Small Business Funding

Small Business Funding

For small businesses and emerging startups, there is a range of funding options. It might be possible to request free money from the government. Private sources are also willing to help out as well.

Small business owners have always found these opportunities useful for maintaining cash flow and expanding their companies. However, during the recent COVID pandemic and associated restrictions, finding the best funding options has become even more vital.

If you’re looking for ways to keep your business afloat in 2021, small business funding opportunities are going to come in handy.

The First Step

A business loan could be worth considering as it would provide you with financial security and working capital. Even though some funding options are loans that require repayment, interest rates tend to be next to nothing. Start by researching the different funding options you have.

To get funding for your small business, look into:

  • Government agencies and small business grants
  • State grant programs
  • Private new business programs and financial institutions

These are the top loan program sources. However, eligibility requirements differ for each option. What you’ll need to do is look closely at each program one by one. Deciding which is the best fit for your old or new business is crucial.

U.S. Small Business Administration and Other Federal Grants Options

Business grants are the specialty of government agencies. They provide free money to a wide range of enterprises. Environmental protection groups, startups, and existing small businesses can all go to them for funding.

However, don’t let the seemingly intimidating application process scare you off. Gather the necessary documentation, fill out the forms, and try your luck with some of the most popular government funding options.

Related Topic: How Much Do You Need To Start a Business

The Database of Funding Opportunities is a database under the authority of the U.S. Department of Education and the Department of Veterans Affairs, among other agencies. The site gathers information about assistance programs from all these government bodies and makes them available in one place.

You’ll find information about assistance programs, eligibility requirements, and other crucial details. Some of the more interesting agencies within the network include:

  • The National Park Services
  • Indian Affairs
  • Fish and Wildlife Services

There are several things you need to know about the government money the system distributes. First, you can’t apply for a grant to cover operating expenses. Startups aren’t eligible either. You need to have an existing, operating business to receive any funding. State and government grants often go to companies that contribute to the economic development of their native region.

Despite these facts, don’t be discouraged. There are other options available to you and your small business should not give you what you need.

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs

The SBIR and STTR programs focus on startups and existing businesses in the technology fields. They’re interested in institutions that are moving tech-forward.

The Small Business Innovation Research and Small Business Technology Transfer programs connect business owners with 12 government agencies that are willing to give them free money. There are specific eligibility requirements you need to cover. The most basic of which is that you need to be a non-profit organization and have less than 500 employees.

You won’t be able to find information about getting free money here. Instead, what tries to do is help emerging businesses develop fully. There are tons of useful tips, guides, and valuable information on the site.

When it comes to small business funding, the list of government loans available at the moment is extensive. You’ll also learn about what you need to qualify for a small business loan. The step-by-step application guides are also indispensable.

The Small Business Administration

Small Business Funding

The US SBA is the go-to government agency when it comes to free money and low-interest loans for small businesses. The Small Business Administration partners with banks, credit unions, and various other lenders. It works as an intermediary between small business owners and these lenders.

In many cases, the SBA will help you negotiate better terms on your loan and provide you with other assistance. Need a short-term or a long-term loan for a new business? Does your company development depend on getting a specific amount of money in the long run, with low interest rates? You can count on SBA loans to give you the line of credit which will allow you to build your business.

Another thing the U.S. Small Business Administration does is to broker as much as a quarter of all government contracts small businesses receive. Over 900 Small Business Development Centers around the country are also under their administration. You’ll find many of them around college and university campuses.

In addition, the SBA has created some 110 Women’s Business Centers and SCORE. The latter is an organization of veteran businessmen that lend their skills and know-how to emerging startups. The SBA is the good guy for many types of small companies because it genuinely seems to care about your business needs.

State Grant and Loan Opportunities

In addition to the federal government, regional agencies assist small businesses with funding. Check out the SBA’s Small Business Development Centers in your area first. Regional SBDCs work with both existing companies and entrepreneurs who want to make their vision come true. The people working there will point you in the right direction if you want to get your hands on your free money. While they don’t have budgets to distribute among startups and struggling businesses, they can refer you to the right place.

Whether it’s a bank loan, business credit, or a grant from the right state department, they’ll guide you through the process. In addition, the SBDC will put you in contact with business owners from your industry. The networking opportunities for business growth and funding alike aren’t something to be taken lightly.

