding during the early stages of business. Additionally, grants don’t involve any ownership stakes, meaning you never have to give away any shares or control of your business. Finally, there’s less risk involved with a grant, as you’re never in any debt to a financial institution. 

Do you have to pay tax on grants?

While grants are a valuable source of funding, they are considered income and may be subject to tax. You should consult with a tax professional to understand the tax implications specific to your country and your business structure.

Pros and cons of small business grants

Grants can be an invaluable way to secure funding for your new small business. Surprisingly, there are some cons to securing a grant. 

Pros

There are lots of benefits to obtaining a small business grant. The main advantage is the financial support they provide without the burden of repayment. This can help you cover your starting costs. You may want to invest in research and development or marketing initiatives to get your name out there. 

Additionally, receiving a grant adds credibility to your business. It demonstrates recognition and support from external organizations. Some grants even offer valuable resources like mentorship programs or networking opportunities, helping your business grow quickly. 

Cons

One major drawback of business grants is the intense competition among small business owners to be considered, as there are limited funds available and many people applying for them. To stand out in the selection process, it's crucial to create a compelling and well-researched application. 

Grants often have strict requirements, so it's important to fulfill all eligibility criteria and submit the required documents carefully. By adhering to these requirements diligently, small business owners can increase their chances of securing adequate funding to get their businesses off the ground.

New business grant application tips 

Securing a grant, especially for new businesses, can be tricky. With so much competition, your application needs to stand out. Here’s how to make your small business memorable: 

  • Do your research: Understand the requirements of each grant you apply for and tailor your application depending on what they’re looking for. 
  • Stay professional: Present a polished and well-thought-out application that reflects the potential of your business.
  • Clearly show why you need a grant: Clearly articulate why your business needs the grant and how it aligns with the objectives of the grant provider. 
  • Seek guidance: Reach out to organizations that offer grants for advice and guidance on the application process. You could also talk to business owners who have previously secured a grant to see what they did right. 

Manage your small business finances with QuickBooks

Starting a business can be costly. Securing a business grant can help you pay for the upfront costs of getting your company off the ground without the risk of debt, helping you to earn a profit quicker. 

With QuickBooks, you can automatically sync all your financial data to help you get a better oversight of how your business is doing. Check out our accounting software for small businesses to streamline your financial management processes. 

Try QuickBooks Accounting Software for Small Businesses Free for 30 Days

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