Getting the funding you need to move your business forward can be one of the most challenging aspects of running a business—and if you want to get the most access to capital, it’s important to be informed of the different financial and grant opportunities that may be available to you.
And while it’s always important to understand the grant opportunities available for your small business, it’s especially important for minority-owned businesses, who traditionally have a harder time securing business financing; according to the Minority Business Development Agency, minority-owned businesses are three times as likely to get denied for a loan as non-minority-owned businesses—and when they are approved, it’s generally for a lower amount at a higher interest rate (minority-owned businesses pay an average interest rate of 7.8 percent—while their non-minority-owned counterparts average 6.4 percent).
If you’re a minority-owned business or a minority woman-owned business, there are a number of different grants available to help you secure funding to support your business. Let’s take a look at the eight best small business grants for minority-owned businesses in 2020:
Why grants?
Before we jump into the best small business grants for minority-owned businesses, let’s quickly touch on why you should consider a grant for your business in the first place.
The biggest draw of grants? Unlike small business loans, which you have to pay back over time (and with interest), grants are essentially free money. When you receive a grant, you can use that money to invest in your business, which can give you a competitive edge in your market—but because you don’t have to pay that grant money back, you don’t have to worry about the grant impacting your bottom line or monthly finances like a loan would. This can be especially helpful in today’s climate, when COVID-19—and the resulting economic slowdown—is still hitting businesses hard.
So, now that you understand why grants are such great funding opportunities for your business, let’s jump into the different grant options available for minority-owned businesses.
Grants.gov
If you’re looking to secure a federally sponsored grant, Grants.gov is a great place to start. While the database isn’t targeted specifically towards minority-owned or minority women-owned businesses (or even businesses in general) features a variety of grant types (the database features over 1,000 grants in a variety of categories from 26 federal agencies, including the U.S. Small Business Administration, or SBA; the U.S. Department of Agriculture, and the U.S. Department of Commerce), many of which your business may be eligible for.
How to apply: You can search available government grants here; use the database’s search function to narrow down the options by keyword, category, or location. Once you identify a potential grant, you can view pertinent information, including eligibility requirements and grant application deadlines.
The National Association for the Self-Employed (NASE) Growth Grants Program
The National Association for the Self-Employed has a small business grant program called NASE Growth Grants that provides grants of up to $4,000. To date, the program has supplied $1 million in grants to small business owners.
While this program doesn’t offer grants specifically targeted towards minority-owned businesses or minority business owners, they are focused on smaller businesses and “micro-business owners” that may have trouble securing financing through a more traditional route—categories that could apply to many minority-owned businesses.
How to apply: You can apply for NASE Growth Grant directly through the organization’s website. Just keep in mind that Growth Grants are only available to members of NASE—so if you’re not a current member, you’ll need to sign up; membership is $11.95 monthly or $120 annually (monthly members will need to wait 90 days before applying for a grant, while annual members can apply immediately).
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT)
If you work in the technology sector—and your business is focused on serious innovation—the Small Business Innovation Research and Small Business Technology Transfer Programs could be options to consider.
According to their website, these programs provide grants to a “diverse portfolio of startups and small businesses across technology areas and markets to stimulate technological innovation, meet Federal research and development (R&D) needs, and increase commercialization to transition R&D into impact.” A variety of government agencies (including NASA, the Department of Defense, and the Department of Health and Human Services) contribute to the programs in order to provide grants to small businesses that are on the cutting-edge of technological development and innovation.
This program isn’t geared towards minority-owned businesses, but minority-owned businesses are, of course, eligible—so if your business is doing something exciting and innovative in the technology space, you may qualify.
How to apply: The application and eligibility requirements as well as the grant amounts vary by program, but grants are highly competitive and all applications are subject to a thorough peer review process. For more information on grant application and eligibility, visit SBIR.gov.
Minority Business Development Agency (MBDA)
The Minority Business Development Agency doesn’t have a grant program that provides grants directly to minority-owned businesses; instead, the agency provides grants to organizations that operate MBDA Business Centers, which provide a variety of services to minority-owned businesses, including business development, access to government contracts (on the local government, state government, and federal government level), and access to capital—making them an excellent resource if your business is in need of funding.
How to apply: Again, the MBDA doesn’t provide grants directly to minority-owned businesses, but they can be a great resource in securing the funding and support you need to grow your business. You can find an MBDA Business Center near you by searching here.
