Small business grants: how to guide your clients to funding

Published Thursday 11 June 2026

Table of contents

• Federal grant and loan programs your clients should know
• State and local grant opportunities
• Corporate and private grant programs
• Grants for underrepresented business owners
• How to help clients apply for small business grants
• Help your clients find funding with Xero
• FAQs on small business grants

Key takeaways

• Federal programs offer a wide range of funding. SBA 7(a) loans go up to $5 million, 504 loans now reach $5.5 million, and the reauthorized SBIR/STTR program includes a new Phase II "strategic breakthrough" vehicle with awards up to $30 million.
• Grants exist at every level. State commerce departments, local economic development agencies, and private organizations like NASE and FedEx all run active grant programs your clients may qualify for.
• Grant advisory is a practice opportunity. Helping clients identify, apply for, and account for grant funding positions your firm as a strategic advisor, not just a compliance resource.
• Grants are taxable income. Remind clients that most grant funds are subject to federal income tax, and proper documentation from the start makes reporting straightforward.

Federal grant and loan programs your clients should know

The federal government offers the largest pool of small business funding in the country. While true grants (funds with no repayment obligation) are less common than loans, several programs combine both. Understanding the current landscape lets you steer clients toward the right opportunities.

Grants.gov

The Grants.gov portal lists thousands of federal grant opportunities across all agencies. Most are aimed at nonprofits, educational institutions, and community organizations, but some are open to for-profit small businesses, especially in research, technology, and manufacturing. Encourage clients to set up saved searches filtered by eligibility.

SBA loan programs

The SBA does not typically issue grants directly to small businesses. Instead, it guarantees loans through partner lenders, reducing risk for both sides. Here are the core programs to know:

• 7(a) loans: the SBA's most popular program, with a maximum loan amount of $5 million. Suitable for working capital, equipment, and real estate.
• 504 loans: designed for major fixed-asset purchases like real estate and heavy equipment. The SBA-backed portion now goes up to $5.5 million. Starting July 2026, the combined 7(a) and 504 cumulative limit doubles to $10 million per borrower.
• Microloans: loans up to $50,000 (average disbursement around $13,000), issued through nonprofit intermediaries. A strong fit for early-stage or very small clients who need modest capital.

You can find full program details and lender directories at the SBA funding programs page.

SBIR and STTR programs

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs fund research and development at small firms. Congress reauthorized both programs in April 2026, extending them through September 2031.

The reauthorization introduced a new Phase II "strategic breakthrough" funding vehicle with award ceilings up to $30 million for high-impact projects. If your clients are in tech, biotech, defense, or advanced manufacturing, these programs are worth flagging. Check the relevant agency solicitation portals for open SBIR and STTR opportunities.

SBA manufacturing grants

In May 2026, the SBA announced a new $50 million grant opportunity under its Made in America initiative, aimed at workforce training and capacity building for small manufacturers. If you advise manufacturing clients, watch for application windows through your local SBA district office.

SBIC program

The Small Business Investment Company (SBIC) program channels private investment into small businesses through SBA-licensed funds. While this is equity and debt financing rather than a grant, it has backed well-known companies including FedEx, Intel, and Staples. Clients seeking growth capital may benefit from exploring SBIC options through the SBA.

State and local grant opportunities

State and local governments often run grant and incentive programs tailored to regional economic priorities. These can be easier to access than federal programs and less competitive, making them a practical starting point for many clients.

State departments of commerce

Most states operate grant programs through their department of commerce or economic development agency. These programs target industries the state wants to grow, such as clean energy, agriculture, or technology. Advise clients to check their state's economic development website for current opportunities.

Small Business Development Centers

Small Business Development Centers (SBDCs) offer free consulting and can help clients identify grants they qualify for at the state and local level. There are nearly 1,000 centers nationwide. Your clients can find their nearest one at America's SBDC locator.

Local economic development agencies

City and county economic development offices sometimes run their own micro-grant or incentive programs, particularly for businesses in underserved areas or target industries. These are often under-publicized, so proactively checking with local agencies can uncover funding your clients would otherwise miss.

Corporate and private grant programs

Several corporations and private organizations run recurring small business grant programs. These are often simpler to apply for than government grants and can provide quick capital along with visibility for your clients.

• NASE Growth Grants: the National Association for the Self-Employed awards grants of up to $4,000 on a quarterly basis. Membership is required, but the application process is straightforward.
• FedEx Small Business Grant Contest: an annual competition that awards grants to small businesses across multiple tiers. Winners also receive FedEx services and national media exposure.
• Amber Grant: awards monthly and annual grants to women-owned businesses. The application is simple and the monthly award amounts have been increasing.

