Federal agencies routinely discuss the importance of small businesses for the U.S. economy.
Based on the attention small business receives from the government, there is a misconception that the federal government hands out business grants left and right. In reality, grants from federal governments are few and far between.
The federal government doesn't generally offer grants for the purchase or expansion of a business. State and local governments sometimes offer startup or expansion grants for specific types of entrepreneurs (e.g. women or minority business owners), but the idea that grant funding is a common source of funding for a business purchase is more rumor than fact.
But even though they won't give you a grant to buy or expand your business, the federal government does offer grant funding for certain business activities. The SBIR (Small Business Innovation Research_ and STTR (Small business Technology Transfer) programs are perfect examples of grant-based funding for entrepreneurs.
Like most grants, the SBIR an STTR have fairly narrow parameters that need to be carefully navigated if your grant request is going to have any chance of success. To get you started, here's our overview of SBIR and STTR government grants for business owners.
- SBIR/STTR focus. SBIR and STTR grants are intended to promote the commercialization potential of new technology through small businesses. The stated goals of the program are to encourage technological innovation in the private sector, to strengthen small business participation in federal R&D activities and to promote the commercialization of federally-funded research. Although the programs are open to any small business owner, they are especially open to the participation of socially & economically disadvantaged and women business owners.
- Funding targets. Both of these funding programs includes three project phases. Phase I is the feasability study with average awarded grants in the $70k-$100k range. Phase II involves the research and development stage in which grants of up to $750,000 are awarded for a two-year period. Phase III is the commercialization stage in which the applicant develops a relationship with a commercialization partner. If you're applying for an SBIR/STTR grant, it's important to know which phase you are applying for and to lay the groundwork for funding in subsequent phases of the project.
- Application process. Over 4,600 SBIR/STTR grants are awarded every year for a total of $1.9 billion. As you might expect, competition is fierce, so it's important to thoroughly research the application process and prepare a thoughtful application that is in full compliance with the application requirements.