Small business grants are a great way for women to get started in the world of business. When they’re available, and when you can find them, they might just be the bridge between traditional lending and personal financial resources needed to get a business off the ground. In the following paragraphs we’ll discuss small business grants for women and how to get them.
What’s In The Guide?1. Searching for state grants
2. Where to find private grants
3. Other sources of business funding
Before we get to how you can find grants for women starting a business you need to understand that the federal government does not make grants for business. Despite what you may have heard from friends or relatives the federal government is prohibited by law from providing small business grants except in very rare circumstances. When money does come from the federal government it’s usually in the form of low-interest loans from the small business administration. If you need clarification on business grants from the federal government feel free to check the Grants.gov website. On that website they make it abundantly clear that Washington does not provide small business grants of any kind.
The good news where the federal government is concerned lies in the fact that they do provide money to the states via block grants. States are free to distribute that money as they see fit as long as it falls within the parameters of the grants. So if the federal government provided a block grant to your state as a means to promote business, your state could then turn around and give individual grants to female business owners. This is not at all uncommon, by the way, though federal money has been a bit hard to come by in recent years.
Keep in mind that state grants almost always come with strings attached. For example, a state may offer grants for women business owners only for businesses that are located within a general geographic location. These locations, also known as economic development zones, have been targeted by your state as being in need of economic growth. State officials use grants as an incentive to get people to open businesses in these areas.
Local and Private Grants
On occasion there will be small business grants for women available from your county or local municipality. This money is typically provided through grants from the state or through private contributions. Like state grants local money usually also comes with some strings attached. One example would be tying a small business grant to a tax abatement with the company receiving it agreeing to hire so many employees within a certain amount of time. If the company fails to meet its end of the bargain tax abatement will be ended and it may, or may not, have to repay that grant.
Private grants come from a variety of sources including trade organizations, local business groups, and female advocacy organizations. These types of grants are usually offered on a limited basis because they rely on private contributions. At the same time they can be helpful if the organization writing the grant also provides business assistance.
Combining Funding Sources
It’s important for women wanting to start a business to be prepared for a variety of funding sources. In other words, even if you’re able to find grant money it’s unlikely to provide all the funding you need for your first year of business. And by the way, you should plan on having at least one year’s worth of funding before opening the doors. It takes the average American business three years to start turning a profit, so you need to be adequately funded right from the start.
In addition to grant money you’ll need to get business loans from either a bank or the Small Business Administration. In order to get one of these loans you will have to convince lenders that your business idea is worth taking a risk on. This involves putting together a comprehensive business plan which explains your goals and vision, your company’s purpose and mission statement, products and services you intend to sell, your target demographic, and how you will market to that demographic group.
In addition to banks and the SBA you might also consider private equity financing. Private equity is a scenario in which a group of wealthy investors has pooled their money in order to invest in companies like yours. In exchange for their investment they take ownership of a certain portion of your company. Don’t let this scare you, however.
Private investors are very skilled at what they do and they have no intention of losing money on your business. They will do whatever it takes to make sure you succeed — so that they make money. When it’s time for them to sell their interest (usually 3 to 5 years down the road) you’ll be able to buy it back or let it be sold to the highest bidder.
Remember, if you’re starting your own business your future success rides in part on making sure you have proper funding. Before you spend a single dime make sure you have enough funding in place to allow you to make a legitimate run at succeeding. Nothing is worse than procuring only part of the funding and then watching the business collapse. If small business grants for women can be helpful, then by all means apply for them.