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What are the Different Types of Government Grants for Small Businesses?

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  • Written By: Kevin P. Hanson
  • Edited By: C. Wilborn
  • Last Modified Date: 16 November 2016
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Government grants for small businesses are money provided by a national or regional government to a business to help fund its operations. Sometimes this money is given to an organization for a specific project, such as for scientific research, while other times it may be given based on who runs the business, such as for those run by women or minorities. A business is usually considered to be "small" if it has a limited number of employees, has relatively low sales, and is privately owned and operated. Grant money, in most cases, does not have to be paid back.

Local and regional governments in the United States provide a multitude of financial programs in order to give small businesses some help in building their organizations. Some of the programs are economic and scientific government grants for small businesses, venture capital, and low-interest loans. There is one stipulation that it is important to remember when researching these grants: the federal government does not offer grants for beginning or expanding businesses.

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Government grants for small businesses are sometimes available by way of local and regional programs and non-profit groups. Some states in the US offer grants for the growth of child care centers, the development of tourism-related marketing programs, and the creation of technology that is energy efficient, for example. Using the term "grant" might be a bit misleading in the case of these programs in that they often do not mean money for free. In some cases, requirements for the grant is that the receiving organization combine the money with other sources of financing, like a loan or matching the granted money for the cause in which it is to be used.

One good example of a government grant from the US Internal Revenue Service (IRS) is the Low Income Taxpayer Clinic grant. This grant helps fund clinics that represent people who are considered low income taxpayers and face the IRS for them with regards to appeals, collections issues, and federal tax litigation. Non-profit organizations, law schools, and business schools are the organizations that offer clinics which are funded through this grant.

In Europe, the European Commission (EU) offers funds via project proposals that conform to Framework Programmes. For example, the Seventh Framework Programme is the main financial instrument put forth by the EU in order to stimulate technological development and research. The European Council developed the Lisbon Agenda in 2000 with the purpose being to attempt to turn the economy of Europe into the most dynamic and competitive one on the globe by 2010.

In the United Kingdom, government grants for small businesses are made available to a wide variety of charitable, research, and business organizations. Many grants are available based on location, with regions undergoing economic redevelopment most eligible. Most of these grants come from government agencies which provide funds to third party groups and have them carry out the work of the grant.

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