Finding Federal Grant Money for Small Businesses
Steve Strauss, founder of www.theselfemployed.com, explains what federal grant money is available to small businesses and how to find the grant right for you.
Q: I was wondering if there really is federal grant money available for my small business, and if so, where do I find it? It would be great if there was.
A: Let me ask you: In your experience, is there really such a thing as a free lunch? Right.
But actually, it is a qualified “right.”
If you think there is free government grant funds to start your business, you would be wrong. But that said, in special circumstances, there is grant money available. Typically, that money is awarded by a federal agency to a business that is doing something that furthers that agency’s public policy objective.
Example: In 2007 a company called TruTouch Technologies received grant money to assist in the development of its invention, a device that detects blood-alcohol levels by shining infrared light on the skin. The uninvasive test takes 60 seconds to get results as opposed to 20 minutes for a Breathalyzer.
The funding came from an IRS program that offered grants to businesses that demonstrated the potential to develop “new therapies to treat chronic conditions or unmet medical needs, reducing long‐term health care costs in the United States.” That was the public policy purpose. Said Dr. Trent Ridder, CTO of TruTouch, the grant “recognizes our commitment to reducing the devastating medical costs caused by alcohol related accidents and injuries.”
The company got almost a quarter million dollars in Round 1, and another $438,000 in Round 2; the second grant coming from the United States Army Medical Research and Materiel Command (USAMRMC).
The point of this story is two-fold:
- It shows that yes, there are some of those magic government grants out there that we all hear about. But hopefully, the story also illustrates that
- Such grants are very specific and often very technical in nature.
The fact is, while there is indeed some limited grant money available to business, it is not for individuals, not for startups, and also is very difficult to get. As the Grants.gov website says, “We have all seen them; late night infomercials, websites, and reference guides, advertising ‘millions in free money.’ Don’t believe the hype! Although there are many grants on Grants.gov, few of them are available to individuals and none of them are available for personal financial assistance.”
That said, if in fact you do think you might qualify for some of this R&D research grant money, then the place to go is the U.S. government’s Small Business Innovation Research (SBIR) program and its Small Business Technology Transfer (SBBR) programs. SBIR/STTR does in fact offer grants to companies that are involved in high-tech R&D. When looking for a federal grant, this is your best bet. For more information, go to SBIR.gov.
Beyond SBIR/STTR, there are some other, less technical grants available through other federal agencies. You can find them at
Additionally, you might consider conducting an online search for the terms “business grants” and the name of the federal agency that may need your goods or services.
All of that said, it is probably better to think of these sorts of opportunities as federal contracts as opposed to free grants. If you do that, then the answer is that yes, there is federal grant money available.
Today’s Tip: The prototypical small business will probably have a better chance of finding grant money on the state level. But even so, the same caveats apply: Grants are not given to individuals, or to new entrepreneurs to start new businesses. But money is available to entrepreneurs who can help their state promote economic activity or otherwise foster a valued social cause like creating jobs.
Every state has some sort of economic development agency. That agency will list any grant money that may be available. You can find the appropriate agency for your state by going to www.ecodevdirectory.com.