Minority business grants are a type of funding for minority-owned businesses, usually small businesses. Unlike loans, grants do not have to be paid back, although they are generally considered by the Internal Revenue Service (IRS) to be taxable business income.
In the United States, minority business grants are available from both public and private sources. While the federal government does not provide grant funding for the purposes of starting or growing a business, many private grantors do.
Key Takeaways
- Minority business grants are a source of funding from private companies, educational institutions, nonprofit organizations, and state, local, and federal governments and agencies for small business entrepreneurs who identify as a member of a minority. These grants are usually very competitive.
- Unlike loans, business grants generally do not have to be paid back, but they are considered taxable business income by the IRS.
- Minority businesses must make sure that they are eligible for a grant and be ready to fill out forms and supply the necessary documentation to apply for a grant.
- To help boost your chances of success, look for grant-writing assistance or examples of previous successful applications from the grantor, and give yourself plenty of time to complete the application process.
Understanding Minority Business Grants
A minority business grant can be a great way for entrepreneurs who identify as a minority to access funding for their small businesses. In contrast to a loan, a grant does not need to be paid back (unless the terms of the grant are violated). However, this can often mean that the grant application process is a lot more in-depth than a typical small business loan application. Competition for grant funding tends to be a lot higher as well.
Typically, a business owner will need to meet the eligibility criteria laid out by the specific grant and then follow the application process, submitting any necessary information or documentation. Generally, the grant funding must also be used for a specified purpose.
Minority business grants are available from a range of sources, including private companies, educational institutions, nonprofit organizations, and state, local, and federal governments and agencies. There are no federal government grants that provide grant funding for the purposes of starting or growing a business, but the Small Business Administration (SBA) does have grant categories for research and development, as well as management and technical assistance. Many private grantors, however, do offer startup grants for small businesses.
Eligibility Criteria for Minority Business Grants
Because minority business grants are offered by a wide range of grantors for a diverse number of specific purposes, eligibility criteria vary widely.
In general, minority business grant eligibility can depend on factors such as:
- The intended purpose of the funding (e.g., research and development)
- The nature and industry of the grantee (e.g., a for-profit, minority-owned business working in the healthcare sector)
- A specified range of annual business revenue (e.g., under $1 million)
- Minority status of the founder, owner, and/or employees (e.g., 51% or more employees must self-identify as a specified minority)
- Residency status of the applicant (e.g., resident of the United States)
- Age of the applicant (e.g., 18 or older)
- Age of the business (e.g., business must have been registered for at least one year)
- Number of employees (e.g., 30 employees or fewer)
- Location of the business (e.g., must be a Chicago-based business)
Application Process for Minority Business Grants
BIPOC and LGBTQIA+ small business owners can now apply for a chance to win $250,000 in advertising and consulting services from Good Impressions.
The application for a minority business grant can look a bit different depending on the specific grant. In particular, government grants tend to have a more involved application and evaluation process.
Generally, the application process for a minority business grant will look something like this:
- The business owner provides information about themselves and their business to confirm eligibility (for government grants, this may also include some form of registration with the grant organization).
- If there are many different grants to select from, the grant is chosen from a range of options (if this is the case, there may be additional steps to narrow down funding categories or specific grant projects).
- The business owner makes an application and submits the required documentation for the grant.
- The grantor reviews all applications and updates applicants on their success or status.
Documents Required for a Minority Business Grant
As minority business grants range widely in purpose and eligibility criteria, the documentation required to apply for one will depend on the nature of the grant in question.
Documents that may be required as part of the application process for a minority business grant can include the following to confirm eligibility:
- Financial documentation
- Personal and/or business information and identification
- Application forms
- Detailed business plan, project proposals, or abstracts
- Budget estimates
- CVs or resumes
- References
Key Tips for a Successful Application
Because minority business grants are essentially free money, there is generally a lot of competition to secure this type of funding. As such, entrepreneurs considering any grant opportunity should ensure that they have adequate time to craft a detailed and well-thought-out application.
Before beginning the application process for a minority business grant, it’s essential to read the eligibility criteria carefully and ensure that they are met. It may also be helpful to gather all necessary information in advance, so that it is available and in one place when the application is made.
Many grants are awarded on a regular basis—whether quarterly, annually, or according to a project schedule—so it can be helpful to keep track and set reminders for the dates associated with grant applications to ensure you are able to take advantage of the opportunity.
Many resources are available to assist with grant writing. Often, especially for government grants, the granting agency may provide previous examples of successful grant applications for reference, or hold events or webinars to share more information about the grant and its requirements. Many public or nonprofit organizations also provide grant-writing assistance, often for free, so looking for programs like these in your area can be helpful.
Additional Resources for Further Assistance
The following are good places to begin a search for minority business grant opportunities:
- Grants.gov is the federal government’s comprehensive database for all government grant funding opportunities.
- The Small Business Administration (SBA) provides some small business grant programs for the purposes of research and development, or management and technical assistance.
- The Accion Opportunity Fund provides resources for minority-owned businesses, including compiling lists of privately funded minority business grant opportunities.
- The Minority Business Development Agency, run by the U.S. Department of Commerce, runs a national network of business centers and programs for minority business owners, including providing grant funding opportunities.
What Is a Minority Business Grant?
A minority business grant is a form of free funding designated for small businesses owned or run by people who identify as minorities. Unlike loans, grants do not need to be paid back (except perhaps in the event that the grant’s terms are violated).
What Is the Application Process for a Minority Business Grant?
Applying for a minority business grant may look a bit different depending on the purpose or criteria of each grant. Government grants tend to be a bit more involved in terms of the application process, but most grants will require applicants to submit information about themselves and the business, compiling a proposal or filling out an application form for review.
Who Is Eligible for a Minority Business Grant?
Eligibility criteria for minority business grants will vary depending on the grant in question, but will generally require that the applicant identify as a minority, or that the business be owned or run by a certain number of employees who identify as minorities.
Does the Government Provide Grant Funding for Minority Businesses?
Yes. Grant funding for minority-owned businesses is available at the local, state, and federal levels. The federal government does not provide grants for the purposes of starting or growing a business; however, many private companies and organizations do.
The Bottom Line
Minority business grants are one way for minority entrepreneurs to secure funding for their businesses without having to take out a loan. Many companies and government agencies have increased their offerings of grant funding to minorities in recent years to address inequities in their industry or field.
However, these funding opportunities remain highly competitive, so it’s important to check eligibility criteria carefully and write a strong application to have the best chance for success.