Small Business Grant Vs Business Loan
Although a small business grant and loan are both ways to get funds for your business, they operate differently. A small business loan, unlike a small business grant, has to be repaid, plus interest and any fees a lender charges.
The business loan application process also differs. When you apply for a small business loan, a lender normally reviews your personal and business credit scores to determine whether you qualify. A grantor, on the other hand, doesnt check your credit since it doesnt expect repayment.
In addition, when you apply for a business loan, youll likely receive funds faster than applying for a grant, provided you qualify. For example, some lenders can approve qualified applicants on the same business day and disburse funds within a few days. However, if you apply for a federal grant, it can take up to six months for a grantor to make a decision.
Be Both Realistic And Optimistic
In exchange for not having to repay the money offered in a grant, they often come with terms and conditions for how the money is used. Government grants often have stricter requirements than those from private corporations .
The good news is, you may be able to apply for multiple grants to fulfill different needs within your business. Plus, some grants can be renewed if youre able to verify that youve used the funds as prescribed.
Quick Tips For Getting More Grants
There are a lot of simple things you can do to improve your chances of winning grants. Most are easy to understand, but you need to make sure you keep them in mind.
Learn all about other useful ways to finance your business with our Small Business Financing Guide.
Heres how to get more grants:
- Always look for new grant options. Setting up a Google Alert is a good idea.
- Make sure the time spent to apply is actually worth the award.
- Read over the specific individual application instructions for each grant. Some are similar, but few are exactly the same.
- Double-check that you are eligible before spending a lot of time on an application.
- Provide specific numbers on how the grant will be used and how it will help.
- Double-check your spelling and grammar.
- If you can, submit your application early you may look more prepared than those who apply late.
- Back up claims with credible citations.
- Be realistic when mentioning your companys costs and revenue.
- Find a book from your library on grant writing if you want to write better proposals.
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Applying For A Government Grant Is Easier Than It Appears And Could Kickstart Your Small Business
14 September 2022
Even in these troubled economic times, there are so many grants available to small businesses, some local, some regional, some national. Currently the Government website lists 150 different schemes for business support, offering finance, advice, or grants. Applying for these schemes can be a laborious process though, and success is not guaranteed. So choosing the right one is vital.
Find a grant that works for your business:
What If I Never Applied For Eidl
If you have not previously applied for EIDL, you may apply at SBA.gov.
You will be able to apply for the low-interest-rate EIDL loan through December 31, 2021 as long as funds are available. If it appears your business also qualifies for the Targeted Advance or supplemental advance, the SBA will invite you to apply.
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Why You Should Complete The Sba Application:
The federal funding process stops at this point for those who choose not to apply. If you apply and are not eligible for a low-interest disaster loan, this may open the door to an additional grant from FEMA. If SBA does not approve a loan or approves a small loan that doesn’t cover all of your needs you may be eligible for additional FEMA grant assistance to replace essential household items, replace or repair a damaged vehicle, cover storage expenses or meet other disaster-related needs.
There are important reasons to complete and send the application to the SBA, even if you think you dont currently need a loan.
- You may discover in the next few weeks that you were underinsured for the amount of work required to repair or replace your home. An SBA low-interest disaster loan may cover some or all of the difference. In other words, the SBA may bridge the gap between your recovery costs and the settlement amount.
- SBA offers loans for homeowners up to the $200,000 statutory maximum to repair or replace your primary residence. The loans are customized to your personal financial circumstances. On a case-by-case basis, the SBA may be able to assist with refinance of your current mortgage.
- SBA can also help renters and homeowners replace household contents and vehicles, referred to as personal property. You may be able to borrow up to the $40,000 statutory maximum to repair or replace clothing, furniture, cars or appliances that were damaged or destroyed in the disaster.
Gather Your Business Information
Every grant will require some business-related information. Some grants want financial information for your business- such as business taxes or bank records- to verify that you meet their requirements. Some require a finalized and professional business plan.
Other grants applications will require you to submit your DUNS number during the application process. Take time now to apply for a DUNS number if you haven’t, and gather all of your business information so it’s ready to go. The quicker you can submit your application, the better.
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Sba Grants: How To Prepare Apply And Win
by Elizabeth Gonzalez | Updated Aug. 5, 2022 – First published on May 18, 2022
Image source: Getty Images
The 2020 Coronavirus Aid, Relief, and Economic Security Act provided funds to help small businesses through the COVID-19 crisis. Unfortunately, the pandemic outlasted many of the CARES programs.
