Additional Loan and Grant Options Available for Small Businesses
- By Molly Bond
While much of the focus regarding financial relief for small businesses has been put on the Economic Injury Disaster Loans/Grants (EIDL) and the Paycheck Protection Program (PPP) loans made available in the CARES Act, it is important to know that these two programs are not your only option.
Here, we provide an overview of some additional loan and grant opportunities.
General Small Business Loans
The Small Business Majority manages Venturize, a free online resource hub for small business owners. Among other offerings, Venturize provides a guide for small businesses to access small business loans.
The loan guide outlines a five-step process to “get loan ready.”
- Get organized using this checklist to prepare your business plan, personal credit report, collateral, ownership and affiliations, etc.
- Learn about the lending world through these resources. Explore different financing sources such as banks, credit unions, Community Development Financial Institutions (CDFIs), the Small Business Administration (SBA), etc. Additionally, review different types of loans like traditional bank loans, mission-driven loans, and microloans, etc.
- Identify your credit score IQ by reviewing these resources.
- Ask the right questions using this list as a guide.
- Find the best loan for your business by reviewing different loan options.
Small Business Administration Express Bridge Loans
Express Bridge Loans allow small businesses that already have a business relationship with an SBA Express Lender to access up to $25,000 quickly. Express bridge loans can provide economic support to small businesses to help cover temporary loss of revenue. The loans can be term loans or used to bridge the gap while applying for an SBA Economic Injury Disaster Loan (EIDL). These loans can be repaid in full or in part by proceeds from an EIDL loan.
For more information and guidance on express bridge loans, find local assistance and/or contact your local lender.
Small Business Administration “Traditional” Loans
General overview: The Small Business Administration facilitates loans through the 7(a), 504, and microloan programs. While these programs existed before the COVID-19 outbreak, there were recently important changes to offer small businesses more relief. Under the CARES Act, the SBA is now required to pay all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief is available to those with existing SBA loans as well as new borrowers who take out loans within six months (through September 27, 2020) of the president signing the bill into law. You can receive a 7(a), 504, or microloan in addition to a Paycheck Protection Program loan.
For more information and guidance on these loan options, find local assistance.
- 7(a) Loans: 7(a) loans are up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital, and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures, and supplies. In the program, banks share a portion of the risk of the loan with SBA. There are many different types of 7(a) loans. You apply for a 7(a) loan with a bank or a mission-based lender such as a Community Development Financial Institution (CDFI).
- 504 Loans: The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery. You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development.
- Microloans: The Microloan Program provides loans up to $50,000 to help small businesses start up and expand. The average microloan is $14,000. Authorized use of loan proceeds includes working capital, supplies, machinery and equipment, and fixtures (does not include real estate). These loans are delivered through mission-based lenders, like CDFIs, who are also able to provide business counseling.
Small Business Grants
- Grants.gov: Grants.gov is a database of federally sponsored grants. Some grant options specifically target small businesses. You’ll need to sort through many different types of grants to locate grants applicable to your business. To explore these grant options, visit the “How to Apply for Grants” section of the website. The webpage will walk you through an overview of grants and will allow you to check your eligibility, find grants that align with your business, register an account, and apply for grants.
- National Association for the Self-Employed Growth Grants: The National Association for the Self-Employed (NASE) is a nonprofit organization that provides resources for member businesses. NASE offers Growth Grants of up to $4,000 to member businesses. These business development grants can be used for marketing, advertising, hiring, and expanding facilities, as well as other business needs. To apply, a business must be a member of NASE that is in good standing, demonstrate the grant will fulfill a business need, explain how it will use the grant and how the grant will help the business succeed, and submit supporting documentation. Visit NASE’s website to learn more.
- Hello Alice Business for All and COVID-19 Emergency Grants: Verizon and Hello Alice, a digital fundraising and advocacy platform, have partnered to offer emergency grants of up to $10,000 on a rolling basis for businesses impacted by COVID-19. The application period for the emergency COVID-19 grant ends on July 16, 2020. The application period for general business grants ends on September 25, 2020. Learn more here.
- Red Backpack Fund: The Red Backpack Fund was established by Spanx and The Spanx by Sara Blakely Foundation. The fund is providing grants through GlobalGiving. Each month, $5,000 grants are distributed to women-owned small businesses. The application portal will open again June 1 to June 8. Learn more here.
- Amber Grant Foundation: The Amber Grant Foundation offers $4,000 grants to one women-owned business each month. Businesses that receive an Amber grant through November 2020 will be eligible for an additional $25,000 grant at the end of the year. Learn more about Amber Grants here.
- GrantsforWomen.org: GrantsforWomen.org is a database of grant opportunities for women. While there are grants available for business purposes, not all grants are for businesses; for instance, some grants on the site are educational grants. You can search GrantsforWomen.org for a list of organizations that provide grant funding to women. Learn more here.
- Localized Assistance: When searching for grants, it is easy to focus on national grants only. However, it is important to remember city, county, and state business grants as well. Search on your local governments’ websites for possible business grants. Here are state-by-state business resources. Additionally, your local chamber of commerce, nonprofit organizations, and colleges and universities may offer business grants.
- Small Business Development Centers (SBDCs) and SCORE: Although SBDCs and SCORE do not offer grants, they can provide guidance on locating grants your business may be eligible for. Find your local SBDC here and your local SCORE here.
- Minority Business Development Agency (MBDA) Business Centers and Women’s Business Centers: Similar to SBDCs and SCORE, both MBDA Business Centers and Women’s Business Centers can provide guidance on locating grants for minority-owned and women-owned businesses in your area. Find your local MBDA Business Center and your local Women’s Business Center.