What are they?
Grants are funds given by one party, often a Government Department, Corporation, Foundation or Trust, to a recipient in order to meet specific, agreed upon goals. The beneficiaries are often non-profit entities, educational institutions or small businesses. Grants are distributed and then used by the recipient in order to carry out a public purpose of support. In most cases, this purpose must be authorized by the benefactor. Grants are not “free money” that the government/foundations give away randomly to organizations. In order to obtain most grants, there is a lengthy application process that the hopeful recipient must go through. The “grant writing” process consists of submission of a proposal to the future donor. They are can range widely in whom they are given to and the amount in which they are given. Grants most often pay and are used for specific projects and programs.
What is the process?
1. Do you have the time and resources to search for a small business grant program and apply?
2. Can you hire a consultant or learn the grant application process by yourself?
3. Does your business need the money now for expansion or can you wait up to a year?
4. If you do undertake the grant process, will it hurt your business taking away time from selling and marketing?
Where to get a Grant
Grants can be available through the U.S. government, most state government, semiprivate, and private economic development companies. Grants are not available to starting or expanding businesses through the federal government. Grants from the federal government are only available to non-commercial organizations such as non-profit organizations and educational institutions. The state and local governments are much more likely to offer grants to small businesses.
The U.S. Small Business Administration does not offer many grants to start or develop small businesses. According to the SBA they do offer some grant programs which are generally designed to expand and enhance organizations that provide small business management, technical, or financial assistance. These specific grants generally support non-profit organizations, intermediary lending institutions, and state and local governments (SBA.gov).
The two largest government grant programs that are specifically intended for small business are the Small Business Innovation Research program and the Small Business Technology Transfer program.
Small Business Innovation Research Program (SBIR)
The SBIR was established by the Small Business Innovation Development Act of 1982. It is a set-aside program for domestic small business to engage in research and development that could lead to commercialization. SBIR requires agencies to set-aside 2.5% of their extramural budget. There are currently eleven federal agencies that participate in the SBIR program and to date SBIR $12 billion dollars have been awarded to various small businesses. The objective of the SBIR is to use small businesses to stimulate technological innovation, strengthen the role of small business in R&D needs, increase private sector commercialization of innovations, and to encourage participation of socially or economically disadvantaged small businesses.
Small Business Technology Transfer Program (STTR)
The STTR program was established by the Small Business Technology Transfer Act of 1992. Federal agencies that have R&D budgets over 1 billion are required to have STTR programs. These agencies are required to set aside 0.30% of their budget. There are currently five federal agencies that participate in STTR programs. Unlike the SBIR, under the STTR the small business receiving the grant must collaborate with a research institution during their first two phases of research.
Structure of SBIR and STTR programs
Both of these programs are structured in three phases:
Phase I. The objective of Phase I is to establish the technical merit and feasibility and potential for commercialization of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II. Support under Phase I normally may not exceed $100,000 for total costs (direct costs, F&A costs, and negotiated fee) for a period normally not to exceed six months for SBIR and one year for STTR.
Phase II. The objective of Phase II is to continue the R/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Only Phase I awardees are eligible for a Phase II award. Support for SBIR and STTR Phase II awards normally may not exceed $750,000 total costs (direct costs, F&A costs, and negotiated fee) for a period normally not to exceed two years.
Deviations from the indicated Phase I/Phase II statutory award amount and project period guidelines are acceptable but must be well justified and should be discussed with appropriate NIH staff prior to submission of the application prior to submission of the application.
Phase III. The objective of Phase III, where appropriate, is for the small business concern to pursue with non-SBIR/STTR funds the commercialization objectives resulting from the Phase I/II R/R&D activities. In some Federal agencies, Phase III may involve follow-on non-SBIR/STTR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
Information taken from: http://grants.nih.gov/grants/funding/sbirsttr_programs.htm
What Kind of Businesses Get SBIR and STTR Grants
The SBIR and STTR programs are run through the National Institutes of Health (NIH). The NIH accepts applications from any small business in the biomedical or behavioral research areas. The NIH Small Business Funding Opportunities Website posts frequent announcements of new funding opportunities and what areas of interest they cover.
Writing the Grant
Once a grant is found and your needs are determined the real work begins. Putting together the grant proposal for funding is the next step in the process. According to Quamut.com, in order to direct your efforts grantmakers usually provide detailed submission guidelines and application kits to businesses. In order to increase the likelihood of getting a particular grant funded a company must do research. Funder’s websites, search engines, libraries, and people are all good ways in order to assist the proposal research process.
