For any startup, obtaining adequate business funding is always a priority. While small business owners often focus on the wide array of small business loans available or access venture capital where they can, grants represent an excellent alternative to get additional funding. Minority business owners can enjoy access to grant programs designed for them by agencies of the federal government, such as the U.S. Small Business Administration (SBA) and various nonprofits, private donors, and corporate entities.
Business owners who identify as women or as African American, Asian, Native American, Hispanic, or Latino can find a grant program aimed at their minority group and use those funds to help their businesses grow. In general, grants operate as financial gifts and don't require repayment. Grant-seekers can check central storehouse sites like Grants.gov or local business centers in their specific regions to get an overview of the grants available and delve deeper into the grant applications that they feel align with their minority status.
This article will walk you through the steps to successfully apply for a grant as a minority business owner and will offer tips for completing grant applications.
What Is a Small Business Grant?
Small business grants are financial infusions meant to stimulate growth or expand operations. As most grants are offered through government agencies, nonprofits, and private donors rather than traditional bank lenders, they typically don't have to be paid back. Essentially, a business grant represents free money for your business enterprise.
Federal grants for minority business owners are offered by agencies like the Minority Business Development Agency (MBDA), a subsidiary of the U.S. Department of Commerce, which also offers many other grants that could be applicable to your business needs. Grant funding opportunities from non-governmental sources can be found everywhere from the National Association for the Self-Employed (NASE) to the annual FedEx Small Business Grant Contest.
Grant money often comes with stipulations on how the funds can be used. It's advisable to research any grant applications that interest you to check your eligibility and ability to align with spending expectations before you begin the official application process.
How Do Small Business Grants Work?
All grant programs are structured differently and have application, eligibility, and funds usage requirements unique to their donor organizations. Grants offered by government agencies, in particular, will be subject to audit and reporting regulations that monitor the integrity of the grant-making process.
Generally, grants are released on a cyclical basis. The grant application itself will feature a hard deadline, and it's wise to start as early as possible in filling out applications for any funding opportunities that may suit your business.
Certain grants may only be available to small business owners who are working in particular locales or seeking funding for highly specified reasons. For instance, the U.S. Department of Agriculture (USDA) provides select grant funding for companies operating in rural areas or seeking to bring technical assistance to established companies in those areas.
Take note that grant applications can be extremely long and meticulously detailed, and can require verifications and validations of paperwork that can take weeks or even months to complete. As such, finding small business grants entails a great deal of deep reading, and the time spent conducting that reading is only the first part of the process.
During the grant application process, you'll typically be asked to provide detailed information about why your company needs the grant and specifics on how you'll use the grant money. If you are running a nonprofit, you'll nearly always be asked to produce evidence of your company's tax-exempt status. For grants specified as capacity-building or dedicated to expansion, such as NASE growth grants, you might be required to submit a full business development plan. Be prepared to share sensitive and detailed information about your company and funding history with grantmakers throughout the application process.
Once awarded, grants fall under different categories of regulation and reporting. You might be asked to submit documents showcasing itemized expense reports or provide invoices and/or receipts for any items purchased with grant money. Some grant-giving organizations also engage in an after-care period where the grant recipient is formally transitioned into the next stages with help from organization-based mentors and officers. However, remember that grant funding is not an overnight paycheck, and — although it's essentially free money — there are almost always stipulations on your company's management of those funds.
Small Business Grant Options for Minorities
Being a minority small business owner comes with a unique set of challenges, and some grants are designed to boost the business finances of underrepresented communities. This means that, very often, eligibility for this kind of grant funding is majorly determined by your company's ability to show a legible connection to minority status, whether that means via ethnic group, gender, or even access to working capital. The following organizations offer specialized grant funding opportunities for minority-led small businesses:
- Asian Women Giving Circle (AWGC): This fund, announced annually on the AWGC website, is made available to Asian American women residing in New York City and heading up arts- and culture-based projects.
- Native American Business Development Institute (NABDI): Managed by the U.S. Department of the Interior Indian Affairs, these grants are aimed at providing members of recognized Native American tribal communities with the resources to research viable business opportunities.
