As the business world works to adapt to the increasingly severe consequences of COVID-19, small businesses in particular are hurting. In order to survive in the current economic climate, many small businesses are reaching for lifelines. Small business grants are one option that can breathe life into a small business needing an influx of cash to get them through to the other side of quarantine.
What is a small business grant?
A small business grant is a sum of money given as a gift to a person, a for-profit small business, or non-profit organization with no expectation of repayment. Most small business grants are highly specific to a particular type of business owner, location, industry, or other niche.
Small Business Grant Use
An important element to consider when applying for a small business grant is how you would use the funds. Unlike a loan, small business grants will likely have a string or two attached. So where and how can you use grant funds for your small business? This often ties to strict eligibility requirements.
Typically, federal small business grants cannot be used to start a new business, pay off debts, purchase inventory, or cover day-to-day operational expenses. These grants tend to be directed towards innovation and improvement through equipment purchases, upgrades & improvements, advertising, etc.
However, there are many local and private grants that are directed towards specific use cases, like emergency relief, mentorships, or startup costs.
In light of the coronavirus changes, many small businesses are trying to find ways to protect or save their enterprise. Small business grants can be helpful, but it’s unlikely that your grant can be used as a mere substitute for decreased revenue. In the case of fulfilling payroll or operational needs, a small business loan may be more applicable.
When to consider applying for a business grant
A business grant can give you an influx of cash to sustain or improve your business in significant ways. Although grant money is, in a sense, “free,” that doesn’t mean that any business can fill out a simple application and get quickly accessible funds to use however they would like.
Business grants are usually created to stimulate specific types of businesses and industries. For example, there are many small business grants for female entrepreneurs, minorities, veterans, and innovative founders. Business grants may also come with a few strings attached for application of funds.
Small business grants may or may not be the best option for strengthening your business, but here are a few indicators that you might benefit from a business grant:
- You could use a sum of cash to revitalize your business
- You have specific ideas for improving or saving your business
- You fit in a particular niche (or a few!) that set you apart
- You have a business story that can captivate decision committees
- You thrive in competition
- You have the time and savvy to complete complex grant applications
Small business grants often require lengthy and specific applications—the easier the application, the more applicants with whom you’ll have to compete. Essentially, you have to determine if the time, effort, and risk are worth the money you may receive.
Federal business grants
The United States Government has a vested interest in the success of small businesses, so there are a wide variety of federal business grants so boost the economy through small business success. Some of these federal programs include grants for veteran-owned businesses and grants for women in business.
U.S. Small Business Administration (SBA)
The Small Business Administration regularly delivers grants to companies involving research and development, exports, and veteran mentorship (learn about SBA grants here).
Currently, the SBA is also offering up to $2 million in disaster loans applicable to financial hardships incurred by COVID-19.
Coronavirus stimulus plan
In response to the COVID-19 threat, Congress has been rapidly working on a stimulus package that can provide our economy with a much-needed shot of adrenaline. The 2 trillion dollar package being currently negotiated would include paycheck support for businesses of less 500 as well as an expansion to unemployment benefits.
The Main Street Emergency Grant Program
The Main Street Emergency Grant Program was proposed by three Democrat Senators: Chris Murphy (Conn.), Jeff Merkley (Ore.), and Chris Van Hollen (Md.). This federal grant program differs from others in that it actually does allow for the coverage of fixed costs for small businesses suffering from the COVID-19 public health crisis.
Small Business Innovation Research Program
The Small Business Innovation Research Program (SBIR) encourages small businesses to engage in Research & Development (R&D) and explore their technological potential. This program is highly competitive, however, they have awarded over 160,000 grants with over $4 billion in funds. Learn more about SBIR here: https://www.sbir.gov/about/about-sbir
State and local business grants
State and local governments can choose to offer specific grant programs, both in times of stability and in times of crisis.
Here are a handful of the current relief programs specific to certain geographic areas:
- DenverEconomic Development and Opportunity’s emergency relief program (cash grants up to $7,500)
- Maryland Emergency Relief Grant Fund($50 million in grants)
- Michigan Small Business Relief Program($10 million in grants)
- New York City NYC Small Business Services(Grants cover 40% of payroll for businesses with less than five employees)
- Philadelphia COVID-19 Small Business Relief Fund
- Portland Jade District-Oldtown COVID-19 Small Business Response Fund$140,000 in grants
- Seattle Business Stabilization FundGrants up to $10,000
Grants specific to COVID-19
A few private companies have announced grants specific to the current climate. Here are a few worth considering:
- Amazon’s Neighborhood Small Business Relief Fund: For Seattle businesses with fewer than 50 employees or less than $7M annual revenue.
- Facebook’s Small Business Grants Program: $100M in cash grants and ad credits to small businesses.
- James Beard Foundation’s Food and Beverage Industry Relief Fund: Micro-grants to independent food and beverage businesses.
- JPMorgan’s $50M Philanthropic Investment: Including $8M in grants to small businesses and $2M to nonprofits.
Grants for women-owned businesses and minority-owned businesses
If your small business falls within a specific demographic, such as a women-owned business or minority-owned business, you may be eligible for the following grants:
- Eileen Fisher Women-Owned Business Grant
- The Amber Grant(Female Entrepreneurs)
- US Department of Agriculture Grants
- StreetShares Foundation Veteran Business Grant
- First Nations Development Institute Grants(Native Americans)
- Minority Business Development Agency Grants
- Asian Women Giving Circle Grants
For dental practices, we recommend that you cover yourself in multiple ways.
First, develop an ongoing relationship with a CPA Firm focused on the Dental industry, rather than a generalist CPA Firm (your neighborhood CPA). A Dental CPA Firm will provide you with insights on how to proceed under these emergency situations, which will save you weeks (probably several months). Some of the leading dental lending institutions are shutting down lending right now due to economic risk. Some are still lending. A Dental CPA Firm will be able to contact various dental lenders to find out who is still lending and who is not right now. Contacting dental lenders directly yourself will give you false hope because no banker will tell you straight up that they are not lending right now. That’s like a politician telling you they don’t want your vote.
In an emergency, which we are in right now, you need to the straight scoop to improve your odds. Time is essential to protecting your business.
The secondary funding method will be grants, which is more like a lottery ticket right now. Yes, this will be a score but should be option #2 for you.
If you would like to work with a Dental CPA, rather than a generalist CPA, then complete a short form and we will recommend a Dental CPA in your area.