Small business grants for eCommerce sellers

Everyone wants money they don’t have to pay back. That’s what makes eCommerce small business grants so competitive. Grants are difficult to obtain because there are a limited number available. With over 33 million small businesses in the United States, there’s just not enough free money to go around.

Just because something is competitive, however, doesn’t mean it’s not worth trying. In fact, applying for grants has little risk and high reward, so it’s often worth your time and effort. We’ll break down the different types of small business grants that you may be eligible for as an eCommerce business owner and how to apply for them.

What Are Small Business Grants?

Small business grants are sums of money that the government, foundations, or other companies give out to finance small businesses. Grants don’t need to be repaid, but are often aimed at furthering a specific cause or goal.

While the definition of “small” depends on industry, small businesses are privately owned companies and have fewer employees and lower revenue than regular sized businesses. In general, small businesses typically have fewer than 500 employees, although there are industries where they can have up to 1,500 employees.

At any given time, thousands of grants are available to small businesses across the US. The average amount awarded ranges from around $1,000 to $10 million. Generally, the higher grant amounts are split between multiple businesses.

From 2020 to 2022, the United States federal government awarded a total of $390 billion in federal small business grant funding for pandemic relief. That means each business received an average of almost $100,000. That much free capital can go a long way toward obtaining inventory or funding market research without the stress of cutting into your revenue and profits.

Types of Small Business Grants

When filling out applications, it’s essential to know what type of grant you are applying for. Not every grant is created equal and eligibility requirements vary. If you don’t read the qualifications carefully, you may miss a crucial detail that eliminates you right from the start.

Keep in mind that certain grants might fall into more than one category. For example, you may have a federal grant for minorities or women. Here is a general description and example of each type of grant.

Federal, state, and local grants

Federal, state, and local grants come from the various levels of government. These organizations give out these grants to fund private companies that provide government research and development that, once the project is completed, is ready for the consumer market.

Examples of federal, state, and local grants include product development and safety testing. The federal government itself does not provide grant funding for business, but instead facilitates funding through the Small Business Association.

Small Business Association grants

The Small Business Association (SBA) is the leading federal agency that facilitates small business and eCommerce grants and loans in the United States. While the government itself does not provide eCommerce financing itself, the SBA website hosts a collection of grants that suit many small business funding options.

SBA grants provide funding to entrepreneurs and government partners to finance technology, education, and innovation research and development. If you have a small business that focuses on the areas of science, technology, engineering, and mathematics (STEM), the SBA might just have a grant for you.

For example, the National Institute of Health has a variety of small business grants for health-related research and the US Department of Commerce Minority Business Development Agency (MBDA) provides assistance to minority-owned small businesses.

If your business is science or technology based, take a look at the two seed funding programs provided by the National Science Foundation (NSF): The Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer Program (STTR). Both SBIR and STTR are rooted in science and technological research and development.

Small Business Innovation Research Program (SBIR)

The SBIR program does not require you to collaborate with a non-profit agency to conduct your research and development. However, utilizing or assisting a non-profit agency is still an option. The program is split up into two phases where you receive up to $150,000 for six months in phase one to conduct research. The second phase provides up to $1 million over a period of 24 months to develop the product, including manufacturing and testing.

Small Business Technology Transfer Program (STTR)

The STTR program does require you to collaborate and work with a US non-profit agency whereas it was an option for SBIR programs. The work in phase one must be split between the small business and the US non-profit research agency. You can receive up to $225,000 for 12 months in phase one (research stage) and up to $1 million for 24 months in phase two (development stage).

Ultimately, the difference between the SBIR and STTR grants is whether or not you want a US non-profit research agency as a partner. Naturally, you will receive more funding if you use a government research partner than if you go it alone.

Non-government grants

While the government is a great source of grants for small businesses, there are also a number of non-governmental companies and organizations that offer grants that may be suitable for small businesses.

Companies from outdoor clothing company Patagonia to The National Association for the Self-Employed (NASE) provide grants to a variety of small businesses. It’s a good idea to do some research to find out if any non-government grants are relevant to your business.

Corporate grants

This type of grant comes from large corporations who are looking to fund eCommerce and small businesses. This isn’t just because big companies care about small business competitors, but because they want to prove to the community that they are productive in the development and progression of the economy.

Corporations benefit from helping level up small businesses, so it’s a win-win. Corporate grants can also be incredibly competitive, but they usually have fewer regulations than government grants.

Grants for minorities, women, and service members

Minorities and women are grossly underrepresented in the United States business ecosystem. As of 2021, only around 20% of small businesses in the United states are minority owned. Around 42% of small businesses are owned by women, and 6% of US businesses are veteran owned.

