Federal Grants to Launch Small Businesses

BY DELLA KAPOCIUS

Finding the money to finance a small business can be the biggest challenge an entrepreneur will face. Most will rely upon their own resources, including personal savings, credit and sometimes liquidating personal assets. Many will borrow from friends and family or secure commercial loans. A few will receive funds from investors or grants.

Yes, grants. Grants for startup businesses do exist but they are hard to locate, often restricted to specific purposes, and the competition is fierce. Landing a grant is not easy but the chance to access free money — even when strings are attached — can be worth the effort.

One source of grants is the federal government, which recognizes that innovation thrives in small business settings but aspiring or early stage entrepreneurs typically lack the resources to test feasibility or do other kinds of research. The Small Business Innovation Research and Small Business Technology Transfer programs were established to allow small businesses to engage in federally funded research and research and development (R/R&D). Federal agencies involved with R&D with extramural budgets of $100 million or more are required to set aside a portion of those budgets to finance cutting-edge technologies developed by small businesses.

Since 1987, North Dakota companies have received 145 SBIR/STTR grants totaling $33,184,082. During the same timeframe, South Dakotans were awarded 141 grants for a total of $25,969,323 and Minnesota businesses secured 2,210 awards totaling $587,402,018. Nationwide, $2.2 billion is available through these programs annually through 11 participating federal agencies. The competitions that are accepting applications can be found easily at www. grants.gov by searching for either SBIR or STTR.

In addition to finding the information on the grants that are available, businesses seeking government funds often need assistance with other aspects of their project. Finding the particular federal agency that might be interested in the company’s technological innovation can be time consuming. Federal grant applications are lengthy and many forms must be completed. In some cases, an SBIR/STTR applicant might need advice on how to start a company or how to locate the right university researcher to join the project team. It might sound daunting, but there are resources for these grant seekers.

Most states have a designated nonprofit organization to assist applicants with the SBIR application process and some private companies provide these services for a fee. In North Dakota, applicants can turn to the University of North Dakota’s Center for Innovation, which has been the host of the North Dakota SBIR program since the 1980s. Funded by a grant from the U.S. Small Business Administration, the UND Center for Innovation currently provides these services free of charge. Information on the programs can also be found at the SBA’s website for the SBIR and STTR programs: www.sbir.gov.

In the end, the impact of SBIR and STTR grants reaches far beyond the launch of small companies. To paraphrase the SBA, small businesses are enabled to explore their technological potential and are provided with the incentive to profit from commercialization. By including small business in the nation’s R&D arena, high-tech innovation is stimulated and the U.S. gains entrepreneurial spirit as it meets its specific research and development needs. PB

Della Kapocius Grant Writer, University of North Dakota Center for Innovation Grand Forks, N.D. della@innovators.net