Small Business Federal Grants

It's important to know that the U.S. Federal Government, as a rule, does not award federal grants to private for-profit small businesses. Unless you are a 501C3 non-profit agency that is organized for charitable purposes and tax exempt under the IRS tax code, your small business is not eligible for federal grants.

That's the bad news. The good news is there are federal resources available for qualified small businesses to apply for.

The U.S. Small Business Administration (SBA) is the federal agency created in 1953 to help Americans start, build and grow businesses. The SBA serves people in the United States, American Samoa, Puerto Rico, the U.S. Virgin Islands and Guam. Although the SBA does not award grants to start or expand small businesses, they do have a wide range of loan programs available. You can access the Small Business Administration website at sba.gov. Also, you can find SBA grants in our agency listing for Small Business Administration Federal Grants here at FederalGrants.com.

The SBA does have an exception to the "no federal grants" rule for small businesses, but it is targeted to innovation research and high technology companies. The Small Business Innovation Research Program is a highly competitive program that funds the startup and commercial development stages of an innovative technology, product or service. The Small Business Technology Transfer Program is another competitive program that funds awards to small businesses which partner with nonprofit research institutions for the commercialization of technology products.

Below is just a portion of the SBA programs that may be able to help American small businesses. You can research all available assistance at the SBA website. The Small Business Administration is primarily a guarantor of loans, meaning that the federal government does not loan money directly to small businesses; they guarantee the loans made by lending institutions to qualified small businesses, making it easier for small businesses to qualify for loans they might not otherwise be eligible for.

1. Basic 7(a) Loan Program: Loan proceeds can be used for working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing under special conditions. Loan maturity is usually up to 10 years for working capital and 25 years for fixed assets. This loan targets start-up and existing small businesses.
    
2. 504 Loan Program: Provides long-term fixed-rate financing to small businesses to acquire real estate, machinery or equipment for expansion or modernization. These loans are usually delivered through a Certified Development Company (CDC) with liens placed on the collateral and a contribution of 10% equity from the borrower.
    
3. Microloan 7(m) Loan Program: These loans target small businesses and nonprofit childcare centers needing small-scale financing and technical assistance for startup or expansion. Provides short-term loans up to $35,000 for working capital, inventory, supplies, furniture, fixtures, machinery or equipment. Proceeds cannot be used to buy real estate or to pay off existing debt. The loans are not guaranteed by the SBA. The SBA makes or guarantees a loan to an intermediary who then turns around and lends the money to a qualified small business. Intermediaries are nonprofit agencies who have experience in lending and technical assistance. The Microloan Program is available in selected locations in most states.
    
4. Loan Prequalification: Allows business applicants to have their loan applications of $250,000 or less analyzed and potentially sanctioned by the SBA before they are taken to lenders for consideration.