Rural Business Development Grants
If you operate your business in a rural area, the Rural Business Development Grants program, which is overseen by the USDA, could be an option to explore. Like some of the other grants on this list, this program isn’t geared specifically towards minority-owned businesses, but if you’re a minority that runs a business in a rural area (which the program defines as a population of less than 50,000) and your business entity a) falls under one of the defined categories (which include nonprofit organizations and rural cooperatives), and b) plan to spend the grant money in a way that benefits your community in some way, you may be eligible for a grant of between $10,000 and $50,000.
How to apply: You can apply for a Rural Business Development Grant directly on the USDA website. Each state has different eligibility requirements and application deadlines; choose your state from the drop-down menu for more information about your state’s application process.
Asian Women Giving Circle (AWGC) Grants
If you’re an Asian woman living in New York City, the Asian Women Giving Circle (AWGC) has a grant program that provides funding to arts, culture, and social projects spearheaded by Asian women. While the grant program, which awards isn’t limited to businesses (they also provide grants to community groups and individual artists), if you’re an Asian woman and your business aligns with the organization’s mission of “amplifying the transformative power of arts and culture to advance an equitable and just society,” it could be an option. While grant amounts vary, in 2020, the grants awarded ranged from $2,500 to $10,000.
How to apply: The AWGC has one grant cycle per year. The organization typically releases their request for proposal (RFP) in January, applications for funding are due in March, and grant recipients are chosen and funding is dispersed in June. Interested applicants can find the organization’s annual RFP on the AWGC website at the beginning of each calendar year.
Native American Business Development Institute (NABDI) Grant
The Native American Business Development Institute (NABDI) Grant, which is overseen by the Office of Indian Energy and Economic Development (which is part of U.S. Department of the Interior Indian Affairs division) provides business development grants to Native American and Alaskan Native tribes. These grants are meant to help Tribes evaluate the economic opportunity of different business ventures through economic feasibility studies and “empower tribes to make informed decisions regarding their economic futures by distinguishing viable economic opportunities from investments and enterprises that have a high likelihood of failure.”
In 2019, the program awarded over $727,000 in business development grants to 21 eligible Tribes.
How to apply: According to the NABDI Grant FAQs, solicitations are posted on Grants.gov, but proposals must be submitted through the IEED’s grant email, ieedgrants@bia.gov.
Things to keep in mind when applying for a small business grant for your minority-owned business
Thinking about applying for a small business grant? Here are a few things to keep in mind before you start the process:
- Register your business. Some grants may require your business to register as a minority-owned or minority woman-owned business or obtain a specific certification (for example, a minority business enterprise, or MBE, certification, or a women’s business enterprise, or WBE, certification).
- Keep track of application requirements and deadlines. The application requirements and deadlines for grants are typically strict—and you don’t want to lose out on grant funding just because you forget to send in a form by a certain date. Make sure you’re keeping track of the different grants you’re applying for, the requirements for each, and when each of those requirements are due. (You may want to consider adding all the data and deadlines to a spreadsheet to help you stay organized.)
- Know how you’re going to spend your grant money. Many grant applications require you to share how you plan to spend your grant money. So, before you invest too much time and energy into the application process, it’s important to develop a business plan for how you’re going to use your grant funding. For example, do you need a grant to purchase new computers or equipment for your employees? Do you need grant money to fund a new research project? Do you need additional financing to expand into a new market? However you’re going to spend your grant money, make sure you’re clear before you start applying for grants; not only will it ensure you meet the eligibility requirements, but it will also help you identify the grant opportunities you’re most likely to qualify for.
- Apply for multiple grants. As mentioned, grants are essentially free money—so don’t limit yourself to just one. Do your research, find any and all grants you’re eligible for, and send in your application. The more grants you apply for, the more potential there is to receive grant money—and the better off your business will be.
- Look for local opportunities. While this list features some of the best small business grants for minority-owned and minority woman-owned businesses in 2020, there are additional funding opportunities out there—including local opportunities. Your local or state government may offer grants for minority-owned businesses, women-owned businesses or both—or, there could be local private or nonprofit organizations dispersing grant money that you may be eligible for. Make sure that, in addition to applying for larger or national grants, you’re doing your research to see what kind of grant money is available in your local area.
Get out there and get the grant money you need to move your business forward
If you’ve been struggling to find the financing options necessary to build your business, grants could be a great option to get the funding you need. And now that you know the best grants available for minority entrepreneurs and women entrepreneurs, all that’s left to do? Get out there, start applying, and secure the grant money you need for your business!
