Grants are awarded through a competitive process and offer a direct injection of funding into a company. While loans need to be repaid over time, grants do not. However, they shouldn’t be regarded as “free money.” Businesses must submit an application making their case for why they should receive funding, and must track how any awarded funds are spent to show that the money is being used for its stated purposes.
Grants can be limited to businesses in certain industries. They can also be set up to support disadvantaged communities or businesses owned by women, veterans, or minorities. Research all grant criteria before applying so you don’t waste your time pursuing a grant your business does not qualify for.
Federal grants are offered through a government portal at Grants.gov. Grants may be offered at the state or local level, by nonprofit organizations, and by for-profit companies.
For more information on small business grants, read this Expert Summary on the subject.