Grants and Incentives Available for U.S. Small Businesses and Startups

By Harrison Sharrett

The United States has a global reputation for being one of the most business-friendly countries in the world, and is home to some of the world’s largest and most influential corporations—from Google and Amazon, to Tesla and Microsoft. However, despite the presence of these global brands, it's the nation's small businesses that keep the American economy alive.

Approximately 99.9% of all U.S. companies are small businesses, according to the U.S. Small Business Administration (SBA). In addition, the United States is home to a wide variety of innovative startups, as illustrated by high startup density in locations such as Silicon Valley, Calif.; New York; and Austin, Tex., and particularly in high-value sectors such as technology, fintech, and marketing.

To maintain the nation’s leading position as a hotbed of entrepreneurship, federal and local governments have launched multiple initiatives and incentives to support small businesses and startups. What follows is an exploration of grants, benefits, and industry incentives available to U.S.-based businesses.

Government grants and incentives

The first thing to note is that the majority of government grants only cover R&D expenses. There’s a strong emphasis on healthcare, non-profit, technology, and regional development projects, so if your business operates in any of these areas you may want to visit this site and search grants by location, awarding agency, and business sector.

The most well-known government programs are the SIBR or Small Business Innovation Research and STTR or Small Business Technology Transfer programs. Both of these initiatives provide awards distributed over three phases, targeting small businesses focused on R&D and innovation.

Outside of R&D grants, the Economic Development Administration periodically offers funding to existing businesses in a variety of industries. You can check the latest grants here.

Small businesses located in any of the 8,700+ Designated Opportunity Zones can benefit from preferential tax treatment, including deferral of capital gains payments and capital gain exclusions.

There are also local funding opportunities available throughout the nation. For more information, you can contact the nearest branch of the Small Business Development Center (SBDC) network.

Startup funds are usually available via corporate funding agencies. Some of these funds are administered by large corporations, such as Visa and its Everywhere Initiative, or the Fedex Small Business Grant Contest.

Industry and demographic-specific incentives

Rural Business Development Grants are available to businesses that are part of rural cooperatives. Here is a list of additional support programs for agricultural businesses.

Export is another industry where businesses can benefit from multiple incentives. The most well-known are the State Trade Expansion Program (STEP) and EXIM's Working Capital Loan Guarantee, which target U.S. small businesses looking to expand into international markets.

NIST grants are offered by the National Institute of Standards and Technology to businesses operating in the information technology field.

Companies involved in environmental protection and sustainability ventures may be eligible for EPA grants.

Additional financial support is also available to certain demographic groups. The most well-known options are:

• Grants for military veterans.
• Grants for women-owned businesses, especially if they are involved in creative fields, environmental justice, and community building.
• Loans and microloans for minorities. In addition, the Minority Business Development Agency (MBDA) has offices in many states. While it does not offer direct funding, this agency can help secure capital and give advice on how to expand business operations.

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Grants and incentives available in times of crisis

Small businesses have been the most affected during the coronavirus crisis. Temporary closures have taken place in many industry sectors and placed additional pressures on business owners who were already struggling financially. To mitigate the effects of this crisis, the federal government has launched several stimulus packages to help small businesses weather the effects of Covid-19. The most important schemes are:

• COVID-19 Economic Injury Disaster Loans. These low interest loans are available to eligible small businesses that have seen their income decline as a result of pandemic restrictions and need help covering operational expenses or securing working capital.
• Rising unemployment is one of the main collateral effects of this crisis, and many employers are struggling to cover payroll expenses when faced with declining revenue. The Paycheck Protection Program is a loan scheme specifically created to help owners of small businesses keep their staff employed.
• A similar incentive involves Employee Retention Credits, which allow small businesses to claim up to 50% of payroll expenses with a maximum of $10,000. Along the same lines, the Families First Coronavirus Response Act (“FFCRA”) has helped small businesses cover paid leave and offer tax credits if employees are absent due to ill health.
• There may be tax incentives available. If your business has been disrupted by the coronavirus pandemic, use this business tax relief tool to confirm whether your company is eligible.
• For those that have been forced to close their premises, the Shuttered Venue Operators Grant (SVOG) is available to businesses with revenue losses of between 25% and 90%. Funds can be used to cover rent, payroll, mortgages, , insurance, and utilities.
• Under the EDA CARES Act, small businesses can access recovery loans at low interest rates. Loan amounts vary depending on location. The details are available from regional economic development agencies.

Additional support may be available at state and county level. The U.S. Chamber of Commerce keeps an updated list of funding sources by state, which you can view here.

During the current crisis, a mix of public and privately funded initiatives have been created to supplement federal and state assistance. For example, Verizon has set up a $7.5 million Small Business Recovery Fund, which offers grants of up to $10,000. This is known as the LISC Small Business Relief Grant and is mainly available to business owners in historically underserved communities hit hard by the pandemic.

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