The truth about small business grants

Search online for “small business grants” and you will see promises of free government money to start or run a business. The reality is more specific, and knowing it saves time and protects you from scams.

Federal grants fund projects, not general operations

Federal agencies award grants to accomplish a purpose set by Congress. When small businesses are eligible, it is usually for defined work: research and development, agricultural value-added projects, energy efficiency or renewable energy, export promotion, or workforce training. Grants for simply starting a business or covering everyday expenses are uncommon.

Research and innovation: SBIR and STTR

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are among the largest sources of federal funding for small businesses. Participating agencies fund research and development with commercial potential. Learn more at SBIR.gov; solicitations that agencies post on Grants.gov appear in our directory.

Many programs are loans or incentives

The U.S. Small Business Administration mainly works through lenders, guaranteeing a portion of loans, and through free counseling partners. See SBA loan programs. States also offer loans, tax credits, and incentives through their economic development agencies — see our state guides.

Red flags

• Anyone who guarantees you will receive a grant.
• Requests for a fee to “release” or “process” a government grant.
• Unsolicited calls, texts, or social media messages offering grants.

Grants.gov publishes guidance on grant fraud and scams.

See what is actually available: current opportunities open to businesses.