Grant Money: Where To Find It And How To Apply
One of the most common challenges of business startups, particularly for Black women, is raising capital. And it’s no secret that it’s harder for women business owners to find funding. Women entrepreneurs are increasingly being turned away by banks for small business loans, but one option we do have is to look for and apply for grants to help with funding.
“You can only get so far draining your savings account. But why drain it?” asks Vernetta R. Freeney, organizer for the Houston African American Bloggers group who won a grant for her own business, Women Are Gamechangers. “There is so much money out there you just have to spend time to look for it. Statistics show that women usually do not receive venture funding or outside funding when they start their business. Grants are a great way to compensate for that financial roadblock,” she told us.
In fact, grants give more women access to capital. “A business grant is a highly beneficial resource for women-owned businesses to start or grow their businesses because they do not have to be paid back unlike a business loan, explained success coach Ari Squires. “Grants are usually funded by government or private agencies as direct money which is allocated to a specific purpose or program and come with strict guidelines for qualification.”
Though you may ignore the benefit of a grant because you have a sufficient start-up fund, you should know these monies can help your business flourish beyond its early days. “In order for a business to sustain itself and grow, working capital is a necessity; therefore women business owners should always be looking out for woman-targeted funding opportunities,” Squires added. “Many government agencies and private groups offer grants geared toward the development of women- and minority-owned businesses in an effort to support women’s business ownership or advance companies that provide social benefit to women. It’s always worth your while to see what’s available.”
So how do grants work? “The typical grant works by the business who is receiving the grant using the funds in a direct and purposeful way — starting a business or project that fills a social need, business development or training, or community affairs,” said Squires. It’s important to understand that grants do require a lot of work, both in the application process and after.
“When applying for the grant the business must show that they have a need for the grant, that the money will be put to use for that need and meet all the requirements for the grant. People tend to think of grants as ‘free-money’ but in fact there is a lot of work and risk involved when applying for grants that goes well beyond receiving the grant,” Squires noted. “The recipient must follow up by reporting how, when and where the money was dispersed by use of a written report, accounting, proof of use and many other additional follow ups by the grantor.”
While receiving grants can be a godsend, the application process is just that–a process. “Grant programs can be very difficult and competitive and it is important that women business owners have detailed information, including financial history for current or new businesses, a detailed and thorough business plan and a business model in place before applying for a grant. Most business grants require a vast amount of documentation and verification which can be difficult to understand and comprehend for most business owners,” explained Shunqetta N. Cunningham, a grant expert for women and owner of Kharis Grants and Services. “There is a vast amount of online material that will help women learn more about achieving a business grant. There are also online self-help tutorials as well as Grant Experts who are able to assist with the process of securing a business grant. Although the grant process may be difficult, receiving funds to start a new business or to improve a current business is the perfect way to achieve your goals without accumulating a ton on debt.”
First, you must research to find the grants that fit your need. “Be very mindful of deadlines, application rules and guidelines and qualification criteria because grants are extremely competitive and you don’t want to make one mistake,” advised Squires. “Your proposal will be thrown out as soon as one single step of the application was overlooked. The grantor will always list their objectives very thoroughly, but I suggest you go the extra mile and step outside the box to do your due diligence by researching the organization who wishes to grant the funding. Visit their website so you can get the best feel for their mission, subscribe to their newsletter to learn more about their purpose, audience and company vision, research past recipients to get a feel for what they do and why they may have qualified, and even reach out to the organization personally to gather all the information you can to increase your chances of qualification. The more you know, the more you grow.”
Next, is your actually proposal in which you must make a great argument as to why you should receive the grant. “Your goal is to explain (using proof and in extreme great detail) that your business’ goals, objectives and vision is in correlation with their ultimate goal for the use of the grant,” explained Squires. “Be very detailed in your needs and how your company serves the audience the grant wishes to support. Explain how the grant will be used, how it will make an impact and further the development of the community or your business. The bottom line is that your proposal show a clearly defined outline proving that your company is the best fit and that you have a very detailed plan for the funds.”
