First off, the federal government will not provide grants for starting or expanding your business. This is mainly due to the fact that federal grants are tax-payer funded and that, with countless strings attached, it would be impossible for the government to support businesses indiscriminately. Federal dollars need to be well spent, which is ensured through various compliance and reporting measures.
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The U.S. Small Business Administration (SBA), a United States government agency that supports entrepreneurs and small businesses mainly through lending programs and counseling, usually makes grants only to non-profit and educational organizations that participate in its counseling and training programs. Small businesses do not qualify for these grants. However, the federal government, and the SBA in particular can support you in obtaining loans and venture capital financing from commercial lenders specifically designed for small and mid-sized businesses. These loans come with a government-backed guarantee and are made through banks, credit unions and other lenders who partner with the SBA. These loan programs have increased in importance after the 2008 credit freeze and the Recovery Act and the Small Business Jobs Act.
There are some exceptions, which might qualify your organization for federal grants: Some state and local programs as well as nonprofit organizations or similar groups might provide small grants for business development. Examples include, but are not limited to, grants to expand child care centers, to develop energy efficient technology, or to boost tourism. According to the SBA, “these grants are not necessarily free money, and usually require the recipient to match funds or combine the grant with other forms of financing such as a loan.”
For more information, check out the pages of the U.S. Small Business Administration at www.sba.gov