Grants can be a vital source of funding for small businesses and non-profit organizations, providing them with the necessary capital to grow and achieve their goals. That said, grants can provide advantages well beyond the actual award including capitalizing new talent, positioning the small business or non-profit for traditional banking products and services, and bringing banking, tax, and accounting partnerships.
For many small businesses, grants can provide the early stage capital to progress from early launch mode to more of a scaled operation. This early-stage funding can be critical in helping small businesses build their infrastructure, hire staff, and develop their products or services. Once a small business has established a track record of success, they may then be eligible for SBA loans, which provide larger amounts of capital at a lower interest rate. A little known fact is that grants can provide the down payment for SBA and other loans.
Grants can also be used to pay for products and services deployed in disadvantaged markets. An example is for an air conditioning company that wants to provide products and services to homeless shelters which might not be able to afford those products and services. The grant can ensure the air conditioning company is paid at full profit margin. In this manner, grants can open new markets.
As a small business grows and matures, they will want to migrate to conventional, lower-cost banking products. These products can include lines of credit, term loans, and other financial offerings that are typically only available to larger businesses.
However, the value of a grant goes beyond just providing funds for a project or program as they can capitalize new talent, a larger facility, better tooling, a larger inventory a lower cost due to volume purchasing, better marketing, as well as being the on-ramp to conventional, lower-cost banking products. Many grants require hiring new staff or outside consultants, which can help drive the organization develop new skills and capabilities. This can be particularly valuable for small businesses that are looking to expand their operations or enter new markets.
It’s important to recognize the necessity of a team of professionals to help manage the grant process and maximize its effective use. This team should include a grant professional partner, a banking partner with expertise in SBA loans and conventional business lines of credit, and tax and accounting professionals to manage prospective tax liabilities.
A grant professional partner can help small businesses and non-profit organizations identify potential grant opportunities, prepare and submit grant proposals, and manage the grant funds once awarded, as all grants require reporting.
A professional grant partner can also help ensure compliance with grant requirements and lead in the building of a strong relationship between the grantor and grantee. Establishing and building that bridge can help organizations secure future grant funding because most grant foundations fund prior grantees at something approximating six to one award for recurring winners as opposed to first time grant winners from a particular foundation.
A banking partner with expertise in SBA loans and conventional business lines of credit can help small businesses and non-profit organizations manage their finances and make longer term and more cost effective strategic decisions about funding.
Tax and accounting professionals can help small businesses and non-profit organizations manage their finances and comply with tax regulations and pay no more than is lawful in terms of tax liabilities.
Depending on how the grant is awarded to the small business or non-profit, the tax implications may or may not be relevant. However, having a team of professionals in place can help organizations manage potential tax liabilities and ensure that grant funds are used effectively to achieve their goals.
In conclusion, grants can provide significant value to small businesses and non-profit organizations well beyond the cash value of the grant. By leveraging grants to establish a track record of success, attract new talent, and migrate to conventional, lower-cost banking products, organizations can position themselves for long-term growth and success.
So, what is your grant story? We’d love to hear it. Drop by our website grantsforyou.org; we’d love to answer any questions and partner with you.
Warm Regards,
Neil Reid