Small business grants are a much-desired way of accessing funds for business, but they are poorly understood. So often I hear business owners (particularly start-ups) mention they intend to “get some grants” as part of their financing arrangements to start off, but without much idea of how they would apply, whether they would be successful or even what grants are available. Let’s unpack how grants really work.
Who gives out grants?
Grants involve the awarding of some benefit – usually financial – by a company, foundation, organisation or government, to a business or organisation to facilitate a goal or implement a specific program. Small-business grants are a small part of a much bigger grants landscape. Grants are offered by various organisations for outcomes and purposes that are aligned with their own objectives (i.e. it’s about them as much as it’s about you).
Governments and their agencies are the biggest sources of grants, through grant programs aimed to achieve specific outcomes that are in line with their own policies. For example, a state government has an objective to increase social outcomes (e.g. employment for women or refugee communities); grantee organisations can then deliver quality programs because they have the capabilities and community connections, understanding, innovation and skills to achieve better program results.
Governments can also offer grants to achieve an economic or innovation outcome, that support businesses and organisations to become better operators, to innovate new products or services, boost exports, skills or improve labour force performance. For example, programs to upskill business owners in adoption of technology.
Grants can also be made available for infrastructure or equipment, usually for community benefit; we just worked on a grant application that helped a tour operator to increase access for disabled clients. A local government, for example, may wish to boost local small businesses, so offer grants for specific local promotions. On rare occasions, there may be untethered grants that support business health and sustainability, during times of crisis (for example during COVID19).
Grants from governments are from all levels – local, state and commonwealth – and vary a lot of amount and purpose. Processes are usually highly formal and require the dedication of time to submit.
Privately run organisations, corporates or foundations offer grants that are in line with their objectives and corporate policies; these can be purely philanthropic or corporate, with grant programs, processes and amounts varying enormously. These types of grants tend to be more focused on the benefit of society, specific community cohorts or activities.
Where do small businesses fit?
The reality for small business owners and start-ups is that there are a limited number of grants that are available to start your business or grow your business. Those that do apply to smaller businesses and organisations fall into two categories:
- Business-specific programs, where the grant offers funds to build, grow or educate. These are usually at state government or local government level, for smaller amounts, that can be used to fund particular activities such as digital development, business planning/strategy, launch of innovative products and service or business owner education and training. For some of these, winning the grant means that you get to participate in the program and get the service, without money going to you directly. If your business happens to be part of a more specific niche, such as a charity, there can be programs that are targeted to these specific industry segments. Indigenous Business Australia (IBA), for example, offer grants to qualifying start-ups and small businesses.
- Program delivery. Your business may have specific skills and capacity that allow it to deliver programs that are funded by the grant. For example, the grant may ask for delivery of support services to disadvantaged segments of the community such as food relief or family violence. For these, you will already need the expertise and demonstrated capabilities.
Where to find grants
Published grant programs are easy to find, with a number of paid search and aggregation services, that send alerts for new tenders that fit your criteria (for example Grants Hub or Grant Guru). Each of the organisations that offer grants will also publish them on their site, such as local councils, state/federal government and philanthropic organisations. Grants are not always available and have specific dates, so if you want to participate in grant applications, you need to be looking out all the time and wait for them to come up.
Grants are not ‘easy money’.
Grants are usually allocated for very specific outcomes or programs, with funds tied to the program delivery, with tied deliverables that you will agree of ahead of time and need to be reported on. For many grants, there is no excess funds left over – sometimes the grantee will actually be contributing funds themselves.
Decide if the grant is right for you.
When you see a grant opportunity that you think is right for your business, download the grant guidelines and also the grant application form. They can be long, but it’s important to take your time to understand these guidelines, as there can be a lot of detail with specific conditions that you will need to follow. Sometimes the conditions can preclude you from applying or else may decrease your chance of winning. For example, co-contributions are common, meaning your organisation will be paying an amount as well – if you don’t have funds to contribute, you may not then want to apply. It is also very useful to read the grant submission forms, so you know what you need to submit – these are all different, sometimes easy, sometimes complex. If there is an information session, listen in so you can understand first-hand what they are looking for.
Try to read between the lines to understand what the grant is really looking for and don’t try to fir your program into their criteria – you won’t’ win. By reading the guidelines, looking at past winners and finding out whatever you can, it will help to craft a submission on what they want.
