Search for business grants online and you will find many links to lead you astray. Ads promise “billions available in grant funding,” but these sites are aimed at pulling money out of your pocketbook rather than providing legitimate dollars for your small business. Never pay up front to apply for a business grant. Genuine grants and scholarships have a rigorous application process but do not require you to pay for the privilege of applying.
So how can you find funding for your business? These seven steps will help you tap into opportunities available for your business:
1. Think about programs with which you already are affiliated.
Do you receive vocational rehabilitation services or Social Security disability or supplemental income? Each of these programs provides support for people who are pursuing self-employment to increase their income and move toward self-sufficiency. Do you receive help for your family through TANF? If you are pursuing self-employment as part of your family contract, you can tap up to $500 to help with expenses as you build your business. With each of these options, you’ll need to demonstrate that your business has the capacity to generate enough income to make it worth your while. A business counselor at Women, Work, and Community or your local Small Business Development Center can help you develop your business plan and assess whether your idea is feasible.
2. Think about where you live.
If you can demonstrate the impact your business has on community economic development — for instance, improving a local building and increasing the tax base; adding to downtown revitalization or commercial district development; creating jobs and generating employment — you often can tap into your community’s economic development plan to include matching funds for your business. Your ticket to these funds is your city’s director of economic and community development, your town manager, or whoever writes and administers grants for your municipality.
3. Be sector specific.
Are you an artist? Check out Maine Arts Commission for funding for your creative projects. Are you an innovator in technology, manufacturing, forestry, aquaculture or agriculture? Check out Maine Technology Institute for matching grants to help you at each stage of developing, producing and promoting your product. Are you a farmer? Visit your local USDA Rural Development office to learn about grants for market development, value-added production and other aspects of agriculture.
4. Make mission-based friends.
Charitable and educational nonprofit organizations receive the bulk of grant funding thanks to their 501(c)3 status. Does your business have a role to play with local nonprofits? If your mission aligns with a partnering nonprofit organization, you may be able to work together to access funding that will move both of you forward.
5. Think green.
Efficiency Maine and USDA Rural Development have funding to help your business become more energy efficient, and tax incentives may apply to your investment.
6. Be savvy and be competitive.
Read the business pages of your local paper, subscribe to industry publications in your sector and keep your ears open. In Aroostook County, the Entrepreneur of the Year Award through Leaders Encouraging Aroostook Development comes with a $500 prize. Statewide, young entrepreneurs ages 18 to 29 can apply for grants of up to $5,000 from the Libra Futures Fund. Women, Work, and Community offers minigrants of up to $400 for marketing, with deadlines varying by region. Many other small pockets of funding come and go. If you stay informed and connected to your business community, you will be first in line for future opportunities.
7. Make your match.
Free money does not grow on trees, and many of the programs above require some level of personal investment from you in your business. If your grant requires a 1:1 match, that means that for a $100,000 project, the grant will fund $50,000 while your own funds or other sources must pay for the rest. Low-income entrepreneurs may be eligible for the Family Development Account program, where you can save up to $1,000 of your own money and have it matched 4:1 to support business expenses to grow your business and build assets. Until you are ready for outside equity investment (a subject for another time), most business financing comes from loans, not grants. Any business owner seeking a loan — whether you’re a veteran, a woman, a minority, all or none of the above — will need to show that you are able to make an investment in your own business and willing to take on some of the risk yourself. Aim for at least 25 percent of the total funding you need in hand before counting on any loans or grants to help you out. Get help writing a business plan showing your projected income and expenses for at least a year and demonstrating how you will meet your goals and repay your loan.
Even with the best business idea, funding does not happen overnight. But with patience and persistence, even entrepreneurs of the most modest means can build assets and access opportunities to grow your business.