Green business grant totals are up over 1,700%
Throughout the sluggish economic recovery, growth in green businesses has consistently been somewhat of a bright spot in the U.S. economy. In fact, a review of the data all the way back through 2001 shows that growth rates for green businesses have risen faster than the overall economy each of the last 13 years. This is the case even in industries that were greatly impacted by the recession of 2008. For instance, from 2008 through 2011, although the U.S. construction industry shrank by 17%, the green building segment flourished, growing by 1,700% over that same time period. Due to this steady growth and the great economic potential the sector offers, more and more entrepreneurs are launching green startups. Green business startups can be seen in nearly every industry sector including energy, housing, construction, manufacturing, agriculture, retail, the service sector and more.
Funding your startup with a grant
The robust growth in green businesses is accompanied by strong demand for capital to fund all these green startups. And with access to capital being so tight and the competition for dollars so fierce, grants are a hot topic among cash-strapped entrepreneurs looking to start or expand green businesses. Grants are particularly of interest as a funding mechanism because unlike private sector investments, they are non-diluting, allowing entrepreneurs to maintain control of their businesses.
Each year, the United States government supports businesses by providing billions of dollars in grants administered by 26 different federal agencies.
More than 1,000 business grant opportunities are offered through the federal government each year and thousands more are offered through state and local agencies.
Out of the approximately $500 billion in grants the federal government gives out every year, only about 5% ($25 billion) are awarded to businesses. The rest go to states, governments, governmental agencies, nonprofit organizations, universities, schools and school districts.
When the federal government does provide grants directly to businesses, most are awarded to support research and development activities in areas such as technology, energy and energy efficiency, healthcare, public safety, job training and education, and others. All of these sectors offer attractive opportunities for innovative green business concepts.
Although 5% may not seem like a lot, it still amounts to $25 billion in grants that the federal government does award to businesses each year.
Though you won’t find any federal grants for starting a business or paying off debts, the range of green business activities that federal grants support is nonetheless broad. Recent examples of funded green business grants I have written include a $1 million grant to develop a renewable energy technology and a $9 million grant to commercialize a new concept in computing (U.S. Department of Energy). Other examples of awarded business grants include $91 million to develop solar PV cells (U.S. Department of Energy), $1.1 million to develop an energy efficient communications infrastructure (U.S. Department of Agriculture) and $800,000 to support virtual job skills training in green industries for rural populations (U.S. Department of Labor).
If you want to find green business grant opportunities available through the federal government then Grants.gov is where you should start. A full 100% of all grant opportunities offered by all 26 federal grant-making agencies are available through Grants.gov.
There are some facts you need to know about government grants for business however, before you look at them as a viable funding option for your green startup.
- The federal government does not give out grants to either start a business or pay off business debt. Of the $25 billion in federal grants awarded to businesses last year, none of them were for starting a business or paying off debt.
- If you do want to seek a federal grant to fund your green business, remember that they are challenging to apply for, are only awarded to projects and activities that are closely aligned to national priorities, and most important, they demand a great deal of responsibility and accountability. However, if you are successful, green business grant awards can range from $10,000 up to the millions.
Some state governments also offer green business grants too.
State grants tend to be focused on technology development, education, job skills training and job creation, with awards ranging from $10,000 up to several hundred thousand dollars. Many local governments also offer grants to support area green businesses. The green business grants offered through local governments are generally smaller, with most grants falling between $1,500 up to about $10,000. Check with your or local economic development office to see what might be available where you live.
If you are looking for a grant to start a green business then you will need to focus your search on private and corporate foundations.
Everything you need to know to connect with local, state, and Federal grants for business.
The majority of foundations do not award grants for business projects but there are some that do, with many being focused on women’s and minority issues. Otherwise, your best bet to find a grant to start a business is to search for business competitions. These usually sponsored by a private foundation, a corporate foundation or a university and typically offer grants of up to $100,000 along with ongoing access to expertise and technical assistance. Your favorite search engine is your best bet for uncovering state or local grant opportunities and business grant competitions in your area.
However, be cautious before proceeding and remember that no governmental funding agency, private charitable foundation or corporate foundation will ever charge a fee to apply for a grant. Also, be aware that researching, applying for and obtaining a business grant can be a time-consuming process that can take up to six months. Nevertheless, with the proper preparation and a bit of tenacity, it is possible to fund your green business with government grants.
Need help with grants and funding? Contact Ron Flavin today.