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Of course, securing capital is often necessary, but depending on what type of financing you apply to and qualify for, it can also be expensive. And you could be paying back a loan for several years (if not longer).
Business loans are great, but free money is even better. What if there was a different option available for the financing you need, but no need to repay it?
That situation sounds too good to be true, but it’s not — that’s exactly what a small business grant is. If you qualify for a small business grant, you get the money, no repayment terms or interest rates attached.
There are caveats, of course. For one thing, you cannot use a small business grant for just any old business expense. You typically apply for a grant for one specific purpose, and you can only use the grant money toward that purpose. Case in point: you cannot use grant money awarded for a specific project to purchase inventory for an unrelated one.
Additionally, grants are tough to qualify for. Applying to one is like applying to an Ivy League university, and potentially even more competitive, depending on the number of applicants and number of grants awarded.
Among the many small business grants out there, some are open to one specific group of people. Often, they are geared toward those who face more financial, social and political challenges gaining their footing in the business world, such as women and minorities.
While minorities own about 15 percent of small businesses in the U.S., and women own about 29 percent, it can still be more difficult for these individuals to secure small business financing (read more about that here and here).
Small business grants for women and minorities
This well-known women’s business grant awards up to 10 recipients each year with a minimum grant of $10,000 each. The grant funding total is $100,000. There are several eligibility criteria, including that businesses be at least 51 percent women-owned, at least three years since founding and annual revenue of less than $1 million.
Each year, the U.S. Small Business Administration awards three female small business owners a total of $70,000 in prize money. Read more about the challenge and previous years’ winners here.
The SBA also provides an excellent online database for female business owners, including helping you find organizations that award grants to women on a local level.
This grant awards $3,000 each to a female recipient in each of these six categories: arts and culture, business, community development, continuing education and teacher support, child and elder care, and human and health services. This grant is open to anyone whose proposal “promotes the empowerment of women or directly benefits women or low-income or underserved populations in Utah and Idaho,” where Zions Bank is based.
This private grant is often earmarked for women and awards $125,500 in total cash and prizes, including credits toward FedEx printing and business services. The grant is spread among 10 recipients at different increments, and part of the qualification process involves the general public voting on the finalists. This means that women applying for this grant can promote their business as part of the application process.
WomensNet awards one winner with $500 each month of the year, and one of those monthly winners will receive an additional $1,000 by the end of the year. The grant has been awarding women with entrepreneurial dreams since first launching in 1998.
This is a much more specific grant, as it is open only to women involved in making and selling jewelry. The award includes $7,500 in cash, $1,000 to spend on supplies and an all expenses paid trip to Arizona. The 10 runners-up are awarded prizes as well.
If you are a minority business owner, be sure to regularly check out the MBDA for grant opportunities. They also provide a number of other educational resources for minority entrepreneurs.
While not explicitly for minority business owners, this grant program awards big payouts ($150,000 total spread out to five winners) and focuses specifically on diversity in entrepreneurship.
Even though the alternative lending space is working to eliminate bias from small business lending, securing business financing can still be a difficult undertaking. If you fit the criteria, try applying for one of these well-deserved grants to lessen the burden.