Money might not grow on trees but, believe it or not, there is such a thing as free money for your small business. If you know where to look, you can supplement your startup funds with free money from the government. It’s not difficult, and you can even take advantage of multiple government programs to get your business off the ground.
If you have the drive and determination of a true entrepreneur, bootstrapping your business is the best method for starting your company. You retain full control over the future of your business, and you can get started right away.
But there’s one aspect of bootstrapping that many entrepreneurs struggle with: funding. When you bootstrap, you don’t have any VCs or angel investors pressuring you, but you also don’t have their money at your disposal. That means you have to come up with all the money to give your business liftoff.
Thankfully, you don’t have to empty your life savings to fuel your startup. If you can’t quite fund everything yourself––or if you’d just prefer to have some financial elbow room––there are all kinds of programs that you can leverage. Here’s how to get free money from the government to kickstart your business and make bootstrapping a whole lot easier.
How to Find the Right Grant Program For Your Business
Most often, financial assistance for small businesses comes in the form of grants. You simply find grant programs you qualify for and apply. If all goes well, you’ll get free money for your business, no strings attached. Grants might seem too good to be true, but they’re not.
Grants and loans are often treated as the same thing, but there’s a world of difference between the two. If you take out a loan, you’re responsible for paying that loan—with interest. With a grant, you have no obligations (other than using the money for your business). There’s nothing to pay back, and you don’t owe anyone a cent of the money you use.
“What’s the catch?”
That’s the best part. There are no real downsides to small business grants, but there are some things you should know before going out and applying for every grant in existence.
First, you have to find the right grants for your business. Many grants are niche by nature and target particular types of small business. In order to qualify, you need to meet specific eligibility requirements. While this can get extreme (see the Minnesota Dairy Business Planning Grant), most startups are able to qualify for a variety of grants. You may need to do some digging to find them, but the payoff is well worth it.
Second, when you’re awarded a grant, you’ll often need to spend the money on certain business expenses. For example, you may need to spend it on R&D instead of Facebook marketing. Make sure you research a grant thoroughly before applying so you know exactly how you’ll need to use the money you’re given.
Where do you find the right grant program?
Finding the right grant is half the battle. Grants are purposely difficult to find (they’re not just throwing the money away, after all) so you’ll need to do your due diligence if you want to find amazing grants.
Here are some of the best options for seeking out grants:
Grants.gov. This is perhaps the best database for grants––although it can be a little difficult to navigate at times. You can search a global grant database and find extensive information on each grant. The site lists over 550 small business grants. Note that these grants are typically for businesses grounded in science, technology, and health.
Fundera’s list of small business grants. Fundera is known for business loans––which, again, aren’t nearly as helpful as grants––but this particular blog post covers grants. This lengthy list sorts 105 grants into seven categories and covers a lot of ground. It’s also updated regularly, so there’s no need to worry about outdated or broken links.
The Small Business Innovation Research (SBIR) program. This popular grant program targets small businesses that are technologically focused. In their own words, the SBIR “encourages domestic small businesses to engage in Federal Research/Research and Development (R/R&D) that has the potential for commercialization.” A related initiative is the Small Business Technology Transfer, which also deals with R&D funding.
It can also pay to seek out local or state-level grants. Many grants are provided by either the federal government or corporations, but these can be highly competitive. If you can find good grant programs targeted at businesses in your state, county, or city, you might strike gold.
Finding Government Contract Opportunities
Nailing a grant isn’t the only way to get government funding for your business. You might find it surprising that the U.S. government often buys from small businesses, and it’s possible to secure government contracts that allow you to sell to different departments.
The Small Business Administration (SBA) provides a wealth of information on gaining contract opportunities. First, you need to make sure you meet all the eligibility requirements set forth by the government.
It also helps to read up on the different types of contracts out there. There are set-aside contracts, which allocate government money for lone small businesses and joint venture contracts, which are designed for two or more small businesses working together.
When you’re ready to seek out contracts, you have a few options. FedBizOpps.com lists tens of thousands of contract opportunities with the federal government, and it’s one of the best sources for finding contracts. Once you find a contract, you’ll have to make a bid on it (so any marketing know-how will come in handy here).
You should also register your business with the System for Award Management (SAM). Registering will input your business into databases that the government uses to find small businesses to work with. Registration is completely free, and it’s best to include as much detailed information as possible. The more appealing your SAM profile is, the more likely you’ll be able to successfully land a contract.
Apply for an SBA Loan & Lighten the Load of Debt
Learning how to get free money sounds great, but it’s even more appealing if you’re experiencing debt. It’s easy to get into debt when bootstrapping a business, but with the help of government assistance, you can mitigate the effects of debt and get back on your feet.
One option is applying for a loan through the SBA. While the SBA itself doesn’t lend to businesses, it facilitates the process of getting a loan. Many SBA-guaranteed loans offer benefits such as competitive rates, extended term lengths, lower down payments, and ongoing counseling. For small businesses, going through the SBA can be far more helpful (and much safer) than going through a bank or private lender.
You can use the Lender Match feature on the SBA’s site to apply for loans. The process is fairly straightforward, and the SBA helps you every step of the way.
However, this approach isn’t all sunshine and rainbows. Finding a lender and getting approved can take some time, and some have rather strict requirements. For some loans, you may even need collateral. This can put your personal assets at risk.
That’s why applying for an SBA loan is something you need to think about carefully. They’re great for the right business, but you need to know what you’re getting into.
Get Free Government Money for Your Business
Knowing how to fund your business with government money can be extremely beneficial for startups of all shapes and sizes.
You’re not going to fund your startup from scratch, but you can use government assistance to supplement your existing capital. What’s more––through grants, contracts, and loans, you can reduce your financial burdens while you grow your business.
If you haven’t considered these methods of getting free money to make money, you owe it to yourself to take a look.