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5 Min. Read

What Are Grants for Small Business? Definition & Meaning

What Are Grants for Small Business? Definition & Meaning

Here’s What We’ll Cover:

Are You Looking for a Grant?

How Do Grants Work?

What Are the Different Types of Grant Funding?

How Do You Qualify for Grants?

Do Grants Need to Be Paid Back?

How Can You Find Available Grants?

Key Takeaways

Are You Looking for a Grant?

Grants are funding made available by an individual, organization or the Federal Government. They are used by another party to finance a particular activity, venture, charity or facility. Most grants are created to aid or encourage a specific activity. Many grants have limitations or requirements which determine who is eligible. You can apply for as many grants as you like. This article will discuss everything you need to know about grants. It will include topics like how grants work, how to apply and more.

How Do Grants Work?

Grants for a certain purpose or a particular activity are often called targeted grants. Grants that do not have a purpose attached to them are usually limited to general research projects, student aid and emergency relief. A grantor or donor is the person who supplies the funds. They are commonly an individual, corporation or nonprofit organization.

The purpose of a grant program is to aid with funding for their intended use, rather than satisfying financial needs. The writing of a proposal and approval by grantors is generally required before receiving the funds. You may also need to specify your project or study in great detail, then describe how you will spend the money once it has been released. This agreement usually includes an expiration date. After this time, you must supply proof of expenditure, as well as any remaining balance.

What Are the Different Types of Grant Funding?

There are several types of grants. Learn more about each one below.

Supply Grant

One of the most common is a supply grant, which covers costs associated with buying goods or services. The goods or services may be intangible. This includes research and development, production planning, technical assistance or travel. Grants are also available for acquiring fixed assets like vehicles, equipment and buildings.

Government Grants

Government agencies offer federal grants for people in need of financial assistance. Common uses for grant funds are medical conditions, disability or other misfortunes.

Business Grants

Business grants provide funding to small businesses depending on the industry type. They can be any size. This includes very small start-ups to major corporations. Some businesses are involved with large infrastructure projects such as bridges and highways. The government also offers business grants through SBA programs (Small Business Administration).

Education

Grants are available for people studying in colleges, universities and postgraduate programs.

Social Services

Public organizations offer grants to voluntary welfare organizations, nonprofit groups and private non-insured charities.

Emergency Relief

Grants are provided by the Red Cross or other aid agencies after natural disasters such as floods, earthquakes or hurricanes. Some of them can be highly specialized like funding for rescue equipment or emergency food supplies. To learn more about government relief assistance after a disaster, visit FEMA's webpage here.

How Do You Qualify for Grants?

The grant application process can vary depending on the grant. Generally, if you are planning to apply for a business grant, you will need to send in a detailed application explaining why your request is valid. It's best if you show the actual value of what business will be generated from the project or research. You can also ask others who know about your work. They can provide any testimonials they might have that could clarify how useful it actually is.

Once approved, most grants provide funds on a reimbursement basis. This means that you must use the money for its intended purpose and make every effort possible to minimize personal costs when doing so. Any leftover funds usually go back to the donor or grantor. This depends on the agreement you make with them during writing up the proposal document.

Do Grants Need to Be Paid Back?

Grants are not loans, so you don't normally need to repay them. However, if your project fails or the money is misappropriated, then repayment may be due even though this isn't common.

How Can You Find Available Grants?

To find a grant, search online in the keywords of your industry. For example, if you own a daycare centre, enter "daycare grants" or "small business childcare grants" into Google's search box. Once you get results, click on each website individually to see if they offer grants related to what you need.

There are also many grants available from the government. Check the SBA website to see if there Is a government grant available. These can range from disaster aid to business grants, and much more.

Key Takeaways

There are many different types of grants. Government agencies offer grants to small businesses depending on the industry type they're in. Grants are not loans, so you don't have to repay them if your project fails or the money is misappropriated. You can search online by entering keywords of your industry into Google's search box to find a grant that matches what you need.

Hopefully, this article has given you some information about what grants are all about and how they work. You should have a clearer idea of why small businesses might benefit from these types of programs.

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