Government grants for small business (U.S.)

Start-ups, entrepreneurs and new small businesses regularly seek information regarding small business grants. There are many misconceptions about the nature of such instruments, who qualifies for them and what constitutes a small business grant. The misunderstanding stems from advertising on the Internet and other media creating the impression that grants are readily available and that they are "Free Money".

There is no such thing as “Free” small business government grant money. In many instances individuals seeking grants should be looking to direct government contracting; this article will explain why.

DEFINITIONS

Small Business Government Grants

Small Business government grants are a type of contract and involve performance of a statement of work for agencies that are in some socio-economic endeavor serving the public, such as health care, public information, communications, high technology, or similar undertakings. A small business entity receiving a grant from a government agency becomes an extension of the agency mission and obtains funding to enhance that mission while growing as an enterprise.

Small Business Direct Contracts

Small business direct government contracting differs from grants in sheer numbers and regulatory control. Direct contracts are used by all agencies of the federal government to acquire supplies and services. Both for-profit and non-profit organizations compete in direct government contracting. A direct government contract has a very specific work scope, schedule, deliverable items, pricing and in many instances incremental funding. A grant has a more generic functional orientation to funding and may or may not include deliverable items.

There are some programs, such as Mentor/Protege and Small Business Innovative Research (SBIR) that appear to be hybrids of grants and direct government contracting and are often mistaken for grant instruments. They are not grants and are governed under the Federal Acquisition Regulation (FAR) as direct government contracts.

REGISTRATION
Guidance on registering to become eligible for both small business grants and direct contracts is at the following link:

SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING (SBFGC): REGISTERING YOUR SMALL BUSINESS FOR FEDERAL GOVERNMENT CONTRACTING



GRANTS VS. DIRECT CONTRACTING

Small Business Grant Funding

Small Business Government Grants have the effect of supplying lump sum funding to a non-profit organization for a specific period once the grant is awarded. In general the funding is used to further the stated mission of the business. However, the grant provider may reserve the right to receive reports on how the money was spent and may require deliverable items associated with performance of the work under the grant.

Certain grants take the form of cooperative agreements, whereby the non-profit and the agency commit to supplying mutual funding amounts to a project. Under limited or special circumstances involving 0 profit, a for-profit entity may be eligible for such a cooperative agreement with the federal government.

Federal Government grant regulations are at the following link:
OMB Uniform Guidance (2014) | GRANTS.GOV

Web sites for researching federal grants as well as additional information on grants in general are at the following sites:

Home | GRANTS.GOV

Proposalwriter.com

Small Business Direct Contract Funding

Federal Government direct contracting regulations are at:
Federal Acquisition Regulation (FAR) | Acquisition.GOV

“Small to Feds”, the web site was initiated to assist small businesses in understanding the above regulation and direct federal government contracting. Please see the table of contents in the right margin of this site for topics.

As stated in the introduction above, both for-profit and non-profit entities compete for direct federal contracting. A non-profit entity will bid grants and direct contracts at 0 profit. The following links are suggested as an introduction to direct federal government contracting:

SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING (SBFGC): INTRODUCING FEDERAL GOVERNMENT CONTRACTING INTO YOUR COMMERCIAL SMALL BUSINESS

SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING (SBFGC): FEDERAL GOVERNMENT CONTRACTING SMALL BUSINESS SET ASIDE DESIGNATIONS

SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING (SBFGC): SHOULD YOU CONSIDER SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING?

SUMMARY
This article has provided a brief (and admittedly general) overview of the difference between non-profit and for-profit business entities and the small business government grants and direct contracting available to each.

Both small business government grants and direct government contracts are highly competitive. Selecting potential agency sources and submitting winning proposals are acquired skills. For assistance in writing grant and direct contract proposals please see the following links:

SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING (SBFGC): FEDERAL GOVERNMENT CONTRACT PROPOSAL PREPARATION

Proposalwriter.com

When considering forming an enterprise, please assess in your business plan the potential of both types of entities in direct contracting or grant competitions. Go to the SBA web site that guides you through the business planning process. I suggest you follow the site presentation and note the factors to consider:

The U.S. Small Business Administration | SBA.gov

The following site contains samples of business plans:

Free Business Plan Samples | Bplans

Look for examples in the above of both for-profit and non-profit organizations at the above link.

Ask yourself some strategic questions, such as what competition you envision and what your marketing plan will be. Addressing these questions may take some research and that is all part of the process of putting in place your plan. It is your road map for the future.