We have all heard them. The stories about how a successful business was started by magic money from grant funds. But do these funds really exist? Or are they pennies in a wishing well rather than authentic dollars? This article is the second component of a two-part series that examines the availability of grants to businesses and individuals in response to the number of inquiries The Grant Plant receives on these subjects. The first article, posted in August of 2010, discussed grants to individuals. This article provides an assessment regarding the availability of grants to build businesses with the primary goal of generating profit.
To the Business Owner:
The availability of grants to businesses is less straightforward than the availability of grants to individuals. Business grants are highly specialized and sporadic in nature, but there are some out there. Potential opportunities are complicated by a high frequency of scams and claims that try to sell grant listings. In fact, at The Grant Plant, we routinely get recorded calls that suggest our business could get a grant. Fortunately, we know better. Red flags should pop up immediately if a site requires you to pay a fee or enter personal information (such as a social security number) in order to inquire about a grant or to obtain more information about a grantmaking organization. Applicants should research the background of questionable grantmakers through internet searches or checking with the State Attorney General’s Office or with the Better Business Bureau.
Funders generally do not provide grants to build businesses with the exception of some grant programs that support research and development for technology-based products and services for the government. There are other federal grants available to businesses that support specific projects: for example, agriculture-based businesses may apply to obtain support to conduct a project that focuses on business development, such as those through the state’s rural development office (USDA). On rare occasions, business development grants are also available through state and local programs, nonprofit organizations, and other groups. These programs primarily target specialized businesses such as tourism campaigns, child-care expansions, or energy efficiency technology companies. Grants such as these typically require recipients to match funds or combine the grant with loans or other financing options. Occasionally, businesses are eligible to apply for federal funds along with a host of other eligible applicants, including tax-exempt organizations.
But the truth is that approximately 95% of businesses are financed through loans and personal funds, as reported by Albuquerque Small Business Development Center. For those businesses that are dedicated to searching for grant opportunities, you can search for grants from private foundations, state, county, or city agencies, and scan through the federal opportunities to see if your business is compatible with any open requests for proposals. When researching business grants, you should always use trusted sources such as government or library websites, or a professional grant search engine (such as the Foundation Center), if available. The U.S. Small Business Administration (SBA) is a savvy site that helps find financing for small businesses and provides a guide to available programs. The search will generate results for grants, loan programs, and seed and venture capital.
I conducted a brief search targeting grants to businesses in general. My findings are not representative of all of the grants out there that support businesses, but may give you an idea about the typical nature of business grants:
- Small Business Technology Transfer Program (STTR): This is a federal program that stimulates technology innovation through cooperative research between small businesses and nonprofit research institutions. The most recent topic in 2011 is Digital Gaming in Education.
- Small Business Innovation Research Program (SBIR) Phase I: The SBIR program is offered through the USDA and supports for-profit small business firms to submit innovative, applied research and development projects that address important problems facing American agriculture.
- Idea Café: Grants support deserving entrepreneurs. The company offers small business grants ($1,000) with no fee, but you must sign up with the company’s website as a “regular.” Signing up is free and requires your email address and company contact information. The current RFP is in the form of a contest that will award the “most deserving small business owner willing to take their business to the next level.” One winner will be awarded the funds, free publicity, and national recognition.
- Federal Home Loan Bank: A first-come, first-served noncompetitive small business grant loan-grant program (EDPPlus) assists member institutions in providing capital to projects that served under-served areas or under-served populations (related to area median income and other qualifiers). Grant funds must be used in conjunction with a bank loan and can be used to purchase, construct, or expand a building, buy machinery and equipment, and/or cover closing costs. Federal Home Loan Bank is located in Dallas, Texas, but offers grants in New Mexico through participating New Mexico Banks.
I also found these opportunities that accept applications from both businesses and nonprofits, including:
- Bill and Melinda Gates Foundation – Grand Challenge Explorations Initiative: Grants focus on overcoming persistent bottlenecks in creating new tools that can radically improve health in the developing world.
- John S. and James L. Knight Foundation – Knight News Challenge: Grants support innovative ideas that develop platforms, tools, and services to inform and transform community news, conversations, and information distribution and visualization.
- National Trust for Historic Preservation – Cynthia Woods Mitchell Fund for Historic Interiors: Grants assist in the preservation, restoration, and interpretation of historic interiors; projects must involve a National Historic Landmark.
- Water Environment Research Foundation: Proposals for research grants are accepted from all qualified entities, including international organizations and disadvantaged business enterprises.
Additional Business Resources in New Mexico:
There are resources that offer assistance through investments and financing options. Leading support organizations include:
- ACCION New Mexico•Arizona•Colorado: Increases access to business credit, makes loans, and provides free online information regarding small business basics.
- The Loan Fund: Provides loans, training, and business consulting to entrepreneurs, business owners, and non-profit organizations. Services support low-income individuals to achieve self-reliance and control over their economic destinies.
- New Mexico Community Capital: Provides equity capital and business growth services to qualifying businesses throughout New Mexico, particularly in under-invested areas.
- New Mexico Economic Development Department: Works with local economic development organizations to provide a variety of assistance for New Mexico businesses. Offers support for financial, labor training, technical or regulatory assistance, and more.
- New Mexico Small Business Development Centers: Provides small business services such as management consulting, business plan development, and business tax help, as well as entrepreneurial education, and resource links for potential and existing small businesses including a good list of resources for New Mexico companies.
- Women’s Economic Self-Sufficiency Team (WESST): Provides small business loans and training and consulting programs (including business training, technical assistance, financial education, etc.). Services are available to any New Mexico resident, with specific emphasis on helping low-income women and minorities achieve financial self-sufficiency through sustained self-employment.
- Technology Ventures Corporation: Helps small businesses that are developing technology from the national laboratories by providing business planning courses and start-up capital.
Finally, your local library may house a number of valuable resources that are beneficial for grant research. In addition to books, many libraries hold memberships to subscription-driven search engines such as Foundation Center and some even offer their own grant database. Note that these search engines are typically designed to support nonprofit organizations and specific searches for business grants may not be available.
Obtaining a grant to support business development is a strenuous and time-consuming journey. Finding an opportunity that correlates with your focus area and eligibility is only half the battle. You must then find the time to develop a carefully crafted and compelling proposal that defines why you deserve the award and how the funds will be used to make a broad impact in your field. But hard work and persistence pays off – you just might find that needle in the haystack!
Contact: Wendy McCoy, Resource Development Officer, email@example.com
This post was filed under: Prospect Research