How can I get a grant to start or expand my business in Alabama?
Unless your business involves the development of new technology or is a non-profit organization, it is difficult to find a grant to start or expand a small business.
Nearly every day a Small Business Development Center (SBDC) office or the Small Business Administration (SBA) gets a call from someone who has responded to an ad that implies there is free money available to start a business. It just isn’t true. If it were, the people who work in those offices would all have one of those wonderful grants and be starting their own businesses. What really happens is that those folks at SBDC’s all over the country spend a lot of their time trying to keep hopeful entrepreneurs from getting ripped off by potential scammers.
How do I get started?
Yes, there is grant money available from private foundations and government entities. No, it is generally not available to individuals to start for-profit businesses. There are a few private sector competitions listed below.
The first step you can take is to talk with an SBDC Business Advisor. Starting a small business in Alabama, or taking steps to save or grow it, is a lot easier after you’ve talked with a small business expert.
Even though many publications and talk shows publicize grants to small businesses, there are only certain types of government grants available to small businesses. SBA, for instance, offers “Small Business Innovation Research” (SBIR) and “Small Business Technology Transfer” (STTR) grants. Grants from other agencies may also be available for new technologies, inventions, or products. The U.S. government does not currently provide grants for starting or expanding a small business.
The U.S. Small Business Administration (SBA) administers the nationwide SBDC program while implementation of program in Alabama rests with the Executive State Director and the participating organizations within the state.
Finding and identifying government agencies that give grants for specific purposes or in specific subject areas requires considerable time, effort, and research. Getting a grant is hard work. Don’t be fooled by advertisements and promotions that state that you can get “free money” just by asking for it. There is a lot of competition for grant funds. To be successful in winning a grant, you must provide the funding agency with a well-written proposal that clearly states your objectives and sets forth a plan and budget for your activities. Grants are “free” in that you do not have to pay back the money. However, if you are awarded a grant you may be required to provide periodic progress, program evaluation, and/or financial reports to the government.
Business Plan or Idea Pitch Competitions
Pitch Competitions are available throughout Alabama, and provide an opportunity to compete for prize money (a grant). Each competition has its own rules and requirements. Some are designed to help companies that are developing new technologies; others are restricted to a specific industry sector. Awards can range from $500 to $50,000 or more. A list of pitch competitions in Alabama is available here.
Private Sector Grant Competitions
There are a few highly competitive private sector grants for certain types of businesses, and a few specifically for woman-owned businesses. Given the frequency at which these competitions change, we suggest that you investigate each of them carefully to determine if you might be eligible to compete, and understand how and when to apply.
The vast majority of government grants are given to non-profit organizations for programs and services that benefit the community or the public at large. There are other types of grants such as those from foundations, corporations, or private organizations. These non-government organizations have specific requirements as to who is eligible to apply for and receive grant funding. By and large, foundations do not make grants to for-profit enterprises.
The Alabama SBDC Network has a talented group of business advisors that are interested in helping your start or grow your business. Even if a grant isn’t available, you should take a moment to talk with a business advisor about the options that are available. Business plan competitions are offered statewide, such as Alabama Launchpad, and smaller competitions are offered locally. Talk with your SBDC business advisor for more information.