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Small Business Grants: What Are They and How to Apply

June 17, 2020
Written by Nextdoor Editorial Team
June 17, 2020 | Written by Nextdoor Editorial Team

Small Business Grants: What Are They and How to Apply

As a small business owner, you have likely been faced with the many obstacles of COVID-19, the hardest being an inability to continue operating. In response to these difficult times, many government and private entities have stepped up to provide relief for small businesses through grants and loan programs. 

This guide will show you how to get federal government grants for small businesses by covering these key topics:

1. What Is a Small Business Grant?

2. Difference Between Grants and Loans

3. Does Your Business Qualify?

4. Common Corporate, State, and Federal Grants

5. How to Apply

6. Next Steps


What Is a Small Business Grant?

A small business grant is a sum of money provided by state, federal, or private entities to qualifying businesses—you don’t have to pay them back, but you do have to apply for them. While these types of grants have always existed, they have recently increased in size and quantity in response to the COVID-19 pandemic. 

The amount of grant money you can receive depends on the entity giving the business grant. Here’s a snapshot of what small business grants look like right now:

  • Kentucky offers locally-owned small businesses (SMBs) grants of up to $3,000 through their small business stimulus fund. 
  • In Colorado, the Denver Small Business Emergency Relief program gives SMBs affected by COVID-19 up to $7,500 in cash grants.
  • Working Washington Small Business Emergency Grant provides local businesses grants of up to $10,000.
  • The SBA Economic Injury Disaster Loan offers grants of up to $10,000 for qualifying applicants, even if they were denied a loan. 

Grants vs. Loans

Grants and loans both help 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. 

This distinction makes grants incredibly valuable during this time of crisis when so many small businesses have suffered from the COVID-19 pandemic. According to this survey by the U.S. Census Bureau:

  • 41% of SMBs had to close a location for one or more days.
  • 45% experienced major disruptions in their supply chain.
  • 31% predict that it will take at least six months to return to their previous levels of operation.

In such a challenging time—when a return to normalcy seems so distant—grants provide a welcome boost to the businesses that need it most. 

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


Does Your Business Qualify for a Small Business Grant?

Before qualifying for a small business grant, first, 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 business grant eligibility requirements, including a few specific examples:

  • Many grants require, very simply, that businesses have 50 employees or less.
  • Others determine grant qualifications based on annual revenue—for example, the Amazon Neighborhood Small Business Relief Fund requires that companies make less than $7 million in annual revenue.
  • In Washington, small businesses must have 10 employees or less and have been operational for at least one year prior to applying. 
  • Some grants may specify your industry or location—in Kentucky, their relief fund only serves small businesses in either the restaurant or experience retail sector. 
  • Many grants also require that companies prove that the pandemic negatively impacted their business, with some specifying a certain percentage of lost revenue or reduced business hours to qualify. 

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 like the U.S. CARES Act

A Quick Note on Forgivable Loans

On top of the government grant programs emerging in response to the COVID-19 pandemic, more and more business loan programs are appearing across the country. What makes these loans especially valuable is that many can become forgivable if certain criteria are met. 

When loans are forgiven, that means they don’t have to be paid back in full, or at all. 

According to the SBA’s page on the Paycheck Protection Program, small business loan forgiveness criteria are as follows:

“The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.”

Though grants are always non-repayable, many of these loans end up acting like grants once forgiven. They are available through your state and the SBA and often lend even greater amounts of money and at manageable interest rates. 


Common Corporate, State, and Federal Small Business Grants

On top of the SBA, you can receive 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 businesses that want to survive—and even grow—in this challenging time. 

  • Small Business Innovation Research and Small Business Technology TransferThe SBIR and STTR programs connect research and technology-focused SMBs to grants from federal departments like NASA, the NSF, and the Department of Energy. 
  • – 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 an annual college scholarship of $3,000 for their dependents and $4,000 worth of monthly grants. 
  • 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. 
  • Amazon Neighborhood Small Business Relief Fund – This $5 million relief fund serves SMBs local to Seattle and Bellevue, Washington.

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.

  • The Red Backpack Fund – The Spanx by Sara Blakely Foundation is offering a $5,000 grant to majority-women owned and led businesses. The deadline for application is through August 2020.
  • PayPal’s Association for Enterprise Opportunity – PayPal announced they’re offering $10,000 to more than a thousand black-owned businesses affected by COVID-19. Applications will be accepted until the fund runs out.

Because businesses need support immediately, most grants’ submissions are closing before the end of July. Be on the lookout for other grant opportunities with deadlines closing sooner, like the Minority Business Development Agency which offers grants for minority-run SMBs. Their submissions deadline is July 15th.


How to Apply for Small Business Grants

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 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 business. 


What Else Can Local Small Businesses Do Right Now?

On top of filing for small business grants, businesses need to be doing everything they can to support and communicate with their customer base. Neighbors and locals are the lifeline 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 business afloat, it’s crucial to consider 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 Business Page lets you plug into the local conversation through customer recommendations, promotions, and marketing. With Nextdoor, businesses can get out the word about their reopening or changes to their business, for free. Don’t miss out on your most valuable potential customers—the people in your neighborhood—and claim your free business page today.



Additional sources: 

Forbes. List of Coronavirus (COVID-19) Small Business Loan And Grant Programs.

Nav. Small Business Grants COVID-19 Relief: Where to Find Free Money in 2020.

NerdWallet. Small-Business Grants: Where to Find Free Money.

RocketLawyer. Grant vs. Loans: What’s the Difference?,institutions%2C%20or%20non%2Dprofits.

Small Business Administration. Size Standards.

United States Census Bureau. Weekly Census Bureau Survey Provides Near-Real-Time Info on Businesses.

For updates on regulations & business relief resources available by state, see our Small Business Relief State Guides: 


Claim your free Business Page to get started on Nextdoor. For resources on how to use Nextdoor to stay connected with your local customers, pertinent news affecting businesses, and more, follow us at @nextdoorbusiness on Facebook.

Claim your free Business Page to get started on Nextdoor. For resources on how to use Nextdoor to stay connected with your local customers, pertinent news affecting business, and more, follow us at @nextdoorbusiness on Facebook

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