How to Get a Grant to Start a Business: A Realistic Step-by-Step

To get a grant to start a business, first check whether your business fits one of the few categories grants actually fund (research and development, certain rural and agricultural ventures, local economic development goals, or private contests for new founders), then use your free local Small Business Development Center to find the programs open in your area, register the business, and apply with a clear plan for how the money will be used. There is no general federal grant for starting a business, and most new businesses are funded by owners, loans, and investors, with grants as a supplement.

This page covers the process. For a current list of named programs with amounts and deadlines, see our startup business grants list.

Step 1: Check whether your business fits a grant

Grant makers fund outcomes they care about, not businesses in general. Your chances are realistic if one of these describes you:

• You are developing new technology. The federal SBIR and STTR programs fund research and development at small businesses. They are large and competitive and require a technical proposal. See our SBIR proposal writing guide.
• You farm or process agricultural products. USDA runs programs for producers; see grants for farmers.
• Your business serves a local economic goal. Cities, counties, and states fund storefront improvements, job creation, and businesses in targeted neighborhoods, often as small grants or matching grants.
• You fit a private program's focus. Companies and foundations run contests for new founders, women, veterans, and specific industries, usually for a few thousand to tens of thousands of dollars.

If none of these fits, a grant is unlikely to fund your launch, and the time is better spent on the options at the end of this page.

Step 2: Use your free local help

Two local resources save more time than any online search.

Your Small Business Development Center (SBDC). There are nearly 1,000 SBDC locations, funded in part by the SBA and hosted mostly by universities and colleges. Advisors are free and know which state and local grants are open, which lenders work with startups, and how to build the business plan applications ask for. Find yours through America's SBDC locator or the SBA's local assistance finder on sba.gov. Women founders can also use one of the SBA's Women's Business Centers, and veterans the Veterans Business Outreach Centers.

Your state economic development agency. Every state has one, sometimes called a department of commerce or economic development corporation. Search your state name plus "economic development" and look for the official site. Its small business or funding page lists state grant programs, and it can point you to city and county programs. Also check your city or county economic development office, which often runs facade, storefront, or microgrant programs that never appear in national lists.

Step 3: Set up the business properly

Almost every grant requires a legally registered business. Before applying, have:

• Your business registered with the state (LLC, corporation, or other entity)
• An Employer Identification Number from the IRS (free on IRS.gov)
• A business bank account separate from personal funds
• Any licenses your industry and city require

Federal grants such as SBIR also require a SAM.gov registration, which can take weeks.

Step 4: Prepare what applications ask for

Most applications draw on the same material, so prepare it once:

• A short business plan: the problem, your product or service, your customers, and how you will make money
• A use-of-funds budget: exactly what the grant would buy (equipment, inventory, a lease deposit) and what it costs
• Financials: projections for a new business; statements if you have been operating
• Your story: your background and why you are the right person to build this business
• Proof of traction, if you have any: first sales, preorders, letters from customers

Private contests often reduce this to a few short essay questions, but the clearer your plan and budget, the better those answers get.

Step 5: Apply, and read the terms

Follow each program's instructions exactly and apply before the deadline. Read the terms before you accept money:

• Matching or cost share. Many local and government grants pay only part of a project, with you covering the rest.
• Reimbursement. Government grants often pay after you spend the money and submit receipts, so you need cash to start.
• Reporting. Expect to show how the money was used.
• Taxes. Business grants are generally treated as taxable income. Ask your tax adviser how to report yours.

Step 6: Watch for scams

The Federal Trade Commission's guidance on government grant scams is direct: government agencies do not contact you out of the blue about a grant, never ask for payment by gift card, wire transfer, or cryptocurrency, and do not charge fees to release grant money. There is no "Federal Grants Administration." Federal grant opportunities are listed free on Grants.gov, so never pay for a list. Some legitimate private programs charge a small application fee; check who runs the program and whether it publishes past winners before paying one.

If no grant fits

Most businesses launch without grants. The common alternatives:

• SBA microloans of up to $50,000 through nonprofit intermediary lenders, which often work with new businesses
• Community development financial institutions (CDFIs) that lend to businesses banks turn down
• SBA-guaranteed loans through banks, once you have a plan and some collateral or revenue
• Crowdfunding and preorders, which also prove demand

Your SBDC advisor can help you compare them.

If you find a grant that fits and want the application written, our small business grant writing service prepares it. Women founders should also see small business grants for women.