Best Government Grants for Small Businesses in the USA

Starting and growing a small business in the United States can be both rewarding and challenging. One of the most significant hurdles entrepreneurs face is securing enough funding to get their ventures off the ground or to scale operations. While loans and private investments are common sources of capital, government grants present an attractive, non-repayable option for many small business owners.

Unlike loans, grants do not need to be repaid, making them highly sought after—especially in industries like technology, healthcare, education, and green energy. This article explores some of the best federal, state, and local government grants available for small businesses in the USA, providing a thorough breakdown of eligibility, benefits, and how to apply.

What Are Small Business Grants?

A small business grant is a sum of money awarded by the government or a private institution to help businesses fund specific projects, research, or operations. Federal agencies offer grants to promote public services, innovation, economic growth, or community development.

While grants are highly competitive and typically come with strict requirements, they are also a debt-free form of financing, which makes them ideal for startups and small businesses looking to minimize financial risk.

Types of Government Grants

Before diving into specific programs, it’s important to understand the different types of grants available:

• Federal Grants: Funded by national agencies like the Small Business Administration (SBA), Department of Agriculture (USDA), and Department of Health and Human Services (HHS).

• State and Local Grants: Offered by state economic development agencies or municipal governments.

• Specialized Grants: Targeted for minority-owned, women-owned, veteran-owned, or rural businesses.

Top Federal Government Grants for Small Businesses

1. Small Business Innovation Research (SBIR) Program

Overview:
The SBIR program encourages domestic small businesses to engage in high-tech innovation and research with commercial potential.

Who Can Apply:

• U.S.-based for-profit small businesses

• Less than 500 employees

• Focused on R&D in fields like AI, biotech, cybersecurity, and aerospace

What It Offers:

• Phase I grants: Up to $295,000 for 6–12 months

• Phase II grants: Up to $1 million or more over 2 years

Participating Agencies: NASA, DOD, DOE, NSF, NIH, and others

How to Apply:

• Visit sbir.gov for open solicitations and application deadlines.

2. Small Business Technology Transfer (STTR) Program

Overview:
STTR is similar to SBIR but requires small businesses to collaborate with a nonprofit research institution.

Eligibility:

• U.S.-owned and operated businesses with under 500 employees

• Formal collaboration with a U.S. research institution

Grant Amounts:

• Phase I: Up to $295,000

• Phase II: Up to $1 million+

How to Apply:

• Use the SBIR/STTR portal for guidance.

3. USDA Rural Business Development Grants

Overview:
For small businesses operating in rural areas, the USDA offers grants to support business growth, technical training, and feasibility studies.

Eligibility:

• Towns with fewer than 50,000 people

• Nonprofits, municipalities, and small businesses

Grant Benefits:

• No maximum grant amount, though funding is limited

• Covers business incubators, rural transportation, and job training

How to Apply:

• Check your local USDA Rural Development office or visit www.rd.usda.gov.

4. National Institutes of Health (NIH) Grants

Overview:
NIH offers research grants for businesses in the health, biotech, and medical tech sectors.

Eligibility:

• Small U.S.-based companies focusing on health-related research and development

Funding Scope:

• Varies per project, but can range from hundreds of thousands to millions of dollars

How to Apply:

• Visit grants.nih.gov and use the NIH Guide for Grants and Contracts.

5. Economic Development Administration (EDA) Grants

Overview:
The EDA provides federal funding to support innovation and regional economic development, especially in underserved communities.

Eligible Applicants:

• Local governments, nonprofits, and small businesses partnering with public institutions

Key Programs:

• Build to Scale Program

• Regional Innovation Strategies

Application Info:

• Find opportunities on eda.gov.

State and Local Small Business Grant Programs

While federal grants are substantial, state and local agencies also offer various grant opportunities:

1. State Trade Expansion Program (STEP) – Administered by SBA

Supports small businesses looking to expand into international markets.

Eligible Expenses:

• Translation of marketing materials

• Trade show fees

• Export training

How to Apply:

• Contact your state’s STEP office through the SBA directory.

2. California Small Business COVID-19 Relief Grant

While this was originally for pandemic-related recovery, California continues to support small businesses through different programs.

Check for updates on:

• calosba.ca.gov

3. Texas Workforce Commission – Skills for Small Business

Provides funding for employee training at small businesses with fewer than 100 employees.

Covers:

• Tuition and fees for training at public community or technical colleges

How to Apply:

• Visit twc.texas.gov

4. New York State Business Recovery Grant Program

Open to businesses facing financial hardship due to COVID-19 and beyond.

Provides:

• Grants of $5,000–$50,000 depending on income and payroll

How to Apply:

• nysmallbusinessrecovery.com

Grants for Minority, Women, and Veteran-Owned Businesses

1. SBA 8(a) Business Development Program

Purpose:
Assists socially and economically disadvantaged businesses in competing for federal contracts and grants.

Eligibility:

• At least 51% minority-owned

• U.S. citizen

• Demonstrate potential for success

More Info:
www.sba.gov/8a

2. National Association for the Self-Employed (NASE) Growth Grants

Offers:

• Up to $4,000 for small business expenses

Eligibility:

• Must be a NASE member

Use Funds For:

• Marketing, hiring, equipment, or expansion

Apply at:
nase.org

Key Tips for Applying for Government Grants

1. Prepare Thorough Documentation
   Grants often require detailed business plans, budgets, tax returns, and legal documentation.

2. Monitor Grant Portals Regularly
   Sites like Grants.gov and SBA.gov are updated regularly with new grant announcements.

3. Tailor Your Proposal to the Grant’s Purpose
   Whether the grant is for innovation, community development, or job creation, align your business goals accordingly.

4. Avoid Scams
   Federal grants do not require upfront payments. Use only official government websites.

Frequently Used Grant Portals

• Grants.gov – Comprehensive database for all U.S. federal grants

• SBA.gov – Small business funding, loans, and disaster relief

• USA.gov – Government services and benefits

• Local SBDC Offices – Provide free consulting and help with funding applications

Conclusion

While securing a grant for your small business in the U.S. may be competitive and time-consuming, the rewards are significant—free capital to grow and sustain your business without repayment or interest.

By understanding eligibility criteria, focusing on grants aligned with your business model, and preparing strong, tailored applications, small business owners can improve their chances of success. Whether you are launching a tech startup, expanding a rural enterprise, or developing a new health solution, there is likely a grant program designed to support your journey.

For those new to the process, reaching out to a local Small Business Development Center (SBDC) or SCORE mentor can be a valuable first step.