Grants and loans can be a great way to infuse cash into your business at key moments. The key is to understand how to capitalize on these opportunities when they arise. Ideally, you want to be able to use your grants to boost small business income toward your long-term goals.
Unfortunately, this is often easier said than done. If you want to maximize the impact of grant money, it will help to start working on a plan for it before you even apply. Of course, it’s never too late to start thinking about your long-term goals. In this article, we take a look at how you can start using grant money as a way to boost your business’s income and work toward your expansion goals.
What is a Grant?
A grant is basically free money. Grant opportunities are usually provided either by government entities or not for profits. While the terms surrounding a grant may vary significantly, there is usually a specific goal in mind. For example, an environmental group might provide grant money for businesses that want to increase their sustainability.
A minority-focused not-for-profit might provide grant money for multicultural business owners. A rehabilitation-focused not-for-profit may provide grant money for business owners that want to rehab a storefront on Main Street.
You get the idea.
The benefit of a grant over a loan, of course, is that you never have to pay the money back. However, there are also a couple of consequences:
- Grants are harder to get: Because you aren’t the only business owner in your community who likes the idea of free money, you may need to get a little competitive in order to secure your grant. This will involve doing your research and putting together high-quality pitch materials.
- The terms are more narrow: If you take on a grant for sustainable business practices, you can’t use it to redo the sidewalk outside your store. Consequently, it is a good idea to identify your business goals beforehand, and then look for grants that complement them.
- They aren’t usually useful for long-term goals: While grants can be great for a quick cash infusion, they aren’t the same thing as a line of credit—what you might get from a conventional loan. They can be used to help you jumpstart your goals, but they are not a long-term financing solution.
Now that you understand what grants are, why they rock, and what sort of limitations they have, let’s talk a little bit about how you can get one.
How to Get a Grant
While getting a grant can be a competitive and often challenging process there are plenty of things you can do to help improve your odds. Below, we include a list of steps to take to boost your chances of getting grant money.
- Research carefully: While grants are competitive they are also very specific. This specificity can be used to your advantage. By carefully researching the grant market, you can find opportunities that best suit your business. For example, you may be able to find grants for minority business owners in southern Illinois. While there may still be plenty of applicants, the pool will be smaller than if you applied for a general grant.
- Follow the submission guidelines carefully: Once you’ve identified a list of grants that you know you qualify for, it is important to read the submission guidelines carefully. Once again, your goal is to stand out amongst a crowded pool of candidates. A well-crafted application can help get the job done.
- Craft a proposal that tells a compelling story: You want your application to demonstrate a clear need for the funding. Moreover, you also want to make sure that your submission demonstrates how effectively you will be able to use the grant money. The organization will want to make sure that the funds they hand out are being used as effectively as possible. If you can show that you will use the money well it may help your submission stand out.
- Provide strong supporting documents: Prepare any supporting documents required for the application, such as letters of support, resumes, or organizational financial statements. Ensure that these documents are well-organized, up-to-date, and relevant to your proposal.
- Follow up: Of course, following up won’t be enough to sway the grant committee’s decision, but it can help you stay in the loop. It can also help you form a valuable connection. Even if you don’t get this grant, you may establish a point of contact who will keep you in the loop for future opportunities.
Keep in mind that even great grant proposals will fall short sometimes. Persistence is key. Once you do land a grant, it’s time to start thinking about how you can use it to grow your business.
Have a Clear Plan
It’s important to have a clear plan for how you intend to use your grant money before you even submit your application. Most grants will require this anyway, but when the money arrives, you should already know exactly how you are going to use it.
So, what are grants good for? Pretty much anything. If you are interested in expansion, you might use your grant to develop a product, or even hire a new employee. Grants can also be used for renovations, advertising, and so on.
One thing to keep in mind is that most grants are one-time payments. So, if you use the funds to acquire something that will result in an ongoing cost (for example, an employee salary) it is a good idea to have a plan in place for how you will be able to maintain that expense once the grant money runs out. Tools like this workforce planning template from Vena Solutions can help simplify labor expense tracking and provide a clear picture of your future financial obligations.
There aren’t many situations in life where people want to give you money with no strings attached. Be sure to take advantage of this opportunity to grow your business!