How to Apply for a Minority Business Grant

Minority business grants are a type of funding for minority-owned businesses, usually small ones.

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 public and private sources. While the federal government does not provide grant funding for the purpose of starting or growing a business, many private grantors do.

Understanding Minority Business Grants

A minority business grant can be a great way for entrepreneurs who identify as a minority to get 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 greater as well.

To get grant funding, a business owner should research grant opportunities, meet the eligibility criteria laid out by a specific grant, and then follow the application process, submitting any necessary information or documentation.

Generally, grant money must be used for a specified purpose. 

Research Available Grants

A range of sources provide minority business grants, including private companies, educational institutions, nonprofit organizations, and state, local, and federal governments and agencies.

However, no federal government grants provide funding for the specific purpose of starting a business.

Many private grantors do offer startup grants for small businesses.

Minority Grant Resources

Here are some 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. It’s also a grant knowledge base and assistance center.
• The Small Business Administration (SBA) provides some small business grant programs for the purposes of research and development, or management and technical assistance.
• The U.S. Chamber of Commerce maintains an updated list of small business grants and other programs (and organizations) that could help you with your business needs.
• 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, part of the U.S. Department of Commerce, runs a national network of business centers and programs for minority business owners, and offers grant funding opportunities.

Check Eligibility

Because minority business grants are offered by a wide range of grantors for a variety of purposes, eligibility criteria vary widely. 

In general, 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 U.S.)
• 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)

Gather the Necessary Documents

The documentation required to apply for a grant will depend on the grant in question. 

Documents that may be required can include:

• Financial documentation 
• Personal and/or business information and identification
• Application forms
• Detailed business plan, project proposals, or abstracts
• Budget estimates
• CVs or resumés
• References 

Understand and Start the Application Process

The application process for a minority business grant can be a bit different depending on the specific grant and the source of the grant. In particular, government grants tend to have an involved application and evaluation process.

Generally, the application process that the business goes through will look something like this:

1. The business owner selects a grant opportunity from a likely range of options. This may involve various steps to narrow down funding categories to specific grant projects.
2. They provide information about themself and their business to confirm eligibility. This may involve some form of registration with the grant organization.
3. The business owner obtains the application package (normally available online). They carefully work through and complete an extensive application, and submit it online along with any required documentation.
4. The grantor reviews the application and usually updates the business owner on its status.

Key Tips for a Successful Application

1. Because minority business grants are essentially free money, there’s a lot of competition to secure them. So, entrepreneurs considering a grant opportunity should devote adequate time to carefully think through and complete an application. 
2. Before beginning the application process, it’s essential to understand the eligibility criteria to ensure that you meet them. It’s also helpful to gather all necessary information in advance so that you’ll have it in one place and ready to go when you submit your application.
3. Many grants are awarded on a regular basis—whether quarterly, annually, or according to a project schedule. Keep track of this schedule by setting reminders for relevant application dates so that you don’t miss a potential funding opportunity. 
4. Make use of the many resources that are available to assist with grants. Often, and especially for government grants, the granting agency may provide previous examples of successful grant applications for reference. It may 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 look for such programs in your area.

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 grant funding to minorities 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.