Keep a running list of these programs so you can flag relevant ones as they open each quarter.

Grants for underrepresented business owners

A number of grant programs specifically target business owners from underrepresented groups. If your client base includes minority-owned, women-owned, or veteran-owned businesses, these programs are worth tracking.

DOT Disadvantaged Business Enterprise program

The Department of Transportation's Disadvantaged Business Enterprise (DBE) program sets goals for awarding transportation-related contracts to small businesses owned by socially and economically disadvantaged individuals. Clients in construction, engineering, or transportation services may qualify for contract set-asides and supportive services through this program.

Veteran-owned business programs

The SBA runs several programs for veteran entrepreneurs, including the Boots to Business training program and access to dedicated lending initiatives. State-level veteran business programs also exist in most states and often include grant funding or tax incentives.

A note on the MBDA

The Minority Business Development Agency (MBDA), which previously operated 35 business centers across the country, was effectively dismantled in 2025 following an executive order. If your clients previously relied on MBDA resources, direct them toward SBDCs, local economic development agencies, and private organizations that continue to serve minority-owned businesses.

How to help clients apply for small business grants

Grant advisory is a natural extension of the work you already do. You understand your clients' financials, their growth trajectory, and their documentation. That puts you in a strong position to guide them through the application process.

Position grant guidance as a service

Many clients do not realize their accountant or bookkeeper can help with grant applications. Consider adding grant readiness as a line item in your advisory services. At a minimum, you can help clients identify which programs fit their business, prepare financial documentation, and review applications before submission.

Prepare the documentation

Most grant applications require financial statements, tax returns, a business plan, and a clear description of how funds will be used. Having clean, up-to-date books is the foundation. If your clients use Xero accounting software, pulling together financial reports and cash flow statements is straightforward.

Remind clients that grants are taxable

One of the most common oversights is the tax treatment of grant income. Most small business grants are considered taxable income by the IRS. Make sure clients understand this before they apply, and plan ahead for the tax liability so it does not come as a surprise at year-end.

Set realistic expectations

Grant programs are competitive. Many receive hundreds or thousands of applications for a limited pool of funding. Help clients understand that applying is an investment of time, and rejection is common. Encourage them to apply to multiple programs and to treat the application materials as reusable assets they can refine over time.

Track grant funds properly

Once a client receives grant funding, ensure the funds are recorded correctly in their books. Depending on the grant, there may be reporting requirements, spending restrictions, or milestone deliverables. Setting up a dedicated tracking category or project code in your client's accounting software keeps everything organized and audit-ready.

Help your clients find funding with Xero

When your clients' books are clean and their financials are easy to access, the grant application process gets much simpler. Xero gives you and your clients real-time visibility into cash flow, profit and loss, and balance sheets, so you can pull together supporting documents without the last-minute scramble.

Join the partner program to access tools, training, and support that help you grow your practice while delivering more value to your clients.

FAQs on small business grants

Here are answers to frequently asked questions about small business grants that come up in client conversations.

Are small business grants taxable?

Yes, most grants are reported as business income. Sole proprietors report grant funds on Schedule C, while corporations include them on Form 1120. Advise clients to set aside a portion of the grant for estimated taxes and retain all award documentation for filing.

What is the difference between a grant and a loan?

A grant is funding that does not need to be repaid, while a loan must be repaid with interest over a set term. Grants are typically more competitive and have stricter eligibility requirements than loans.

What is the easiest grant for a small business to get?

Corporate and private grants, such as the NASE Growth Grants or the Amber Grant, tend to have simpler applications and shorter timelines than government programs. Encourage clients to start there while also pursuing larger opportunities.

Does the government give free money to start a business?

Direct grants for starting a business are rare at the federal level. Most federal funding goes through SBA-guaranteed loans or is earmarked for R&D through programs like SBIR. State and local programs are more likely to offer startup-friendly grants.

How can accountants help clients with grant applications?

You can help by identifying relevant programs, preparing financial statements and projections, reviewing the application for completeness, and ensuring grant funds are properly recorded once received. This positions your practice as a strategic advisor.

What grants are available for small businesses in 2026?

Program availability and deadlines shift throughout the year, so encourage clients to bookmark Grants.gov and their state's economic development site and set calendar reminders for quarterly cycles. Businesses with strong financials, a clear use-of-funds narrative, and prior grant experience tend to be the most competitive applicants.