Guide

Small business grants and loans to help your clients

There are thousands of small business grants and loans out there, for businesses of all ages, shapes and sizes.

Delivery business owner getting financed with a small business grant

It’s getting easier to find small business grants and loans

There’s no shortage of small business grants or loans, and they’re a great alternative to traditional financing. There are public and private options ranging in value from $500 to $5 million. It’s just a matter of finding them.

Fortunately that’s getting easier. Dedicated search engines can do most of the work for you.

For businesses of all types

Small business grants and loans are available for all sorts of situations. These programs are designed for a number of reasons, including to help:

  • create jobs in low- to moderate-income communities
  • encourage rural business
  • finance projects that aren’t getting supported by traditional lenders

There are so many programs that you’re bound to be surprised at what you find. They can be quite specific, but these search engines from the Department of Commerce, SBA and BusinessUSA will help you find relevant initiatives.

Department of Commerce

Kick off your search with the Department of Commerce’s database, which covers nearly every federal grant opportunity. That’s over 1000 grant programs worth billions a year.

The grants are awarded to address social and environmental issues so they’re not always suitable for businesses. It’s worth taking a look, however. You can filter your search by category, eligibility requirements, or government agency. Check out grants.gov

As a bonus, grants.gov makes it clear how to apply and has standardized application processes. You can also sign up for alerts about upcoming grants.

Don’t forget the state level

State departments of commerce also have grant opportunities for startups and mature businesses. Each state’s site is different and some are more intuitive than others, but it’s worth taking a few minutes to look around your local one.

The Small Business Administration

The Small Business Administration (SBA) is the leading provider of government loans to small businesses. They do have to be paid back, but the interest rates are favorable and the loans can be easier to come by than traditional bank finance. The funds are channeled through third-party organizations, including nonprofit and commercial lenders.

At a broad level, the SBA offers:

7(a) loans

These loans can be as big as $5 million for businesses that qualify. These can be used for:

  • starting, acquiring or expanding a small business
  • short- and long-term working capital
  • refinancing current business debt
  • purchasing equipment, machinery, furniture, fixtures, supplies, or materials
  • purchasing real estate, including land and buildings

504 loans

These are long-term loans of up to $5 million for major fixed assets that promote business growth and job creation. These can be used for the purchase or construction of:

  • existing buildings or land
  • new facilities
  • long-term machinery and equipment

Or the improvement or modernization of:

  • land, streets, utilities, parking lots and landscaping
  • existing facilities

Microloans

These loans are for businesses that want to expand. The maximum amount is $50,000 with the average loan being $13,000. They can be used for:

  • working capital
  • inventory and supplies
  • furniture and fixtures
  • machinery and equipment

Besides finance, the SBA also gives new business owners free advice, consulting and training. It’s worth your clients knowing where to find their nearest office.

National Association for the Self-Employed

Small businesses can get Growth Grants of up to $4,000 to cover advertising and marketing, hiring employees, expanding facilities and other specific business needs. These small business grants are awarded four times a year and your client can apply by becoming a member of the National Association for the Self-Employed, then applying online.

Small Business Innovation Research program

Business owners who aim to bring new technologies to market may be eligible for grants from the Small Business Innovation Research (SBIR) program. Administered by the Small Business Administration, it helps businesses that are:

  • conducting research and development themselves
  • working with research institutions to commercialize new technologies

Support for minority businesses

With 35 business centers across the USA, the Minority Business Development Association (MBDA) offers many resources to help minorities get a start in business. That includes guidance on how to access loans from the SBA. Learn more about the MBDA.

The Department of Transport helps small businesses owned and controlled by socially and economically disadvantaged individuals compete for contracts with state, federal, public transport and airport agencies. Check out their Disadvantaged Business Enterprise Program.

Finding private investors through government programs

Each year, the government connects small businesses with billions of dollars worth of private investment, through the Small Business Investment Company (SBIC) program.

Private financiers provide the capital for this program. The money is distributed to qualified investment firms by the government’s Small Business Administration. Those investment firms are chosen for their expertise in specific industries. Qualifying small businesses can access the capital as debt or in exchange for equity.

The SBIC program has launched successful brands such as FedEx, Intel, Staples, and Outback Steakhouse. However, this type of funding is much more commercially complex than grant schemes. If any of your clients consider this route, make sure they have good investment advice.

In-kind support

Your clients may be looking for small business grants and finance but they shouldn’t overlook the other types of support that are out there. It can be a lot easier to get free advice and business consultation, or low-cost training – and that can be just as valuable.

Small Business Development Centers (SBDC) provide help with business planning, market research, exporting and importing, manufacturing and more. There’s probably an SBDC near you.

There will be work involved

Government grants or loans can be an excellent option for small businesses in certain industries or locations.

If they’re going for a small business grant, it’s important to remind clients that it’s not free money.

  • The application will have to be well put together (get help from the local SBDC)
  • Grant programs can be very competitive so don’t count on getting the funds
  • Many grants require government reporting (showing how the money is used)

Government-backed small business loans are more widely available than grants and often come with low interest rates. But as with other commercial lending, applicants are more likely to succeed if they have:

  • good credit
  • a solid business plan
  • a service or product that shows profit and growth potential

Small business grants and loans are worth exploring

No matter how big or small your clients might be – or how long they’ve been in business – there could be a program to help them. Small business grants can be very specific and competition for them can be high, but there might just be one that fits your client’s niche. Meanwhile government-backed loans are much more widely available and can really help solve financing issues.

You can help your client find a program and prepare an application, or you can point them to these sites and suggest they work with an SBDC. It might be just what they need to break through and unlock solid business growth.

Disclaimer

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

Start using Xero for free

Access all Xero features for 30 days, then decide which plan best suits your business.

  • Included
    Safe and secure
  • Included
    Cancel any time
  • Included
    24/7 online support