A quote thrown around by a mentor of mine is the notion that “desperate times call for desperate measures”. Looking back over the first half of the year 2020, the novel coronavirus has added a new depth and harsh reality to this option. “Unprecedented times” is a phrase thrown around frequently and has created a new reality for the world and businesses alike. Small businesses have headlined the news as many are grappling with ways to stay afloat amidst these difficult times. A commonly sought-after lifeline, pre- COVID-19 and now, has been small business grants. But what exactly is a small business grant and how has COVID-19 impacted them? Let’s take a look.
Small business grants are small amounts of seed money that further the goals of federal, state, or nonprofit organizations. They can be awarded by government entities or private businesses. Unlike a loan, you don’t have to repay a grant. Loans are given contingent upon the borrower’s ability to repay the amount given. Grants differ from loans in that the money is provided by agencies to a business whose purpose tends to align with the mission or initiative of the giver. Grant initiatives vary and can include qualifications such as being a woman or a minority, just to name a couple. Various nonprofit, private, and government entities provide this program funding. It should be noted that grant funding is not provided by the federal government, that funding typically applies to nonprofits and government agencies.
There are also The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs. The STTR program is centered around the partnership between small businesses and nonprofit research institutions. The SBIR and STTR programs are highly competitive programs that encourage domestic small businesses to engage in Federal Research/Research and Development (R&D) with the potential for commercialization. The inclusion of qualified small businesses in the nation’s R&D arena, leads to stimulation of high-tech innovation, and the United States gains entrepreneurial spirit as it meets its specific research and development needs.
Government agencies, private businesses, and nonprofits set aside money as they so choose. They will then set up parameters and an application process for these funds. Small businesses that meet the criteria and are interested in the grant may apply and include requested documentation (aka grant writing). From here, if a small business qualifies for the grant there will be further discussion on terms and agreement upon monetary dissemination. Even though grant money does not have to be repaid, agencies offering the money will require regular reports on goal progression.
Although there are various types of grants, they are most often available for specific categories of businesses or activities the government seeks to encourage. These categories range from arts and education to transportation. Furthermore, states have specific business grants available in efforts to improve their economic plans. Even though the awards are by way of state and local governments, the funds still come from the national level.
Amidst the pandemic, there have been various methods taken to eliminate or decrease the financial strains placed on small business owners. Most notably, emergency grants from the Small Business Administration (SBA) which are part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. This provides immediate grants within three days of submitting the application of up to $10,000 for eligible entities. Those entities include the likes of small businesses and sole proprietors, all with under 500 employees that apply for loans in response to the COVID-19. States specific grants, such as the Maryland Small Business COVID-19 Emergency Relief Grant, have also been created.
For many, the last few months have been desperate times indeed. Although the circumstances are not ideal, there have been additional resources created to help small businesses stay afloat. If a venture does not qualify for a grant, perhaps this could be a good time to become innovative in finding ways to reposition itself. Small businesses are the framework of America. We need them to survive as they are needed now more than ever.
Sources:
Amadeo, K. (2020). What Is a Small-Business Grant? Retrieved September 20, 2020, from https://www.thebalance.com/small-business-grants-3306029
Loans. (2020). Retrieved September 20, 2020, from https://www.sba.gov/funding-programs/loans
McLaughlin, N. (2020). Inside the CARES Act: Emergency EIDL Grants as Part of the CARES Act of 2020. Retrieved September 20, 2020, from https://www.natlawreview.com/article/inside-cares-act-emergency-eidl-grants-part-cares-act-2020
Search- Grants. (2020). Retrieved September 20, 2020, from https://www.grants.gov/web/grants/search-grants.html
The SBIR and STTR Programs. (2020). Retrieved September 20, 2020, from https://www.sbir.gov/about
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