The Economic Development Administration

The next thing to look into, on a regional level, is the US Department of Commerce agency. It provides technical assistance, resources, and grants. The Eda’s primary focus is economic local community development.

They’ll be happy to work with you if your goal is innovation and entrepreneurship on a regional level. On top of grants and loans, they can help with finding locations for your business and hiring employees.

Coronavirus Small-Business Grants

2020 was a trying time for small businesses due to the COVID pandemic. The government restrictions made it difficult for many companies to stay afloat. There are still some government services you can use if your business has suffered due to the pandemic situation:

  • Shuttered Venue Operators Grant has $15 billion available in grants for venues that lost money, commercialization chances, or had to close due to the pandemic. Art venues, theatres, and other eligible institutions in business since at least 29 February 2020 can apply. The registration process opened on 8 April, so don’t miss your chance.
  • Targeted Economic Injury Disaster Loan Advance of up to $10 000 for small businesses in low-income areas. The advance is a grant, not a loan. That means you won’t have to return the money. The trick here is that the SBA reaches out to eligible businesses. There isn’t an application process per se.
  • The Restaurant Revitalization Fund. The restaurant industry is the industry hurt the most by the coronavirus. Food establishments may qualify for up to $10 million in funding from the RRF. The list application session ended on 24 May 2021. Be on the lookout for the next round.
  • The Paycheck Protection Program (PPP) ended on 31 May 2021, but the PPP Loan Forgiveness Program is a topic worth researching. Learn more about how the Paycheck Protection Program can still help you.

Corporate Small Business Grants

If you don’t want to go to the government for money or have exhausted those options already, don’t give up. Private corporations give out small business grants and low-interest loans as well. The philanthropic component of large companies isn’t a chance to miss. The drawback is most of them focus on the non-profit sector. However, there are still certain resources available to small businesses and emerging entrepreneurs.

FedEx Small Business Grant Contest

This annual competition gives $250 000 to 12 businesses that defended their business plan the best. The big winner gets $50 000 and $7500 in FedEx print and business services. The competition starts around the beginning of February each year. To enter, you need to be a US-based for-profit company. You need 99 employees or fewer and at least 6 months in business before you enter the grant contest.

National Association for the Self-Employed

If you are a NASE member, you can apply for a small business grant of $4000 each month. Applications are reviewed in April, July, October, and January. The grant program runs annually without breaks. Don’t forget as a NASE member you are eligible for an annual $3000 scholarship award as well. The money goes toward the higher education of your kids.

Other Funding Opportunities

Let’s say you have gone through all government and private small business financing options. You either didn’t qualify or didn’t get enough money in the form of grants and business loans. Should you give up? Not before you have explored other funding sources:

  • Crowdfunding – In the age of social media, it’s become more and more popular. Crowdfunding happens everywhere. Go on Facebook and Instagram or to specialized platforms like Patreon, GoFundMe, and Kickstarter. The money works just like a grant. Your responsibility is to live up to the promises you made to your backers. Convincing a lot of people to get their credit cards out and invest in your idea can be tricky. It isn’t impossible, though. Many successful startups have emerged from the crowdfunding scene.
  • Angel investors and venture capital firms – There are a lot of wealthy people out there who are looking to invest. If you can convince them your business idea is feasible, they might be willing to take a gamble on your startup. Venture capitalists fund existing small businesses as well. They hope to help them grow and share the profits. The drawback of such investors is that you “sell” a portion of your future profits to them.
  • Friends and family might be willing to help you – Even hardcore economy experts agree such loans might be a viable option for small businesses. Family and the local community can be the best support group during tough times. The benefit, even when you have to return the money with interest, is that the interest will be lower than a traditional bank loan.

In Conclusion

Getting a small business loan might not be the easiest task in the world. A credit score of 680 or higher and the ability to deal with a lot of paperwork are necessary. More small businesses than ever compete for grants and loans, which only adds to the problem.

You need to find the right agency or funding program and follow strict application deadlines. Things become trickier if your small business isn’t in an industry the government has deemed important at the moment.

The fact remains that there is a wide range of grants and loan opportunities. Even if the government isn’t there for you, private corporations might be. Don’t get discouraged, roll up your sleeves and get to work.

And don’t forget, if you have experience in getting small business loans, or have any questions, let us know in the comments.