- National Black MBA Association: Business owners of Black or African descent can apply for these funds, which are focused on empowering Black leadership and overall presence in the national business landscape.
- Office of Minority Health (OMH): Part of the U.S. Department of Health and Human Services, OMH grants are provided to businesses dedicated to diminishing health inequities in minority populations.
Naturally, this list represents only a fraction of the minority grant funding available to small business owners. Keeping up with grant sites and entities, such as Grants.gov and the SBA, can help you stay up-to-date on more grant options that may be suitable for your business needs. Federal grants that may not specifically pertain to minority groups but emphasize technological advancement and research, such as the Small Business Innovation Research (SBIR), can also provide additional grant funds for eligible small businesses.
How to Apply for Small Business Grants for Minorities
Minority entrepreneurs need to educate themselves on what to expect from the grant application process before they begin. Knowing what steps to take before, during, and after a grant award can help save time and maximize your company's chances of receiving grant money.
It's always advisable to apply for multiple grants at once to keep up with relevant grant opportunities and register your business as minority-owned ahead of time with your regional government. The following sections provide further details on how to successfully navigate the grant application process for your minority-owned small business.
Before You Apply
One of the most critical steps before seeking financial assistance is taking the time to elaborate on why it's needed. Grant applications don't usually just want you to answer their queries with "I need money" kinds of answers, but rather with thoughtful responses on why receiving that money matters. Take the time to carefully review the FAQs section of any grant that interests you or that you feel might be aligned with your company's business needs.
This allows you to sidestep common pitfalls and also have a reference point for what may cause your company's application to stand out from the crowd. Keep a file folder of commonly required documents, letters, forms, and other critical information about your company's funding needs and plans readily available. Check and recheck your business's eligibility before beginning any grant application, as applications that don't meet criteria are often rejected or recycled.
Applying to a Minority Small Business Grant
Grant financing options for minority-led businesses can be offered in a variety of application styles. Federal government grants typically feature online applications wherein fields of information are completed by the business owner and submitted electronically. Nonprofit organizations offering grants often have grant applications that read more as open-ended proposals that applicants are expected to respond to in the form of an essay that goes into context about how the money will be used. Local government offices may post grant applications on their office's website for download.
Keep in mind that most grantmakers are interested in the procurement of the best applicants and don't desire to leave anyone out of the consideration pool, so don't be shy if you need to contact a grantmaking agency to ask for an application in a different format. Paper applications are nearly always available upon request, as are those modified for vision impairment.
No matter what format the grant application takes, check and recheck your responses before submitting them. Errors or omissions can cost your company leverage in the grantmaker's final decision. Keep a calendar of application submissions with appropriate dates and be prepared to wait weeks or even months before you hear back. Every grant is different in terms of turnaround time, but decisions are rarely handed down swiftly for any.
Receiving a Minority Small Business Grant
When your company becomes the fortunate recipient of grant funding, the money can arrive in a variety of ways. Some grants dispense money via wire transfer, others use certified checks, and others delegate funds in separate chunks directly to any equipment or service providers the grant-seeker has listed.
Manage Your Grant Financially
Grant-awarded companies will need to carefully plan and budget their new grant earnings to make the most effective use of them. Grant funds should never be mixed with any other accounts or assets belonging to the awarded company. Keeping detailed logs of how the money is being used is not just smart business but also, generally, the law. Any misuse of grant funds can be viewed as criminal activity with subsequent consequences. The good news is that there are business software products available to help keep your company's bookkeeping simple.
Keep Your Small Business's Finances in Order With Skynova
Business opportunities for minorities come with special challenges and unique privileges. If you own a minority startup business, Skynova's accounting software can help you track and manage income and expenses, manage invoices, and keep ahead of your company's organizational needs. Let Skynova take the guesswork out of your company's bookkeeping so that you can get back to the business of researching your next capacity-building grant.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific grant-seeking situation. Always consult with a grant-writing professional or a member of the grantmaking institution if you have specific queries as to your company's alignment with grant funding expectations and regulations.