Federal Government Grants For Startup Businesses

June 23, 2021

With great ideas come great startups. However, it’s never enough to just start a company, one needs to scale it to keep growing and funding can help plenty. This is why initiatives like federal government grants are welcomed by budding entrepreneurs with open arms!

According to SBA, there were 30.2 million small businesses operating in the US in 2018. Starting a small business is always encouraged by the State because it leads to innovation, growth, and creates more jobs. In this view, the government has set up multiple grants for small businesses and startups to help them operate smoothly and grow effectively.

When it comes to the IT sector, smaller businesses and startups have been providing an array of services such as end-to-end product development, software team augmentation, proof of concept services, etc to clients operating at all scales. This creates a sustainable environment for businesses with the potential to thrive in all markets. This further encourages the government to support startups and offer grants to help them thrive.

Below, we have listed down some of the key federal government grants for startups and small businesses:

Small Business Innovative Research Program (SBIR)

The SBIR offers federal grants to growing businesses, encouraging them to participate in research and development. The grant aims to commercialize their research and development through an award-based initiative. 

If an entrepreneur holds a company for profit and fulfills the requirements, they can obtain these grants to work for scientific merits and technological innovation.

Small Business Technology Transfer Program (STTR)

The STTR is fairly similar to SBIR, helping startups and small businesses by funding research and development. However, unlike SBIR, businesses need to be formally associated with a research institution to obtain this grant. 

Community Navigator Pilot Program

Through the Community Navigator Pilot Program, the federal government provides underserved startups and small businesses with grants ranging from $1 million to $5 million. 

The initiative prioritises businesses owned by women, veterans, and individuals who lack social and economic support. It aims to encourage and promote business interest in people who have great potential but lack the opportunities to set up and run a venture due to prejudice.

USDA Rural Business Enterprise Grant Program

Under this grant, the federal government provides technical assistance and training to startups and small businesses that have 1) less than 50 members, 2) lower than $1 million gross revenue, and 3) based themselves in rural areas. 

It aims to aid projects that work towards the development of rural public entities including state agencies, educational institutions, rural cooperatives, nonprofits, and federally recognized tribes.

US Small Business Administration State Trade Expansion Program (STEP)

This grant is provided by the federal government to startups and small businesses willing to export their products. 

The funds are distributed through state entities to businesses that comply with specific state regulations. These funds are to be used for participating in foreign trades, entering international markets, and indulging in international marketing of their products/services.

US Department Of Commerce Minority Business Development Agency (MBDA)

These grants are offered by the federal government throughout the year to startups and small businesses owned by minorities. 

US Economic Development Administration (EDA)

Being a part of the US Department of Commerce, the EDA offers grants to small businesses for projects that are dedicated to supporting regional and national economic development. Businesses that meet the criteria can obtain EDA investments on a rolling basis for funding projects relating to construction, non-construction, research and evaluation, higher education, technical assistance, and more. 

These grants open a multitude of opportunities for startups who are struggling to scale. Although all these grants are credible and offer some or the other sort of assistance to entrepreneurs, SBIR and STTR are the ones that draw more attention and are highly sought after.

How Do SBIR And STTR Work?

Both SBIR and STTR follow a three-phase approach for providing grants to startups:

Phase 1: Concept Development

In the first phase, the agencies assess the feasibility, potential, scope, and technical merit of the concerned venture before going ahead with the grant. This phase deals with the preliminary research and development required to get the venture up and running.

In the case of SBIR, the grant does not exceed $150,000 in total costs for a period of 6 months. When it comes to STTR, the limit is again $150,000 in total costs but for a period of one year.

Phase 2: Prototype Development

After the authenticity and potential of a business are assessed, SBIR and STTR provide a maximum of $1,000,000 in total costs for a period of 2 years. This is when a venture has found its footing in the market and is looking towards an uphill journey.

Phase 3: Commercialization

This phase is dedicated to pursue the objectives derived from the first two phases to commercialize the products/services for the desired traction. No SBIR or STTR grants are awarded to startups at this stage.

It is important to note that most federal government grants are obtained over a fairly long period of time. It is not always advisable for startups looking for quick funds.

Boost Your Startup With Fission Labs

Once you have set up your venture and are looking forward to a healthy run in the industry, Fission Labs helps you streamline technical processes, from customized end-to-end product development to team augmentation for skilled performance. 

Fission Labs will help you take your startup to new heights and attain all your desired goals.

To know more about Fission Labs and the services provided by our dedicated teams contact us.

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