Grant submission guidelines and requests for proposals present a vast majority of information for businesses in search of funding. The submission guidelines give businesses an accurate picture of what the grantmaker expects for the application. The guidelines generally include: what you need to include in your submission, where, how, and when you should deliver it, and how long it will take for your proposal to receive a response. While reviewing the desired grant the due date should be identified in order to ensure that it is written and submitted on time. When seeking multiple grants the due dates should be looked at in order to prioritize which application should be completed first.
The following is a list of important things to look for in submission guidelines and requests for proposals:
- Contact information
- Review criteria
- Grantee qualifications
- Program goals and purpose
- Order of contents (often a checklist)
- Maximum number of pages
- Paper size
- Paper composition (e.g., the Environmental Protection Agency requires the use of recycled paper)
- Spacing (e.g., double- or single-spaced)
- Minimum font size
Information taken from: http://quamut.com/quamut/grant_writing/
Grant Proposal Components
When it comes to writing a small business grant there are a few basic components that are included on most grant applications. The following are general guidelines, taken from Quamut.com, which a small business can use and adapt when writing a grant.
1. Cover letter:
This one-page document includes a summary of your grant request and why it complements the mission of the funding institution.
2. Executive Summary:
The executive summary provides a one-page of key points from the full proposal.
3. Organization overview:
This section includes who you are and what you’ve done, including a brief history, important milestones, current programming, partnerships, and a profile of the population that you serve.
4. Needs Analysis:
The needs analysis introduces the specific problem that the grant could help your organization solve. Underlined by powerful statistics it shows the needs of the company.
5. Program overview:
This longest section is the main part of your proposal. It includes a detailed discussion of what you will do to solve the problems presented earlier. Your goals and objectives should be included as well.
6. Personnel overview:
This section demonstrates your team to execute the problem. Key personnel as well as individuals should be presented in this overview as well as how they will be held accountable for the groups’ aims.
This part should include how much money is needed to support each aspect of your agenda and how you anticipate the costs. It should include a narrative description as well as a detailed spreadsheet.
8. Supplementary materials:
This chapter includes résumés of key personnel, tax-exempt status verification, historical financial statements, client lists and endorsement letters.
Small Business Grant Writing Tips
When completing grant applications businesses must focus on making their application stand out among the rest. With many businesses applying for the same grant in order to “win them” a business must be noticeable different from others. In order to do this, businesses must focus on making every aspect of their application excellent. VentureWorthy.com helps small businesses by citing tips for winning grants. First they must focus on the most important aspect of the application which is accuracy. Providing all the information required without omission or embellishment will ensure a business from losing the grant. Accurate information should always be given when apply for grants. An incomplete or inaccurate application may not make the review process. Incomplete applications also can add delay because it takes longer for the awarding body to review.
Businesses should also speak to the grant officer about the grant. Take time to talk to them about their constraints, budget and concerns with approving your grant. This ensures that all questions will be answered and you can give them the exact information they are looking for. The more that is found out about the grant and the program offering it the better a business can focus on specific aspects of the grant. Keeping in contact with the grant office on a frequent basis helps shows your continuing interest in receiving the grant. Contact should be regular and completed in a professional, non-intrusive way. This shows your eagerness and helps them to remember your businesses over other businesses.
Stand out among the other applications by showing them a clear and well-prepared business plan. Demonstrate that you have a clear understanding of your business. Identify the ways in which the grant money will benefit the economy. Show them how the money will also bring the benefit the awarding body wants. Make them know how you want to be a part of the larger economic community and you are willing to making your business the best it can be.
In order to write the best application outside experts should be brought in if necessary. Using consultants and/or accountants can help you prepare the application can be very beneficial. The use of experts adds credibility to your application. This also shows your commitment to provide a precise, truthful, and professional grant application. Having experts can increase the quality of the grant and make it stand out better among others.
Businesses should ensure that the grant they are applying for is applicable to their business. In most cases the government and other organizations give out grants based on very specific reasons. By making certain that your business follows the specified guidelines you are saving your time. Time will be wasted applying for grants that may not be applicable to your business. In order to save time and effort, only applying for those in which you have a good chance of success is important.
This entire process can overall be very time consuming and demanding. The time spent research and finding grants applicable to your business can be very exhausting. It is vital that businesses realize this before they begin the process. Other sources of funding should also be considered other than grants. However, the benefit of grants is the ability to never have to pay back the money.
Since the task of locating and applying for small business grants is often very time consuming and difficult business should look also for other alternatives. Although grants are a very beneficial thing to business often the process is more burden than benefit. Small businesses may consider things such as loans, personal credit lines, friends, and family when seeking out additional funding. These options could be easier to come by and not so exhausting for a small business trying to succeed.