The Economic Injury Disaster Loans program is a prime example. The U.S. Small Business Administration awarded EIDL grants of up to $10,000 to small businesses in disaster areas to offset economic losses from the pandemic. Funds for SBA EIDL grants ran out in July 2020, but EIDL loans are still available.
The SBA continually offers fresh small business grants and loans at sba.gov. SBA grants are particularly valuable because the terms are better than other loans and grants for small businesses.
All too often, small business owners miss out on these opportunities, relying on their personal finances to weather financial storms. The Federal Reserve Banks most recent Small Business Credit Survey found that two-thirds of small businesses face financial challenges, and more than half rely on funds from personal savings, friends, or family to pull them through.
Relying on personal assets to fund your operations limits your ability to grow and develop your business. Adding SBA loans and grants to your funding mix can enhance your financial security and strengthen your business.
Be Cautious Of Scammers
When applying for an SBA grant, beware of scammers. Whenever you suspect anything, reach out to an SBA advisor or resource partner. You can also report fraud through sba.gov.
If anyone from SBA emails or contacts you, check the email address to see if it ends with @sba.gov. Be cautious of anyone who contacts you from SBA without an official SBA email address.
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Personal And Business Income Tax Returns
Personal tax returns are a big part of your requirements for the same reason your personal credit score isâlenders want to scrutinize your personal financials to gauge whether youâll be responsible when you take on your SBA loan. With personal tax returns, lenders will also verify your income.
Similarly, lenders will use business tax returns to verify your businessâs income. Conventionally, lenders ask to see the past three years of personal and business income tax returns, so make sure to get these documents in order.
Review Submissions Of Previous Grant Winners
One of the best ways to prepare for your grant application is to review the past winners. Not every grant will display and discuss the previous winners, but if they do, take the time to look into the winners.
Read their story, watch their video, analyze their application , and find out all that you can about the winners. The purpose is to understand why they were selected so you can emulate their application and make your business appealing to the grant review team.
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Register For The Grant
Sign up on the website or agency that offers the SBA grant that you want to get. In the case of SBIR and STTR, you will register through SBIR.gov. For STEP programs, you will register through the local state in your area. You can also register and manage all your federal grants through grants.gov.
When applying for federal grants through grants.gov, the registration process for individuals is different from that of an organization. Grants.gov defines an organization as an entity consisting of people such as a non-profit organization, state government, or private business.
Before registering on grants.gov, your organization should first obtain a DUNS number. You should also create an account with SAM.gov. The DUNS number is unique to all organizations, and it contains nine characters used to identify your entity.
Some details that you may need to give out on your SBA grant application include:
- Number of months or years in business
- Number of employees
- Your organizations Employer Identification Number
- Business plan or pitch deck
- Social media handles
- Your plan for using the funds
Here are a few tips to help improve your chances of getting the grant:
Most states and agencies will want to learn about you and your business before giving you the grant. Prepare a detailed business plan before you apply. A business plan is especially vital if you havent started the business or conceptualized the idea yet.
How To Apply For A Small Business Grant
The grant application process varies from grant to grant. For instance, if you apply for a small business grant with the Amber Grant foundation, you can complete your application within a few minutes by submitting a short form. However, when you apply for a federal grant, youll be required to submit a formal grant proposal and it could take weeks to finish your application.
Here are some documents and information you may need when applying:
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Dos And Donts Of Winning Business Grants
Lets start with some basic dos and donts of trying to win grants.
- Make a schedule several grants are only open to applications once a year. Give yourself enough time to put together an application well before the due date.
- Write a business plan first most grants will ask for one. More importantly, you should know exactly how the grant money will help your enterprise. Heres our guide to writing a simple business plan.
- See what companies have been funded in the past this can help you determine which grants you have a better chance of winning. If theyve funded similar types of businesses, thats a good sign.
- Get help from community business organizations I went through many types of organizations that provide assistance to small business owners. This includes helping you find grants and presenting your company in the best light.
- Consider professional help if you come across a grant that requires a well-written cover letter or essay, consider hiring a professional grant writer if you can afford it. Its usually only worth it for big grants.
Personal Character And Background
To qualify for an SBA loan, youâll need to provide information about your personal background, including previous addresses, your citizenship status, and your criminal record.
