Startup Business Grants: Free Funding Options and What to Know
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Startup business grants provide free funding to help small businesses grow without debt. However, competition for small-business grants is fierce, and many awards require time in business — often at least six months.
Some grants are open to newer businesses or true startups. And even if you don’t qualify now, it can pay to know where to look for future funding. Here are the best grants for small-business startups, plus alternative sources of startup funding to consider.
» MORE: How to fund your business idea
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Government startup business grants and resources
Some government programs offer direct funding to startups looking for business grants, but those that don’t may point you in the right direction or help with applications.
Grants.gov. Government agencies routinely post new grant opportunities on this centralized database. If you see an opportunity relevant to your business idea, you can check if startups are eligible. Many of these grants deal with scientific or pharmaceutical research, though, so they may not be relevant to Main Street businesses.
Local governments. Lots of federal grants award funding to other governments, like states or cities, or to nonprofit economic development organizations. Those entities then offer grants to local businesses. Plugging into your local startup ecosystem can help you stay on top of these opportunities. For example, New York state’s website offers a consolidated list of business grants and incubators organized by region.
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These federal grant programs are designed for businesses with innovative technology or scientific research ideas. Federal agencies list the types of research they’re hoping to fund, and if you think your idea qualifies, you can submit a proposal. Unsolicited proposals aren’t allowed.
Small Business Development Centers. These resource centers funded by the Small Business Administration offer business coaching, education, technical support and networking opportunities. They may also be able to help you apply for small-business grants, develop a business plan and level up your business in other ways.
Minority Business Development Agency Centers. The MBDA, which is part of the U.S. Department of Commerce, operates small-business support centers similar to SBDCs. The MBDA doesn't give grants to businesses directly, but these centers can connect you with grant organizations, help you prepare applications and secure other types of business financing.
Small-business incubator programs
Business incubators or accelerators are designed to help businesses in various phases of the startup stage — providing education, workspaces and mentorship. Some also provide funding in the form of grants, pitch competitions with cash prizes or access to investors upon completion of their program.
These programs often target underserved demographics. Head Boss in Charge Headquarters (HBICHQ), for example, is a Seattle-based nonprofit that serves women and minority-owned startup businesses. It offers merit-based grants for graduates of several of its educational programs.
Other programs are designed to bolster support for certain industries. For example, Accelerate Long Island is a nonprofit designed to help high-growth biotech and health technology companies. The program may provide grants to participants in conjunction with funding partners on a case-by-case basis, and it helps startups navigate New York state tax incentives and find workspace by partnering with local universities.
To find these institutions near you, do an online search for “[Your City] business incubator.” Even if you don’t see a grant program, sign up for their email newsletter or follow them on social media. Like SBDCs and MBDAs, business incubators often provide business coaching, courses and lectures that can help you develop your business idea.
Startup business grants from companies and nonprofits
Lots of corporations and large nonprofits, like the U.S. Chamber of Commerce, organize grant competitions. Some national opportunities include:
IFundWomen. IFundWomen partners with other corporations to administer business grants. You can fill out a universal application to receive automatic notifications when you’re eligible to apply for a grant.
Amber Grant for Women. WomensNet gives two $10,000 Amber Grants each month and two $25,000 grants annually. Filling out one application makes you eligible for all Amber Grants. To qualify, businesses must be at least 50% women-owned and based in the U.S. or Canada.
National Association for the Self-Employed. Join NASE, and you can apply for quarterly Growth Grant opportunities. There are no time-in-business requirements for these grants of up to $4,000, but you’ll need to provide details about how you plan to use the grant and how it will help your business grow.
FedEx Small Business Grant Contest. This annual competition awards grants to small-business owners in a variety of industries. You can sign up to receive an email when each application period opens. To be eligible, you’ll need to have been selling your product or service for at least six months. Be mindful, though, that each grant cycle receives thousands of applications.
Fast Break for Small Business. This grant program is funded by LegalZoom, the NBA, WNBA and NBA G League and administered by Accion Opportunity Fund. You can win a $10,000 business grant plus free LegalZoom services. Applications are open during the NBA season, which runs from fall to early summer each year.
Alternative funding sources for startups
New businesses likely won’t be able to rely on startup business grants for working capital. And small-business loans are often out of reach for new businesses as well. The following startup funding sources may help accelerate your growth or get your startup off the ground.
SBA microloans
SBA microloans offer up to $50,000 to help your business launch or expand. The average microloan is around $13,000, according to the SBA.
The SBA issues microloans through intermediary lenders, usually nonprofit financial institutions and economic development organizations, all of which have different requirements. You can use the SBA’s website to find a lender in your state.
Friends and family
Asking friends and family to invest in your business may seem daunting, but it’s very common. Make sure you define whether each person’s money is a loan and, if so, when and how you’ll pay it back. Put an agreement in writing if possible.
Business credit cards
Business credit cards can help you manage startup expenses while your cash flow is still unsteady. You can qualify for a business credit card with your personal credit score and some general information about your business, like your business name and industry.
You’ll probably need to sign a personal guarantee, though, which is a promise that you’ll pay back the debt if your business can’t.
Crowdfunding
If your business has a dedicated customer base, they can help fund you through crowdfunding. Usually businesses offer something in exchange, like debt notes, equity shares or access to an exclusive event.
There are lots of crowdfunding platforms that offer different terms, so look around to find the model that works best for you.
