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Home > Financing > Grants

Overview

The best possible way of financing your business is to receive a grant from the federal, state, or local government. The greatest benefit is a grant does not have to be paid back as a loan would. However, the vast majority of grant programs are for technology and product development. Another aspect about government grants is that there is usually a requirement for the recipient to provide a match of either cash or in-kind support or both in order to qualify for these funds.

Obviously, grants are very difficult to get. Grant proposals are usually long and very technical, requiring the services of a professional grant proposal writer in most cases. Grants are also very competitive and a large majority of these requests are rejected.

The small business owner or prospective owner looking for a grant to provide working capital to start or expand their business is generally looking for something that, with few exceptions, simply does not exist.

Federal Grants

Although most of the federal departments have grant programs, these are almost always restricted to universities or non-profit organizations and are usually designed to further a research objective of the department.

An exception is the Small Business Innovation Research program. This program requires federal agencies to allocate a percentage of their research budgets to small qualifying businesses engaged in advanced scientific and engineering areas. The grants are intended to convert research into usable technological innovation with commercial applications.

The basic purpose of the SBIR program is to encourage small firms to undertake high risk, long-term research that has a potential commercial payoff. It will fund the process of turning an idea into a working prototype that can be supported by private capital once it is proven effective.

SBIR Agencies

The federal agencies and departments that award SBIR grants are:

• Department of Agriculture
• Department of Commerce
• Department of Defense
• Department of Education
• Department of Energy
• Department of Health & Human Services
• Department of Transportation
• Environmental Protection Agency
• NASA
• National Science Foundation
• Nuclear Regulatory Commission

To apply for an SBIR grant you must contact the specific federal agency providing the grant and request an application, or write:

Office of Innovation Research and Technology
U.S. Small Business Administration
Washington, D.C. 20416
(202) 205-7777

Other Federal Grant Programs

While there are other grant programs available for certain defined business ventures, they are for very narrow purposes. Copies of the Federal Domestic Catalogue in the largest libraries will also contain comprehensive information on potential grants and contract opportunities at the federal government level.

State Grants

In Virginia there are grant programs available through the Virginia Center for Innovative Technology. A private business may join with a university to have research and development done for the business to bring a technological innovation from the idea stage to the production stage. It is expected that the CIT grant funds be matched by industry funds.

Other grant programs offered in the state are detailed in the Virginia Capital Resources Directory which is available through the Chamber's Small Business Development Center.

Scams

Grants are one area where the warning "Caveat Emptor" (Let the Buyer Beware) cannot be overemphasized. Beware of individuals or organizations that claim to offer the "inside track", or a "proven method" for you to qualify for government grants if only you pay them a certain amount of money up front. In the majority of these cases, you will be receiving information that is available for free from other sources.