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    Receiving government funding for a startup business

    How to Get Government Funding for Startups

    Richard Harroch
    FinanceFinancing & CreditStarting a BusinessOperations

    Wondering how to get startup funding from the government? Startups seeking funding or seed financing can turn to a variety of programs from governmental agencies for grants or loans. In this article, a list of key opportunities is provided with links to the related grant or loan programs. Many of the programs can be applied for online.

    Startup funding in the form of grants

    Grants may provide the most attractive form of financing for startups, as they do not typically have to ever be repaid nor does the company receiving the grant have to suffer any ownership dilution. Some grants are available from federal agencies and others are available from state and local agencies. Here are some key grant programs for those looking for startup funding from the government:

    • Grants.gov. This is a government website that provides a comprehensive searchable list of governmental grants for small businesses. Agencies that provide the grants include the Department of Commerce, the Department of Defense, the Department of Justice, the Department of Treasury, the EPA, and other governmental agencies. There are over 2500 searchable grant programs listed.
    • America’s Seed Fund. America’s Seed Fund offers non-dilutive funding through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These awards are designed to help companies innovate and move toward creating a commercially viable product. The fund is coordinated by the SBA, and over 4000 companies are funded each year with over $4 billion invested. No equity or intellectual property stakes are taken by the government. Tech industries eligible include semiconductor, space, and software companies.
    • National Institute of Health (NIH). The National Institute of Health provides grants for small businesses that develop and research biomedical technology, including ones specific to COVID-19.
    • Minority-owned firms through the MBDA program. Minority-owned firms seeking to penetrate new markets—domestic and global—and to grow in size and scale can access grants and business experts at a Minority Business Development Agency Business Center. Whether it’s securing capital, competing for a contract, identifying a strategic partner or becoming export-ready, the MBDA can help. The Centers are located in areas with the largest concentration of minority populations and the largest number of minority businesses.
    • Environmental Protection Agency. Small companies that are developing technologies to benefit human health and the environment can apply for startup funding in the form of grants from the Environmental Protection Agency (EPA).
    • Department of Agriculture Grants. The USDA provides a variety of grants and loans to agriculture and food service businesses. Rural businesses are a focus.
    • California state grants for California startups. California provides a variety of startup funding in the form of grants and loans to California-based businesses.
    • Texas grants for Texas small businesses. Texas provides a resource page for Texas-based small businesses.
    • Washington state grants for small businesses. The State of Washington provides grants and loans to Washington-based businesses.
    • New York state recovery grants. The state of New York provides a variety of grants to support recovery from the pandemic for New York businesses, including restaurants, theatrical productions, biodefense companies, and more.

    Startup funding in the form of loans

    SBA loan form on a table © Vitalii Vodolazskyi -Adobe Stock

    • SBA small business loans. Some banks offer attractive low-interest-rate loans for small businesses, backed and guaranteed by the U.S. Small Business Administration (SBA). Because of the SBA guarantee, the interest rate and repayment terms are more favorable than most loans. Loan amounts range from $30,000 to as high as $5 million. However, the loan process is time-consuming, with strict requirements for eligible small businesses. Visit the SBA website to see a list of the most active SBA lenders. The SBA site also has a section called “Lender Match” which lets you answer a few questions about your business and get matched with potential lenders offering SBA-backed loans. Expect that banks may ask for a business plan and financial projections for your business.
    • Loans for veteran- or active duty-owned businesses. The SBA provides access to loans or assistance to businesses that are owned or controlled by veterans or active duty personnel or their spouses.
    • Loans for women-owned businesses. The SBA provides access to loans or assistance to women-owned businesses.
    • Loans for LGBTQ-owned businesses. The SBA provides access to loans or assistance to LGBTQ-owned businesses.
    • Loans for minority-owned businesses. The SBA provides access to loans or assistance to minority-owned businesses.

    Other funding options for startups

    There are other non-government funding options for startups, including angel financing, venture capital financing, crowdfunding, small business credit cards, lines of credit, accounts receivable financing, equipment lease financing, online lenders, and more. See a comprehensive discussion of these startup funding alternatives at 5 Startup Funding Options for Your Business. Some companies, such as Amazon, Walmart, Sam’s Club, FedEx, Visa, and Capital One, also provide grants to small businesses.

    RELATED: 15 Expert Tips for Startups Seeking Angel or Seed Financing

    Copyright © Richard D. Harroch. All Rights Reserved.

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    Profile: Richard Harroch

    Richard D. Harroch is a Senior Advisor to CEOs, management teams, and Boards of Directors. He is an expert on M&A, venture capital, startups, and business contracts. He was the Managing Director and Global Head of M&A at VantagePoint Capital Partners, a venture capital fund in the San Francisco area. His focus is on internet, digital media, AI and technology companies. He was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, Fox Business and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of a 1,500-page book published by Bloomberg on mergers and acquisitions of privately held companies. He was also a corporate and M&A partner at the international law firm of Orrick, Herrington & Sutcliffe. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.

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