The Truth Behind Government Grants for Small Businesses

Financing your small business ventures is likely one of your biggest concerns as an entrepreneur. One route you might be considering is to apply for grants, but there are strict guidelines when it comes to being eligible for any government grants. There are some instances that might make you eligible, but it depends on what kind of business you’re in and what the government and taxpayers may receive in return for their investment in your endeavor. Here’s what you should know.

Is my business eligible?

Federal and state governments don’t provide grants to:

  • Start a business
  • Pay off debt
  • Cover operational expenses

Grants from the federal government are authorized through bills passed by Congress and signed by the President – and grant authority varies widely across the various agencies (such as SBA, USDA, DOE, etc.).

Federal grants are typically aimed at specific industries and causes identified by the government. These usually include scientific and medical research, conservation efforts, and so on.

Sometimes at the state government level, business grants or “discretionary incentive grants” are available, but they’re still closely tied to the agency’s agenda. These grants usually serve to advance regional economies and promote causes, such as clean energy development. Unfortunately for small businesses, however, state grants are often geared toward large businesses. They may also require that the grant be matched or combined with other forms of financing such as a loan.

Research-and-Development Grants

If your small business is engaged in scientific research and development (R&D), you may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs.

SBIR and STTR programs encourage small businesses to undertake R&D projects that:

  • Meet federal R&D objectives
  • Have high potential for commercialization

You can explore to learn more about specific SBIR and STTR programs and opportunities throughout the federal government.


photo credit: Washington DC Capitol – Purple Hour HDR via photopin (license)


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