Business owners often have amazing ideas that, if implemented, can change local communities for the better. But where to get funds to implement these changes? There are several options, for instance, taking a loan or asking investors for more funding.
But there is another option available to small businesses — a grant. This article explains a business grant and how to write a grant proposal to receive funds.
What Is a Business Grant?
A business grant is money given to businesses that need funds and submits a grant proposal. A grant differs from a loan since the business owner doesn’t have to pay it off. Moreover, there is no interest attached to the grant. An organization gives money to the business without expecting funds in return.
Typically, federal, state, or local governments become grantors (an organization giving money, the grantee is the funds’ recipient). However, sometimes corporations can offer grants to small business owners.
Each source of grants has benefits and drawbacks. For instance, federal governments have various grants for various businesses, but it isn’t easy to convince the grantor that you’re a perfect candidate. Local governments offer smaller grants, but it’s easier to obtain them since locals are interested in businesses giving back to communities.
Each grant type has a specific focus. Business owners should research offered grants and apply for those programs that meet their needs. It’s critical since such programs have strict rules on how to spend the funds. Loans offer more freedom on what to spend, but the company must spend grant money on specific areas described in the grant proposal.
Why Do You Need a Grant Proposal?
The main reason to receive grant funds is to start, optimize or scale businesses. However, business owners must write and submit grant proposals. If you write a grant proposal describing how you plan to distribute funds, the grantor might accept your application.
Thus, you can invest funds in a business and gain profit. Check local or state programs to find options that suit your business. Getting a loan is a riskier option since there is a chance of a business not making a profit.
Keeping proper financial records is time-intensive and small mistakes can be costly. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business.
Who May Apply to Get a Small Business Grant?
Not every business can receive funds from the government or federal programs. Applicants should meet strict requirements outlined in the grant proposal guidelines. A business must fit into a specific category to receive funds.
For instance, if a business offers free training to physically or mentally disabled individuals is considered eligible to receive funds. However, the business or organization must prove that they provide this training. If it’s a startup, it might be difficult or impossible to prove that the business will provide this training. An existing business can provide proof.
Here are a few things business owners need to understand:
- Most grants are created for existing businesses, not startups. It’s nearly impossible to get with a startup in mind, so it’s a better idea to apply for a loan when launching a business.
- Businesses with “interesting” ideas get funds. A typical coffee shop won’t win funds since most projects cater to the interests of innovative businesses or companies that aim to fix an existing issue. In simple words, the business should be useful to society or the local community.
- Getting a grant is a long process. Typically, governments announce grants once a year. Moreover, the committee announces the winner only after a while. So, it’s not a short-term funding solution.
Overall, any business can apply for a grant, but it won’t get approval if it doesn’t meet the eligibility criteria.
Preparations Before Writing a Grant Proposal
Before writing a grant proposal to get funds for your project or existing business, you must prepare a few things and gather information. The grant committee responsible for approving an application wants to know more about each business. They need the following data:
- business type;
- the needs of the company;
- action plan (the step-by-step plan of how a business owner plans to achieve all goals);
- the budget (a clear plan of how the business owner is planning to invest money).
To begin, check your business plan, and create a list of objectives and company needs. The next step is researching different accessible programs that offer the necessary funding. Check requirements and what these programs offer.
When you find a perfect program that offers the necessary funds, tailor your grant proposal to this program. Ideally, your grant proposal should meet all grant requirements to increase the chances of getting committee approval.
It’s the reason why business owners should pay extra attention when researching each program. Understanding requirements and where the committee is coming from should help business owners to submit an effective grant proposal.
What to Include in a Grant Proposal?
If you’ve already found a grant to apply for, now it’s time to write a grant proposal. Here are a few short steps to prepare the grant proposal:
- Review instructions and requirements.
- Make an executive summary.
- Prepare a business needs statement.
- Write a project description.
- Write a business budget.
- Prepare the cover letter.
Now let’s see in detail how to write a grant proposal.
Review Instructions and Requirements
Ensure you know all the grant requirements, including documents to provide, deadlines, etc. A business may meet all the requirements from the program but fail to collect all necessary documents. As a result, the company won’t get funds.
Research the program, its goals, and other critical information to tailor your application according to the requirements. You should understand what the committee is looking for in applications. It’s how businesses can use this data to their advantage.
Make an Executive Summary
An executive summary outlines why the organization needs funding. The summary should also include funding needs, how the business plans to follow through with the project, etc. However, business owners should fit all information in a few paragraphs. So, it’s critical to outline the most important aspects.
The executive summary should include engaging, short sentences that get right to the point. It’s the first introduction to a business or organization requesting funds, so it should be as convincing as possible.
Prepare a Business Needs Statement
The needs or problem statement reveals why your business is a perfect candidate to receive funding. This proposal section should include the problem you aim to solve and how you plan to solve it with grant money.
When preparing the needs statement, highlight two key points:
- the scope of the issue;
- why your business can solve the issue.
Emphasize that you’ve researched the problem and have planned to take the necessary steps to solve it. Prove you did your research by providing supporting data. However, don’t make things too complicated. Use simple language, and avoid using technical terms unless the committee consists of experts from the same field.
Write a Project Description
This section should include goals and how the company plans to hit these goals. Ensure to highlight goals and objectives that can be easily measured.
Here’s what you may include in this section:
- Project’s timeline.
- Project’s budget.
- How the business plans to approach and solve the problem.
- Why the business is perfect for solving the issue with grant money.
- The number of employees working on solving the issue and hitting goals.
- Resources the business has and the resources it needs.
- Members of the community who will benefit from the business solving the issue.
- Key performance metrics the company will use to track the project.
- Metrics to help track success.
The main goal of this section is to clearly describe what you plan to do with funds, how you’ll manage the company’s success, and what communities should benefit from your business’s success.
Write a Business Budget
Keep the numbers within the grant’s funding limits. When preparing the budget, double-check that all your calculations are correct. A simple error or a typo may disqualify a company from the competition.
Prepare the Cover Letter
It’s the first part of the grant application, but consider writing it as the last part. It’s easier to summarize everything when you’ve written the entire proposal so that the business gets a better chance of receiving the necessary funds.
To sum up, a business grant is an opportunity given by federal, state, or local governments to businesses that have innovative ideas or aim to bring value to local communities. Anyone can apply for a grant, but they won’t get funding if they don’t meet the requirements.
Business owners should thoroughly research all available programs to write a successful grant proposal. A successful proposal is one tailored specifically to meet the requirements outlined in the program.
Author: Charles Lutwidge