Being given a grant is not easy. It demands commitment and determination, but can make a substantial difference in how and when a business becomes successful. Entrepreneurs might find it difficult and exhausting to search for grants, as it often involves going through countless websites and government databases. In this guide, we offer a variety of resources for small business owners to consider.
Federal grants are a useful resource that entrepreneurs can exploit when they decide to start a new business. Programs like North Dakota’s Innovate ND (which is administered by the state’s Department of Commerce) are focused on helping business owners turn their ideas into lucrative and successful ventures. In the last several years, these programs have awarded millions of dollars in funding to proposals in an attempt to incentivize local economies and promote innovative entrepreneurship.
Finding a business grant from programs like Innovate ND is not simple. People who apply to be given free money to start their business often need to have a comprehensive plan of what they want to achieve. They must understand the market they want to approach as well as what will be required to have an impact and become successful. At a glance, it may seem like an insurmountable task, and it sometimes can be, but diligent entrepreneurs are rewarded handsomely for their efforts. Innovative ND, in particular, grants up to $32,500 to business ventures that show promising results and meet the milestones set by the agency.
Entrepreneurs looking for monetary support to turn their idea into a reality can talk to the economic development agencies located in their community or state. Places like the local Small Business Development Center (SBDC), Women’s Business Center, SCORE office or Small Business Association (SBA) office are ideal to request information about grants and financial assistance programs available in the area.
Research and Development Grants
The federal government is deeply interested in funding small businesses and institutions that desire to perform research and development in topics that are of public interest. Two programs were created to pursue this goal: The Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer Program (STTR).
The Small Business Innovation Research Program (SBIR) is coordinated by the Small Business Association. Its purpose is to provide financial assistance to small businesses willing to carry out research and development (usually referred to as R&D) on particular topics that the government has singled out as being of public interest. Companies that are interested in being awarded this grant must provide evidence that their proposals have the potential to be commercialized in the near future and meet the criteria set by the federal government.
The goal of the SBIR program is to stimulate the development of new technologies that could harbor economic wealth, as well as to promote entrepreneurship in the private sector. Federal agencies that have reported an extramural R&D budget that exceeds $100 million are mandated by the government to set aside 2.8% to support small businesses that qualify for the program. More than $2.5 billion dollars are awarded through the SBIR program each year, with over 50% of the grantees being firms that employ less than 25 people, and about 20% being owned by women or minorities.
SBIR is accompanied by a sister program called the Small Business Technology Transfer Program (STTR). It operates in similar fashion to the standard SBIR, with the exception that it restricts proposals to those made by small businesses in collaboration with a non-profit research institution, which receives a minimum of 30% of the total amount being awarded. Five federal agencies participate in STTR as of 2017, putting aside around $1 billion in funds every year to support these partnerships.
Due to the large sums of money being awarded to recipients of SBIR and STTR (up to $150,000 in the first phase and $1 million in the second phase), the application process to become a grantee is highly competitive. Each year, thousands of small businesses submit thoroughly developed proposals to be considered by the agencies.