Assessment
Grant programs can be assessed on a competitive basis, meaning there are limited funds or places and only the number of recipients that fit within those limits will be successful – usually that means not everyone that applies will be successful. Alternatively, the grant could be available until the funding pool runs out.
One consideration for whether you should apply is how competitive the grant is likely to be and how many applicants are likely. For example, grants open to a large number of applicants with lower eligibility criteria then it will be harder to win, but if the grant is targeted to a very specific sector with more detailed eligibility criteria, then your chances are higher.
When you are making this decision, there are some things to consider:
- Consider the maximum value of the grants awarded, as submissions take time and effort, with no guarantee of winning, so you need to assess whether all of that is worth it for the returns available.
- Grants are competitive; accept that your chances of winning are less than 100%. Grants that are more specific and niche to your business are much more likely to succeed.
- Does your submission really meet the conditions? Check carefully all conditions. Look over the key criteria to make sure you fit; sometimes your application can be excluded before you even start.
- If you are proposing to deliver a program, can you demonstrate capability to do so? Applying for a grant that is much bigger than your current business activities will not be convincing.
- Consider who you would be competing against.
- Make sure you have enough time for all parts of the process. Doing a half-baked application will show and you won’t get far.
- Look at the application form/structure early in your preparation so you know what kind of information you will need to provide. See if you can download these so you can work offline as you put it together.
Develop your program or strategy.
For many grants you will need to propose a program that the grant will fund. For example, we worked on a grant program to develop multicultural celebrations, so we worked with the client to develop an event, with full detailed descriptions and budget that went into the submission. This could also be a business development or innovation strategy, for example.
Don’t try to fit your business activities or program into the grant guidelines. If it isn’t a fit for the program, you won’t be successful and will waste your time.
Preparing your submission
The grant submission documents will clearly specify what you need to submit, usually with very specific questions that have word limits. Common formats also include writable pdfs and spreadsheets. Make sure you are very clear on which ones need to be submitted and the submission deadline. Give yourself a day or so in advance to submit before the deadline, as these systems sometimes don’t function well under pressure.
Word and character limits can be challenging, so write your responses without attention to this at first, then edit down to the limit. Sometimes the short limits can make it feel like you can’t fully describe your proposal comprehensively enough, so use attachments to support your proposal where they are allowed.
As you are collating your information and writing responses, it’s much easier to work in an editable format like MS Word, then add into the final document once it’s ready. Editing in online forms is much more difficult. I usually do the drafting then add into the forms in one go.
Once it’s at draft stage, get multiple other people to read it before you do the last edit for submission.
Fulfilling and reporting
For many grants there are strict reporting requirements, to demonstrate that you are completing the program as you proposed, so make sure you know these in advance and take the time to submit the reports on time. Failure to comply could impact the funding you receive and also reduce your chances of ever winning again.
How to win.
Grants need time and attention to win, but there are a few things that increase your chances:
- Take time to understand the Grantor, what is important to the organisation and the criteria of the tender. Address these in your submission. Remember that the organisation offering the grant has their own objectives and will judge the submissions based on these, not your organisation’s wants.
- Programs should be innovative and show how your business will directly respond to the criteria and achieve the outcomes specified in the grant guidelines.
- Make sure the budget is right. Show how you arrived at the amounts you are asking for, oftentimes needing quotes to substantiate.
- Make sure your house is in order. Your website, logo, social media profile and overall presentation to the market will be scrutinised. Make sure it’s all looking good. Many small factors that contribute 1% all add up.
- Answer all questions comprehensively. Grant applications tend to ask very similar questions over and over, so take time to really understand what they are asking each time.
- Don’t be afraid to get help. The Business Plan Company have completed many applications and can assist through the whole process.
- Persistence pays. Applying to suitable grants on an ongoing basis will increase your chances of winning. They also get easier, as some of the content that is more consistent between grant applications (such as your organisations’ descriptions) can be used as a starting point for later grants.
Other benefits of grant applications.
Grant submissions take time and effort, so you need to carefully weigh up the potential benefits with the costs before embarking on the journey. For the right grant program, there are potential benefits beyond the money itself, as they can help to build credibility, to be associated with a government agency and to promote your business as the winner. Just by completing the details of the grant application itself can also help in the strategy development of your business.
Dr Warren Harmer