Whether you’re interested in starting a new small business or want to expand your existing enterprise, one of the main hurdles is cash. Funding can be an obstacle for many business goals, but there are some surprising ways that government benefits can help you with your small business. Understanding government benefits and how they can help you is important for your small business journey.
The Importance of Small Businesses for the Overall Economy
While you may think that your little enterprise or small business is not particularly significant, you may not be aware of the important role you play in the overall economy. According to data from the Small Business Administration, businesses with fewer than 500 employees make up 99.9% of all the businesses in the US. In fact, between 1995 and 2021, small businesses accounted for 62% of all new job creations, which added up to 17.3 million.
However, small businesses not only provide jobs, but they also provide opportunities and careers. Successful small businesses can put money back into the local community and even if you only have one or two employees, your paychecks and taxes are supporting your town, city or county.
Government Initiatives and Offices for Small Business Assistance
Before we delve into specific government benefits, it is important to appreciate that there are a number of government initiatives and offices that are in place to assist small business owners.
State Small Business Credit Initiative
SSBCI is a government program offering almost $10 billion in support for small businesses. It is available to communities throughout the US, providing technical assistance and capital to promote stability, growth and success for small businesses.
This initiative is intended as a transformational investment in the small business economy of America, providing funding to states, territories, the District of Columbia and Tribal governments to create tailored programs through collateral support, capital access, loan participation, loan guarantee and equity/venture capital programs.
SSBCI aims to bolster small business support networks, helping to invest in America’s future economy.
Small Business Lending Fund
The SBLF was established under the Small Business Jobs Act of 2010. It is a dedicated fund that is designed to provide capital to community development loan funds and qualified community banks to encourage small business lending. The purpose of this initiative is to encourage banks and small businesses to work together to promote economic growth and help create jobs. As of the end of 2024, 327 institutions have fully redeemed SBLF treasury investment, reporting lending of over $19 billion.
The Community Development Financial Institutions Fund
The CDFI fund plays a crucial role in generating economic opportunity and growth in some of the most distressed communities in America. It offers innovative programs and tailored resources to support economically disadvantaged communities. Each business financed and each job created is considered a crucial step in transforming lives, families and communities.
The Office of Small and Disadvantaged Business Utilization
This government office provides assistance, counselling and advice for small businesses of all types including economically disadvantaged, women owned, veteran owned and small businesses in historically underutilized business zones.
The aim of the office is to provide assistance for contracting with the treasury through a number of state initiatives including HUBZone, OpportuniTEA and Xcelerate.
Service-Disabled Veteran Owned Small Business Program
This program aims to help the government to meet its target to award a minimum of 3% of all federal contracting dollars each year to veteran owned businesses. In order to be eligible, small businesses must be more than 50% owned or controlled by one or more service disabled veterans, have their day to day operations and long term goals managed by one or more service disabled veterans and have a service connected disability.
Women Owned Small Business Federal Contracting Program
The federal government also seeks to award a minimum of 5% of federal contracting dollars each year to women owned businesses. This SBA program helps to meet this target and provides support to female entrepreneurs by offering counseling, business training, access to credit and capital, and federal contracts with the overall aim of offering equal opportunities for women in business.
8A Business Development Program
This program was established with the purpose of assisting small businesses owned by economically and socially disadvantaged entities. It achieves this by limiting competition for some government contracts to participants of the 8A program. To participate, businesses must be certified as an 8A entity, which involves financial, and other eligibility requirements.
Small Business Government Grants
While there are a number of grant opportunities from private companies and NGOs, federal grants are one of the most accessible ways to access government benefits for your small business. Each grant program does have its own eligibility criteria and application process, but it can be worth taking the time to investigate if your small business could qualify.
Grants.gov
The Grants.gov website should be your starting point to explore government benefits and grants for your small business. It provides a comprehensive database of thousands of federal, state and local grants and it is updated regularly with new opportunities. You can search for a grant by location, industry or your specific business needs. However, it is important to check the eligibility criteria for specific grants before you apply.
STEP
The State Trade Expansions Program was created by the Small Business Administration in 2011 with the aim of helping more businesses expand into the international marketplace. This is a federal program, but you need to apply for funding via your state or territory government.
Rural Business Development Grants
This grant program is administered by the Department of Agriculture with the intention of increasing job creation and economic development in rural communities. Recipients of the grant can use the funding for a variety of purposes including land acquisition, transportation improvements, training and more. You can explore the eligibility criteria and apply through the Department of Agriculture.
Small Business Technology Transfer Program
The STTR program is part of the Seed Fund, a federal government initiative to encourage small business advancement through technological innovation. However, to benefit from the STTR program, small businesses need to formally partner with a research institution in order to develop their ideas.
This means that you need to check the participating agencies for details and how to start an application.
Small Business Innovation Research Program
The SBIR is also a component of the Seed Fund, serving a similar purpose, but there is one major exception; your small business does not need to work with a research institution. Apart from this, the program and application process is largely the same as the STTR program.
Broadband USA Funding Program
The National Telecommunications and Information Administration or NTIA offers a variety of funding opportunities via Broadband USA. The specific programs vary according to location, but generally they support adopting broadband infrastructure in unserved or underserved areas. You can download the latest funding guide and details of programs in your area at the Broadband USA website.
National Institutes of Health Grants
The NIH offers a variety of grants for small businesses involved in medical development and research. In addition to grants, the NIH offers loan programs and contract assistance for eligible businesses. You can check out the available grants and application process through the National Institutes of Health.