There are a number of grants available that are specifically targeted to these groups in order to fill the gaps and provide essential funding and resources to these marginalized groups.

For women-owned businesses, these include the Amber Grant, the Cartier Women’s Initiative Award, and many more. Grants for minority owned businesses include The Coalition to Back Black Businesses and the Asian Women Giving Circle (AWCG) among others. For veterans and service members, grants are available through the SBA, Hivers and Strivers, and several other organizations.

Grant continuation/renewal

If you have received grant money for your business in the past, continuation or renewal grants may be an option. Many grant recipients can more easily get a second phase of grant installment to fund your projects. Continuations and renewal grants may require you to compete with other previous recipients to show the progress you have achieved as a direct result from receiving the initial grant.

This type of small business grant may require you to create a new pitch or presentation to show you have utilized the funding in the way you promised so they can verify you will use the additional funding appropriately.

How to Apply for Small Business Grants

Before applying for a small business grant, it’s important to ensure that you meet the eligibility requirements.  Small business grant applications vary in length and difficulty, so be ready to dedicate some time to the process. You may also want to hire a grant writer. They know the ins and outs of how to write a successful grant application.

Here are the general steps that most small business owners should take when applying for small business grants. For more information on applying for grants, visit the US government website hub that hosts thousands of grants from various sources.

1. Determine your business type

While there is nothing saying you can’t apply for grants you do not qualify for, you don’t want to waste your time – or the grant agency’s time. One of the important eligibility factors is determining your business type. Many grants are only available to a certain type of business, so it’s a good idea to sort that out first.

• Sole Proprietor – A sole proprietorship is a type of business that is unincorporated and run by a single person. Sole proprietors take on many of the responsibilities of their businesses but that does not mean they don’t have employees. Sole proprietors do not have shareholders and the single owner is entitled to all of the profits after taxes.
• Partnership – Partnerships are shared ownership of a business between two or more people. Each person involved in the partnership has partial ownership and the ownership is usually equal. However, the ownership does not have to be equal in the way they contribute or the work that is distributed.
• Corporation – A corporation is divided into two categories: S Corp or C Corp. S Corp companies have the advantages of a tax-exempt partnership while still offering up to 100 shares of stock. C Corp companies are their own legal entities and are responsible for federal and state taxes. C Corps are the more common type of incorporated business.
• LLC (Limited Liability Company) – Many business owners choose an LLC in order to protect themselves from debt or other liabilities. An LLC is its own entity that combines some of the elements of sole proprietorships and partnerships with those of corporations.

2. Find grants within your business type and industry

After you have determined your business type, you can search for grants within that category. It’s important to stay within your business type, but equally as important to search for grants within your industry. Don’t try to apply for grants related to pharmaceutical research when you are selling a technological product. If you apply for a grant that does not fit your industry, you’ll be quickly eliminated from the process.

3. Determine your eligibility

Read the requirements and qualifications very carefully. You may have to adjust some business practices, attempt to obtain finances through other means first, or shift your focus to better align with the eligibility requirements.

4. Determine your spending goals

Part of your application will likely include answering questions regarding how you plan to spend the grant money. Create a detailed outline that shows where each dollar will be spent. Outlining your expenses and how grant money will allow you to research and develop your product or expand and grow your business is essential to formulating a business plan. Grant giving agencies want to ensure that the money is not misused, so this is a crucial part of your application.

5. Write your pitch

Depending on the application requirements, you may need to tailor your pitch for the specific grant-giving body. Generally speaking, you should explain why they should give you this opportunity over your competitor. You will need to include a problem that you are trying to solve and how the grant will allow you to solve this problem. You will also be required to show how you will use the money and how you will track success. Provide examples of concepts and project development that you have achieved thus far. Being as specific as possible is often beneficial and can raise your chances of success.

6. Submit your application

Ensure all documents are attached, well written and carefully edited, and accurate.  Then hit submit (or mail in your application)!

An Alternative to Small Business Grants for ECommerce

Small business eCommerce grants are competitive and hard to come by. Depending on your background and what you sell, you may have trouble finding a relevant grant in your field.

If you are an eCommerce business owner looking for an eCommerce funding solution and grants just aren’t working for you, 8fig is another option.

8fig works with successful small to medium sized eCommerce businesses in order to provide them with both the funding and the serious financial tools they need to reach their full potential. Funding from 8fig is fast, flexible, and equity-free, and it’s aligned to your supply chain needs in order to maximize your cash flow. Sign up for an 8fig Growth Plan here and see how we can help you take your business to new heights.