Jun 18, 2020 | 9 min read

Small Business Grants: What Are They and How to Apply

This article was updated on April 13, 2023

Whether your existing small business is financially struggling or you’re looking to start a new company from the ground up, you might be in need of a little extra cash. If you are in need of financial assistance, a small business grant could help.

Small business grants are a type of financial assistance that are specifically designed to support both existing and new small businesses as they navigate financial hardships—or the baseline challenges of opening a local business. 

If you’re looking for more information, you’re in the right place. Below, we’ll explore the following topics: 

  1. What is a small business grant?
  2. The differences between grants and loans
  3. Does your company qualify for a small business grant?
  4. Common corporate, state, and federal grants
  5. How to apply for a small business grant
  6. Next steps

What is a small business grant?

A small business grant is a sum of money provided by a state, federal, or private entity to qualifying small businesses—you don’t have to pay them back, but you do have to apply for them. 

Grants are, essentially, free money. 

But, the amount of money your small local business can receive from a grant varies based on multiple factors, including (but not limited to):

  • The entity awarding the grant
  • The size of your business
  • Your eligibility for certain funding tiers
  • Your legal status (e.g., for-profit vs. nonprofit corporation)

Let’s take a look at some grants currently available on the market to give you an idea of how much to expect when you apply for a grant:

  • The US Department of Agriculture is currently offering the Agriculture Innovation Center Grant Program, offering ten grants of up to $1,000.00.
  • The SBA is offering grants through the State Trade Expansion Program (STEP), an initiative to help small businesses develop foreign sales initiatives and export systems. Grant funding amounts vary by state, but they all exceed $100,000.00.  
    • What is an SBA grant? The Small Business Administration (SBA) supports small businesses in a variety of ways—one of which is by administering grant and loan programs specifically for small businesses. To apply for SBA grants, companies must meet very specific qualifications.
  • Each year, the Visa Global Initiative awards prizes of various amounts to entrepreneurs around the world. In North America, finalists can receive $10,000.00. 

Grants vs. loans

Grants and loans both help small businesses. However, one crucial factor distinguishes the two. Loans have to be repaid to the lender after a specified period of time, often with interest and a hefty collateral attached, should the borrower fail to pay. 

But with grants, you don’t have to pay the money back. 

The distinction makes grants incredibly valuable during the current recession when small businesses have been distinctly impacted by inflation. In their 2022 Small Business Index, the US Chamber of Commerce found that:

  • 50% of small businesses report that inflation is the biggest challenge they’re facing right now
  • While 73% of small businesses were comfortable with their current cash flow in Q3 2022, that number dropped to just 66% in Q4 2022—the first significant drop in the cash flow comfort metric since April of 2020
  • 37% of small businesses have cut staff as a cost-saving measure in 2022, and 40% have taken out a business loan this year

Which begs the question: Does your business qualify for a small business grant?

Does your business qualify for a small business grant?

Before applying for a small business grant, ensure that the grant-giver considers your business a small one.

According to the Small Business Administration (SBA)—which gives out several vital small business loans and grants—what constitutes a small business is described as follows:

“Size standards define the largest size a business can be to participate in government contracting programs and compete for contracts reserved or set aside for small businesses. Size standards vary by industry, and are generally based on the number of employees or the amount of annual receipts the business has.”

Input information on your company using this convenient tool to determine whether you fall into the SBA’s size standards for small businesses.

Aside from size, grant opportunity qualifications vary depending on the lender, the state, or the country. 

Common grant qualifications for small businesses

Here are some of the most common small business grant eligibility requirements, including a few specific examples:

  • Many grants require that small businesses have 50 employees or less.
  • Others determine grant qualifications based on annual revenue—for example, the Amazon Neighborhood Small Business Relief Fund Amazon Small Business Grant Program (introduced in September 2022) requires that companies make less than $1 million in annual revenue.
  • Many grants also require that companies write a business plan, demonstrate their financial need, and/or detail how they’ll use the grant funds—this is the case for the Growth Grants offered by the National Association for the Self-Employed.

To ensure that you receive the most relief possible, conduct a comprehensive search of the government grant programs available in your area. Some may come from private entities like Facebook or Amazon, others from your state, and others from federal grant programs through providers like the SBA CARES Act

A quick note on forgivable loans

While forgivable loans became more prominent at the advent of the COVID-19 pandemic, some lenders still offer them. For example, the Vermont Economic Development Authority (VEDA) began administering the Short Term Forgivable Loan Program in November of 2022 to help small businesses overcome prolonged financial hardships resulting from the pandemic. 