Environmental Protection Agency Grants
The EPA has several grant programs to support the protection of human health and the environment, but some of the grants are only available within certain regions. This means that you need to check carefully to see if the grants apply in your specific area. You can explore the options on the Grants.gov website or via the Environmental Protection Agency.
Economic Development Administration Grants
The EDA
If your business helps the community or is involved in developing projects to strengthen local economies, you may qualify for an EDA grant. Typically, these grants fund initiatives to create new jobs, improve physical infrastructure or recover from disasters and other ways to boost economic development.
How to Apply for Small Business Grants
When you are ready to start applying for small business grants, there are several steps to follow that can help you with your applications and staying organized.
Create a List of Grants
The first step you need to take is to create a list of the grants that are appropriate to your small business. It is simply a waste of time and effort to apply for government benefits that you are not eligible for. It is a good idea to create a spreadsheet with program details including the maximum grant amounts, application deadlines and key requirements, to help you to keep track.
Double Check the Eligibility Requirements
It is important to carefully review the criteria for each grant and ensure that you are realistic about your qualifications. You may want to be ambitious about your small business plans, but you should direct your focus on the grants which offer the highest chance of being awarded.
You can also double check the application deadlines, so you leave yourself plenty of time to prepare your application. This will also leave time should you need to reach out to the grant program with any questions or queries.
Prepare Your Documentation
Each grant has its own specific requirements, but you will often need to support your application with some documentation. This could include tax returns, financial statements, business licenses and a certificate of good standing. Pay attention to any specific format requirements for the application, such as whether a PDF copy is acceptable.
Write Down the Story of Your Small Business
Each grant application will require some facts, figures and documentation, but you will also need to let the awarding committee know about the unique story of your business. So, take some time to draft down the journey of your small business, how you’ll use the funds and why your business is a perfect candidate to receive a grant.
Submit Your Applications
After you finish the applications, take some time to thoroughly review them before you submit well ahead of the deadline. Bear in mind that some grant programs will close after receiving a set number of submissions or if they run out of funding, so you should aim to be one of the first applicants.
When you submit your application, make a note of how you can follow up. Some programs notify all applicants, but others only contact the awardees. So, you’ll feel greater peace of mind if you know when to expect a response.
Grant FAQs
Is it Hard to Qualify?
There is no easy answer to this question, as the criteria for each grant program varies. Just bear in mind that many grant programs are highly competitive and there are limited funds. So, focus on the grants where you have the greatest chance of success and thoroughly check your application.
Do Grants Need to be Repaid?
While you don’t have to repay the small business grant back, there are often specific limitations for how you can use the funds. If you don’t meet the program requirements or misuse your grant, you may be required to return the funds.
Are Grants Taxable?
Usually, small business grants count as taxable income, but for some government grants this is not the case. There could be special tax considerations for your grant, so it is best to consult a tax professional for clarification.
Other Government Benefits for Small Businesses
In addition to grants, you may be able to access other government benefits. For example, there are a number of programs that help small businesses to access loans and other funding opportunities. While this is not the “free money” you can get with a grant, it can be offered at a preferential rate or provide funds in a situation where it may otherwise be difficult to access.
Remember that while this is not free funding, it has the potential to save you money for your business start up or expansion.
Tips for Accessing Small Business Government Benefits
Whether you decide to try for a government grant or want to access some other form of government benefits, it can be a daunting prospect. Fortunately, there are a few tips that can help you to navigate the process.
Set Out Your Business Goals
Regardless of which type of funding you’re looking for, the approval committee is likely to want to know about how you intend to use the money. You can’t simply pick a figure out of your head and expect this amount of funding.
So, take some time to think about your business goals and how the funding can help you work towards achieving them. Be specific about your ideas and how the money will help you. Don’t guess or estimate how much money you would need, but rather take the time to research how much you would realistically need.
Keep Documentation
You’ll need to support any application with documentation, so be sure to keep accurate records of your business activities. This includes projections, income and expenditure, profits and other documents. You may be required to provide copies of this paperwork with your application, so try to be as accurate as possible.
Be Realistic
We’ve covered this earlier, but it is important to reiterate that you need to be realistic about your small business, goals and funding opportunities. Grants and other government programs are highly competitive and there is often a limited fund for each program. So you don’t want to waste time and effort going through the application process for programs where you have little to no chance of success.
Go through the program terms and qualification criteria carefully to assess whether you have a realistic chance of getting approved. If you need to qualify for something such as 8A entity status, make sure that you have this in place before applying.
You also need to be realistic about how much time it will take to complete the application process and make sure that you allow sufficient time before the program deadline.
Don’t Lose Hope
Even if you’re not successful right now, this doesn’t mean that you won’t be able to access benefits in the future. Circumstances change and there are new programs updated continually. So, don’t lose hope. While you may need to modify your business expansion plans in the short term, it may not impact your long term goals. Keep an eye on the programs and government websites and you’ll be perfectly placed to submit an application when a new opportunity arises.
Running a small business can be a challenge and finding funding can be incredibly frustrating, but there are some surprising ways that you can access government benefits which can help you to reach your goals. While you may be busy running your day to day operations, it is worth taking some time to explore the options available to you and what you need to do to qualify. You may be able to become eligible for grants, preferential loans and other benefits that will provide you with the funding you need to take your small business to the next level.
