Small Business Grants: Where to Find Free Money

The Reality About Grants

Grants are real, but they are not easy money. The grant landscape is competitive, time-consuming, and narrower than most people think. The biggest misconception is that there are piles of government money waiting for any small business to claim. That is not how it works.

Most federal grants go to nonprofits, educational institutions, and specific research programs. True small business grants from the federal government are limited primarily to innovation and research through programs like SBIR and STTR. State and local grants, corporate grants, and private foundation grants offer more options, but each comes with specific eligibility requirements and significant application effort.

Federal Grant Programs

SBIR (Small Business Innovation Research)

The SBIR program is the largest source of federal grants specifically for small businesses. Eleven federal agencies participate, including the Department of Defense, the National Institutes of Health, the National Science Foundation, and the Department of Energy.

Phase I: $50,000 to $275,000 for feasibility studies (6 to 12 months)
Phase II: Up to $1 million for full research and development (2 years)
Phase III: Commercialization phase (no SBIR funding, but agencies may award contracts)

Who qualifies: U.S.-based, for-profit businesses with fewer than 500 employees. The business must perform the primary research.

STTR (Small Business Technology Transfer)

STTR is similar to SBIR but requires a formal partnership with a research institution (university, federal lab, or nonprofit research organization). The research institution must perform at least 30% of the work.

Phase I: Up to $200,000
Phase II: Up to $1.5 million

SBA Grants

The SBA itself does not issue general-purpose grants to small businesses. However, it does administer several targeted programs:

Community Advantage grants for lenders serving underserved markets
PRIME grants for micro-enterprise development organizations
Growth Accelerator Fund Competition: Awards up to $50,000 to accelerators and incubators (not directly to businesses, but you can benefit by participating)

State and Local Grants

State and local grants are often more accessible than federal ones and more relevant to typical small businesses. These programs vary widely by location but commonly include:

Economic development grants for businesses opening in specific areas
Job creation grants tied to hiring commitments
Minority, women, and veteran-owned business grants
Industry-specific grants (agriculture, technology, manufacturing, tourism)
Community development grants for businesses in underserved neighborhoods

How to Find State Grants

Visit your state's economic development agency website
Contact your local Small Business Development Center (SBDC)
Check with your city or county's business development office
Ask your SCORE mentor about local programs

Corporate and Private Grants

Many corporations run grant programs for small businesses, often as part of their community investment or diversity initiatives:

FedEx Small Business Grant Contest: Awards up to $50,000
Visa Everywhere Initiative: Awards for fintech and payment innovation
National Association for the Self-Employed (NASE): Growth grants up to $4,000
Amber Grant Foundation: Monthly $10,000 grants for women-owned businesses

These programs change frequently, so check current availability before investing time in an application.

How to Write a Strong Grant Application

Read the Requirements Three Times

The number one reason grant applications fail is that the applicant did not follow the instructions. Read every word of the eligibility criteria, the application requirements, and the evaluation rubric. If the grant specifies a 5-page narrative, do not submit 6 pages.

Match Your Business to Their Mission

Every grant exists to advance a specific goal. The SBIR program wants innovative technology. A state economic development grant wants job creation. A corporate grant might want to support underrepresented founders. Your application must clearly connect your business to the grantor's mission.

Be Specific About Impact

Vague promises do not win grants. Instead of "we will create jobs," write "we will hire 8 full-time employees within 18 months at an average salary of $52,000." Instead of "we will serve the community," write "we will provide services to 200 households in ZIP codes 30301 through 30305."

Budget With Precision

Include a detailed, line-item budget that accounts for every dollar requested. Grantors want to see that you have thought carefully about how the money will be used. Include matching funds or in-kind contributions if applicable.

Get Reviews Before Submitting

Have at least two people review your application. A SCORE mentor, an SBDC advisor, or a colleague who has won grants can catch errors and strengthen your narrative.

Common Grant Mistakes

Applying for grants you do not qualify for: Read eligibility criteria carefully and do not waste time on long shots
Missing deadlines: Grant deadlines are hard deadlines. Submit at least 48 hours early to account for technical issues.
Ignoring reporting requirements: Grants come with strings. You must report on how you used the funds and what outcomes you achieved. Failing to report can require you to return the money and disqualify you from future grants.
Treating grant writing as an afterthought: Strong applications take 20 to 40 hours to prepare. Budget the time.
Falling for grant scams: If someone asks you to pay a fee to "access" grant money, it is a scam. Federal grants are always free to apply for.

Building a Grant Strategy

Do not rely on grants as your primary funding source. The timelines are long (3 to 12 months from application to funding), the competition is fierce, and there is no guarantee you will win.

Instead, treat grants as a supplement to your overall funding strategy. Apply for grants that align with what you are already doing. If you are already hiring, apply for job creation grants. If you are already doing research, apply for SBIR. The best grant applications describe activities that will happen regardless of whether you win the money. The grant simply accelerates the timeline.