If your small local business meets the criteria for a forgivable business loan both at the time of the application and at the time of forgiveness, a forgivable loan becomes, essentially, a grant—free money that your small business doesn't have to pay back. 

Criteria for forgiveness varies lender-to-lender, but in the case of the VEDA loan mentioned above, small businesses must meet the following criteria to qualify for forgiveness:

  • Employs fewer than 500 workers
  • Was active and operational in March of 2020
  • Can demonstrate continued financial impacts related to the COVID-19 pandemic

The funds from this forgivable loan must also be used for limited, specific applications—this is often the case for such loans. 

Common corporate, state, and federal small business grants

On top of the SBA, you can receive small business grants from federal, state, and corporate entities across various industries. While many of these grants may seem intimidating due to their comprehensive application processes, they are worthwhile opportunities for small businesses that want to survive—and even grow—in this challenging time. 

  • Small Business Innovation Research and Small Business Technology Transfer – The SBIR and STTR programs connect research and technology-focused SMBs to grants from federal departments like NASA, the NSF, and the Department of Energy. 
  • Grants.gov – This comprehensive database details grants from federal government agencies across the country. 
  • National Association for the Self-Employed – Members of this government agency can receive up to $4,000 for their small business through the NASE Growth Grants program.
  • Economic Development Administration – This government agency encourages innovation and entrepreneurship by providing resources, technical guidance, and grants to communities nationwide.
  • FedEx Small Business Grant Contest – This yearly competition awards $250,000 grants to twelve U.S.-based small businesses that have less than 100 employees. 

Minority small business grants

Many entities also reward small business grants for women and minorities. Some of these funding opportunities are more traditional grants with applications, while others take the form of entrepreneurial competitions.

  • Operation Hope’s 1 Million Black Businesses Initiative – To reach their goal of starting, growing, and scaling one million Black-owned businesses by 2030, Operation Hope provides financial support and mentoring for Black entrepreneurs. 
  • Women’s Business Centers and Veterans’ Business Outreach Center – The SBA offers unique opportunities for counseling, funding, and other resources through its Women’s Business Centers program—they offer a similar program for veterans
  • StartOut – StartOut offers mentoring, networking, and funding to entrepreneurs in the LGBT+ community. 
  • First Nations Development Institute – The First Nations Development Institute offers occasional grant opportunities for Native American business owners looking to grow. While they don’t have any active grants as of December 2022, check their website regularly for updates. 

How to apply for a small business grant

Let’s explore how to apply for a small business grant.

While application processes vary from grant to grant, most share similar steps and eligibility requirements. To optimize the amount of grant money you receive, compile a document of pertinent information required by most federal grant programs.

Here are some common details that grant funding applications require you to specify:

  • Business description or “elevator pitch”
  • Monthly or yearly revenue
  • Number of employees
  • Years of operation
  • Proposed use of grant funds
  • Business plan
  • Employer Identification Number (EIN)
  • Website and social media handles (Facebook, LinkedIn, Instagram, etc.)
  • Professional photo of you and associates

Even though grants seem like money that grows on trees, they are by no means low-hanging fruit—you have to work hard and be as detailed as possible to ensure the best outcomes for your small local business. 

What else can local, small businesses do right now?

On top of filing for small business grants, small businesses need to be doing everything they can to support and communicate with their customer base. Neighbors and locals are the lifelines of a small business, and right now, it’s important to be communicating everything from your operating hours to your implemented safety measures.

This will open channels of dialogue, allowing word of mouth about your business to spread. 

To help with this, there’s Nextdoor.

Next steps: Notify the neighborhood with Nextdoor

According to a survey of Nextdoor members, 70% of consumers turn to word of mouth from neighbors to discover new local businesses, while 88% shop locally at least once a week. 

So while securing grants will help keep your small business afloat, it’s crucial to consider the next steps of recovery. That includes focusing on business growth and reconnecting with your neighborhood and the customers that live in it. 

With Nextdoor, you join the neighborhood hub and increase your visibility to consumers within your local community. Your Nextdoor Business Page lets you plug into the local conversation through customer recommendations, promotions, and marketing. With Nextdoor, local small businesses can get out the word about their reopening or changes to their small business, for free. 

Don’t miss out on your most valuable potential customers—the people in your neighborhood—and claim your free Nextdoor Business Page today.

Claim your free Business Page



Claim your free business page
Author image Nextdoor Editorial Team At Nextdoor, we love local. The Nextdoor Editorial Team is dedicated to telling stories of local businesses, providing product education, and sharing marketing best practices to help businesses grow.