Having a criminal record doesnât automatically disqualify you from SBA financing, unless the crime is a felony of âmoral turpitudeâ . However, the lender will evaluate your application with more scrutiny. The SBA asks for your citizenship status because only U.S. citizens and permanent residents can qualify.
For SBA 7 loans, microloans, and CAPLines, youâll provide this information using SBA form 1919 or SBA form 912. Lenders usually supply their own forms for 504 loans.
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Montana State Trade Expansion Program Grant
Montana just received a $600,000 grant from the federal State Trade Expansion Program. Funds from this annual program are used to help expand the base of small business exporters within a state. Overall, the U.S. Small Business Administration awarded $20 million in grants across 52 state and territory international trade agencies. In Montana, funds will be administered by Montana Department of Commerce. Though this money doesnt go directly to businesses, the state can use it to support various export-related activities, from marketing to trade shows.
For Businesses And Private Nonprofit Organizations There Are Loans Available For:
- Businesses of any size and private nonprofit organizations up to the $2 million statutory to repair or replace real estate, machinery and equipment, inventory and other assets that were damaged or destroyed.
- Small businesses, those engaged in aquaculture and most private nonprofit organizations up to the $2 million statutory for working capital needs, even if they had no property damage, with a $2 million maximum loan for any combination of property damage and working capital needs.
- Economic Injury only for small businesses and most private non-profit organizations suffering adverse financial impacts of the disaster , up to the $2 million statutory for working capital to help pay obligations until normal operations resume.
- Applications for physical damage to businesses must be submitted by July 5, 2022. Businesses with economic injury have until Feb. 5, 2023, to complete and submit their applications.
SBA has established a Business Recovery Center that opened Wednesday, May 11, 2022, at 8:30 a.m. MST. The Center is located at:
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Find Applicable Small Business Grants
The first step is finding the right grants to apply to. This is one of the most time-consuming aspects of the process. Depending on the time of year, there may not be a large number of grants to apply to.
Several corporations, such as FedEx, Visa, Stacy’s Chips, and more, offer small business grants throughout the year. Find out when their grants will open and be ready to apply.
Pro-tip: We search the web for grants and other funding opportunities every week so you don’t have to.Join Skip today and never miss out on another major grant or funding opportunity.
Business Grants Are Just Not That Easy: 5 Tips To Help
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Business grants may seem like the holy grail for small-business owners, since they offer cash you dont have to pay back.
But finding one can feel as futile as searching for lost treasure.
Everybody wants to know: How do I get free money for my business? says Jenn Steinfeld, director of entrepreneurship and economic development at the National League of Cities, an organization that supports local government officials nationwide. And the answer that I have is: It’s just not that easy.
That doesnt mean small-business grants arent worth pursuing as long as you manage your expectations. Here are five tips to remember as you search.
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What Is A Small Business Grant
A small business grant is a sum of money awarded to a small business owner or organization. Several entities, including the federal government, state and local governments and private corporations provide funds for small businesses in specific industries that meet certain eligibility requirements.
Unlike a business credit card or loan, small business grants dont require repayment. Although grants are considered free money, an organization or individual typically has to spend a lot of time and effort researching available grants and writing grant proposals.
In addition, some small business grants come with specific guidelines on how you can use the funds. Failing to adhere to the rules may result in repaying some or all of the money you receive.
Natural Resource Sales Assistance Program
In addition to the billions of dollars spent purchasing goods and services, the federal government also sells large amounts of natural resources and surplus property. The SBA Natural Resource Sales Assistance Program sets aside a percentage of these goods for bidding by small businesses only. In addition, federal agencies sometimes divide surplus materials into smaller parcels, making it easier for small businesses to purchase. The five categories are:
- Timber and related forest products.
- Strategic materials.
- Leases involving rights to minerals, coil, oil and gas.
- Surplus real and personal property.
The program also provides training for small businesses on government sales and leasing.
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How Can I Make Sure I Provide My Correct Direct Deposit Information To The Sba
Direct deposit information is as follows:
- The name of your bank.
- Your bank account number, which can be up to 17 characters. On the sample check below, the account number is 2020202086.
- The routing number for your bank, which must contain 9 digits. On the sample check below, the routing number is 250250025.
- Dont include the check number .
- Double-check that you have provided the correct numbers.
Be sure to include your routing number and account number, as seen in the example above.