If you have trouble with the application process, you can seek out a professional grant writer to complete the process for you.
There are a number of pros for applying for grants. “You don’t have to give up any equity or provide financial background including credit checks. Winning a grant provides confidence to other investors and banks,” said Squires. “When researching grants, it can usually provide good ideas for expanding your programs and services because there is a need that you were not aware of. This is beneficial even if you do not receive the grant.”
The application process also gives you a chance to get your company’s objectives in order. “It provides a good structure for your work. Since you have to provide detailed plans, overall it helps you become a better planner and empowers you to become more strategic in your business planning,” She added.
One grant could also lead to others, Squires noted. “Once you have one grant, it becomes much easier to get another one. You have contacts at a funding organization and you’re familiar with the process. Your relationship with the provider means they’ll be more likely to recommend other available grants or money to you when you ask.
On the downside, like Squires pointed out, grants are not “free money” and often times you will be required to come up with at least a portion of the funds. “Most government grants expect you to come up with some of the money for the project yourself. That percentage will depend on the grant, but 50 percent is a fairly reasonable rule of thumb,” she said. “You often only get the money once work is completed (or a segment of work) so you also need enough in the bank to cover costs until then.”
And you must use the grant only for its intended purpose, rather than spreading it around within your business, Squires added.
Summing up the grant dichotomy, Feeny said “The pros to grants is more funding for your business, credibility that someone else has validated your business idea and it forced you to get clear on what you are doing. The cons are you may spend more time looking for and applying to grants than you actually win, you may not qualify for the ones that offer the type of funding you need or there are too many hoops to jump through to get it.”
But the bottom line is despite the paperwork, competition, and time-consuming process, grants can be a source when you have no where else to turn. “Business grants for women also eliminate the frustrating pains of raising capital to start a business and taking out large sums of money that has to be paid back with business loans,” noted Cunningham. “If women business owners suffer from bad credit or prior bankruptcy or credit issues, a business grant may be the most beneficial route to take when starting a business.”
Government grant guide:
–The Minority Business Development Agency (MBDA) assists minorities and women in new and already established businesses. On its site you locate grants and access links to state agencies that work with women-owned businesses for funding opportunities.
–InnovateHER: 2016 Innovating for Women Business Challenge is sponsored by the Small Business Administration (SBA) Office of Women’s Business Ownership. It awards three winners $30,000 in prize money for businesses that have an impact on the lives of women. The InnovateHER: Innovating for Women Business Challenge and Summit will kick off in the fall of 2015 with local competitions hosted by universities, accelerators, clusters, scale-up communities, SBA’s resource partners, and other organizations.
—Small Business Innovation Research (SBIR) involves 11 federal agencies participate, which incentivizes and enables small businesses to reach their technological potential.
—Small Business Technology Transfer Program (STTR) reserves a percentage of federal research and development funding to offer funding opportunities in research and development.
—The Eileen Fisher Women-Owned Business Grant Program give five grants annually to 100 percent women-owned businesses.
–FedEx Think Bigger — Small Business Grant Program: awards $75,000 in grants each year to 10 recipients.
–Idea Café Small Business Grant hosts different grants on its site.
–Chase Google — Mission Main Street Project is sponsored by Chase and Google. Together they have awarded a total of $3 million in grants. Last year, recipients were awarded $150,000 as well as a tour of Google headquarters, a Google Chromebook laptop and a $2,000 coupon toward a market research study with Google Consumer Surveys.
–Women Veteran Entrepreneur Corp (WVEC) Small Business Competition is sponsored by Capitol One and Count Me In for Women’s Economic Independence. Applicants must give two-minute pitches in order to take part in a nine-month business accelerator program.
–Wal-Mart Women’s Economic Empowerment Initiative (WEE) is aimed at empowering women across its supply chain.