Government Business Grants
Unlike traditional forms of business funding, such as loans and investments, grant money is free. However, accepting grant money typically comes with plenty of paperwork and strict guidelines.
Government business grants provide capital for small businesses to explore international markets, participate in export trade shows and more. They can also incentivize research and development activities for for-profit and non-profit small companies.
State Trade Expansion Program (STEP)
Federal grant money often comes with a lot of paperwork and specific requirements. This can include legal and administrative prerequisites as well as ongoing reporting and auditing obligations.
The STEP grant program was established by Congress in 2010 to help small businesses increase their exports. Since its inception, more than 1,800 North Carolina businesses have used grant funds to participate in international trade shows and export-related activities.
These grant funds can be used to offset costs associated with participation in foreign trade missions and market sales trips, subscriptions to services such as U.S. Commercial Service offerings and Ex-Im Bank export credit insurance, design of marketing products and campaigns for overseas markets and more. Eligible companies must be small business concerns and meet certain size criteria.
To assess SBA’s management of the STEP program, GAO reviewed the program’s authorizing legislation and guidance, analyzed STEP data and interviewed state officials. GAO found that while SBA has made some improvements, states report challenges that continue to affect their ability to use grant funds to achieve program goals.
Small Business Innovation Research (SBIR)
The Small Business Innovation Research (SBIR) program is a federal funding initiative that supports technological advancements by encouraging partnerships between small businesses and various government agencies. This program helps bridge the gap between research and development and commercialization, resulting in a positive impact on job creation and economic growth.
To be eligible, a small business must meet certain requirements, such as eligibility, research and development focus, technology readiness level, and commercialization potential. Applicants must also submit proposals through a competitive selection process, with the results of peer review evaluations determining funding decisions. Unlike traditional government contracts, SBIR funds are non-dilutive, meaning the small business retains ownership of intellectual property developed through its participation in the program.
In addition to funding, SBIR can help small businesses gain valuable experience by collaborating with federal agencies. Additionally, participating in the program can open doors to networking opportunities and improve their credibility and marketability among potential investors and partners.
Small Business Technology Transfer (STTR)
The STTR program helps small businesses develop technological innovations with the potential to meet government R&D needs. This program provides equity-free funding and entrepreneur support in the early or “seed” stages of research. It also promotes participation by socially and economically disadvantaged businesses.
The Air Force SBIR and STTR programs help small technology companies develop innovative technologies that will enable the Air Force to accomplish its mission. These competitive programs encourage partnering between small business concerns and non-profit U.S. research institutions to foster commercialization of innovative technology solutions.
The STTR program focuses on technology innovation and market potential, but it also recognizes that some innovations cannot be easily categorized. Therefore, it is open to proposals addressing any technology that has the potential to have high commercial and/or societal impact. Small businesses can submit an STTR Project Pitch to the NSF for evaluation. If the Project Pitch is deemed acceptable, the cognizant NSF SBIR/STTR Program Director will officially respond via email.
Texas Enterprise Fund (TEF)
The Texas Enterprise Fund is the largest deal-closing grant program in the nation. This cash grant is used as a financial incentive for companies planning a new project with significant projected job creation and capital investment, where one Texas site is competing with at least one viable out-of-state option.
Applicants undergo a rigorous 11-step due diligence review process that includes a review of the company’s financial strength and stability, business sector analysis, local community support, public and private financial support, the estimated impact on jobs and wages, as well as other factors. Ultimately, the Governor, Lieutenant Governor and Speaker of the House must unanimously support each application.
The State has awarded more than $609 million in grants since the fund’s inception. That amount could have fully funded 5,000 K-12 students or repaved 500 miles of road. Instead, it went to corporations that will likely take their money and leave when a better deal comes along.