Government Grants and Other Funding for Small Businesses

There are a growing number of government grants and other funding programs to support small businesses. Some come in the form of stimulus funding through the American Rescue Plan Act, others are state grants to help businesses export products to overseas markets, and there are the well-known federal programs that fund small business innovation and research.

Grants Works staff pored through a number of new and existing government grant programs and summarized a few. Some of the funding programs described are not grants. Some are credit and investment programs to bolster small businesses by providing financial assistance and others are grants to the financial institutions that support businesses in underserved communities.

SBIR AND STTR

SBIR/STTR are acronyms for Small Business Innovation Research and Small Business Technology Transfer. Both are competitive programs developed by the federal government to spur small businesses to engage in federally-funded research or research and development (R&D). The mission of the SBIR/STTR programs is to “support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.”

The SBIR and STTR programs provide funding for startups and small businesses in a number of technology areas to stimulate technological innovation, meet federal research and development (R&D) needs, and support commercialization.

Small Business Grants from ARPA

Grants are being and have been awarded to small businesses from the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF). The CSLFRF is an allocation of $350 billion in emergency funding awarded to each eligible state, county, city, territorial, and Tribal government and to non-entitlement units of local government. 

In addition to other eligible uses mandated by the Treasury Department, many local governments are using some of their CSLFRF awards to ease the disastrous effect of the pandemic on small businesses and nonprofits. For example, the City of Atlanta allocated $20 million of the over $170 million in ARPA funding it receives to small businesses and nonprofits. New York City allocated $1.51 billion of its ARPA funding to create employment opportunities and support small businesses. Finally, Miami-Dade County in Florida allocated $7 million in Innovation Grants to small businesses that can prove negative impacts to business operations caused by the pandemic.

To learn if your city plans to allocate some of its ARPA funding for small business grants, visit the city’s website and search for its Recovery Plan or related funding announcement.

Announcement of small business grant funding on a local government website

State Small Business Credit Initiative

The State Small Business Credit Initiative (SSBCI) was reauthorized by the American Rescue Plan Act of 2021. It was initially authorized by the Small Business Jobs Act of 2010.

Under SSBCI 2.0, the Treasury Department will send $10 billion to states, the District of Columbia, territories, and tribal governments to broaden access to capital for small businesses, build ecosystems for opportunity and entrepreneurship, and spur the creation of high-quality jobs.

State and other government entities will receive awards to be used for credit and investment programs for existing small businesses and start-ups and to provide technical assistance to small businesses applying for SSBCI 2.0 and other government small business initiatives.

While the funds will be awarded by the Treasury Department to jurisdictions as grants, the support small businesses will receive will come in the form of credit and investment programs such as venture capital programs, loan participation programs, loan guarantee programs, collateral support programs, capital access programs, and technical assistance.

The first five awards were announced by the Treasury Department on May 19, 2022. The funds were awarded to the state governments of Hawaii, Kansas, Maryland, Michigan and West Virginia.

The Minority Business Development Act of 2021

The Minority Business Development Act of 2021 was included in the Bipartisan Infrastructure Investment and Jobs Act signed by President Biden on November 15, 2021. Passage of the law makes the Minority Business Development Agency (MBDA) permanent, elevates its stature, expands the geographic reach of the MBDA by authorizing the creation of regional MBDA offices and rural business centers, and increases the number and scope of existing programs.

In addition, MBDA’s grant-making capacity to partner with community and national nonprofits engaged in private and public sector development as well as research increases and it mandates the creation of the Paren J. Mitchel Entrepreneurship Education Grants Program to cultivate the next generation of minority entrepreneurs on the campuses of historically black colleges and universities and minority serving institutions.

To jumpstart its expanded grants programs, MBDA announced the Access to Capital: Innovative Finance Grant Competition in early May 2022. Eligible entities included non-bank lenders, minority depository institutions, community development financial institutions, fintech lenders, nonprofit lenders, and others. 

man and woman business owners

Local Government Grants

Many local governments offer grant funding and other types of financial support. Below are some examples. Note that some require matching funds.

Cleveland, OH

Gardening for Greenbacks – This program was established in 2008 to encourage local food system development and facilitate residents’ access to fresh, healthy and affordable food. Grants are from $3,000 – $5,000.

Job Creation Incentive Program – This program was created to attract or retain businesses in Cleveland. The grant is based on actual payroll and income tax generated to the City and includes potential qualification for a $5,000 Moving Assistance Grant.

Ohio Brownfield Program Grant – This $350 million grant program covers the costs of environmental assessments or environmental remediations and are awarded on a first come, first served basis. Eligible applicants included non-governmental entities that have partnered with an eligible government entity, county governments, municipal corporations, land banks, and other local governments.

City of Chicago

Chicago Small Business Improvement Fund – This grant program provides funds to tenants and owners of industrial and commercial properties for permanent building improvement and repairs.

Neighborhood Opportunity Fund – This fund provides grants to support commercial corridors in Chicago’s underserved neighborhoods. Small Projects grants are awarded up to $250,000 and Large Projects grants are $250,000+ up to $2.5 million. 

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