US Business Funding for Small Businesses: How to Get a Grant

Posted at May 12, 2020 » By : » Categories : Business Funding »
US business funding

According to US business funding statistics, over 60% of new businesses fail within ten years.

One of the top reasons why so many small businesses go under is lack of capital. Building a business takes resources, and not all new businesses can generate enough profits to support growth.

Up to 77% of small businesses are initially funded via personal finances. However, this is not always the ideal route, as it places all risk onto the business owner and can constrict growth.

Fortunately, there are several financing options when it comes to US business funding. If you want to learn more about the different ways to find capital, read on as we explore some of the leading small business funding options.

US Business Funding and How to Get a Grant

One of the best US business funding solutions is small business grants. Grants have the advantage that they do not to be repaid. If your business is qualified for a grant, you will receive the funds with no obligation of repayment. You will also retain full control over your business.

The downside to grants is that not all business types qualify. A large percentage of grants are aimed at businesses in specific sectors, such as health care or technology. However, grants are also awarded for other criteria. If you are a female business owner or underprivileged, you may qualify for a grant program specific to these criteria.

Another drawback of grants is that the approval process is often time-consuming and may involve a lot of paperwork. However, considering that grants are essentially “free money,” it is worth finding out if there is a grant that you might qualify for.

The main types of grants available for US business funding are federal and state grants.

Federal Grants

The fed offers a variety of grants to small businesses. Most of these are aimed at stimulating a certain area of economic development.

The best place to browse available federal grants is at Grants.gov. This is the official website for grants that are administered at a federal level. Start by navigating to “search grants.”

State Grants

Grants for small businesses are also available at a state level. To get an idea of what grants are available in your area, and who they apply to, start by visiting your state government’s website. If you don’t know what it is, you can try this directory.

Take note that not all state-level grants will be listed online. In many cases, it may be best to enquire via email to check if there are any available that aren’t listed on their website.

US Business Funding via Commercial Loans

Loans are a common form of business funding. Although loans involve paying some form of interest payment, they can be a valuable source of capital. Unlike grants, loans are usually quick and relatively easy to apply for.

One stumbling block when it comes to commercial loans for small businesses is that banks often require a business to have a one-year track record or more before they can be approved for a loan. This is not very helpful if you are seeking funds for the initial launch of your business.

Fortunately, there are a few different options when it comes to loans. Between them, you should be able to find a source of funding that suits your needs.

SBA Loans

The Small Business Administration (SBA) offers some of the best loans for small and midsized businesses (SMBs). These loans are government-backed. They also generally have extended repayment terms, often as long as 25 years.

This makes repayment a lot easier and more manageable for business owners. What’s more, SBA loans offer attractive interest rates of between 7% to 10%.

Although extended by the Small Business Administration, SBA loans are typically administered through banks and private lenders. If you would like to find out more about SBA loans, head over to our SBA loans page.

Bank Loans

Bank loans for small businesses tend to come with reasonable interest rates and good terms. However, the approval processes can be stringent, and if you have not been in business for a year or more, you may have a hard time qualifying. In this case, you should look to private lender options.

Private Lender Loans

Private lenders’ fees and interest rates are generally higher than traditional bank loans. This is because their loans are often considered to be higher risk.

However, the upside to private lender loans is that the market is highly competitive. Therefore you will be able to choose from a variety of loan terms.

Additionally, private lenders typically have less stringent approval processes.

If you are interested in comparing loan options from private lenders, take a look at our small business loans page to learn more. To apply, simply fill out our free 2-minute application. From there, you will receive multiple funding solutions from competing lenders who are in our network of approved private lenders.

US Business Funding for Small Businesses: Microloans

Microloans are another US business funding option that may be worth considering if your funding needs are not large.

Microloans tend to have higher interest rates but are easier to apply for than regular loans. This is particularly advantageous if you have an impacted credit score.

The SBA is the main indirect lender of microloans in the US. As with other SBA loans, these are administered through banks and other types of direct lenders. However, they take much less time to be approved, often in as little as 14 days.

Business Credit Cards

Lastly, another option for US business funding that you can look into is business credit cards. Credit cards offer a buffer of financing and can help to alleviate cash flow problems.

One drawback is that credit card debt typically comes with high interest rates. However, in some cases, you might be able to take advantage of zero-interest offers. Just be aware that when these expire, you will be paying hefty interest rates on any outstanding balances that you have.

US Business Funding: Find Financing Today

Whether you are starting out or looking to finance growth, there are several US business funding options you can choose from.

The key to securing funding with optimal terms is to shop around.

If you are ready to start, you are in the perfect place. Browse our business loan categories for an extensive list of loan types designed for small businesses. Once you are ready to apply, simply fill out our application and you will be matched with the most competitive funding solutions within minutes.