Federal Small Business Grants for Women

The SBA recognizes that the conventional commercial loan market may not offer many women small business owners access to the capital they need to keep their businesses strong and help them grow. The SBA has developed a number of financial programs for small businesses including the application process. Federal small business grants usually revolve around non-profit organizations, and research projects that help a community and these business grants do not have to be repaid.

The Small Business Administration does offer guaranteed loan programs.

7(a) Loan Program:
This is SBA’s primary and most flexible loan program, with financing guaranteed for a variety of general business purposes. It is designed for start-up and existing small businesses, and is delivered through commercial lending institutions. The major types of 7(a) loans are:

    * Express Programs
    * Export Loan Programs
    * Rural Lender Advantage Program
    * Special Purpose Loans Program

Federal Microloan Program:
This program provides small (up to $35,000) short-term loans for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. It is designed for small businesses and not-for-profit child-care centers needing small-scale financing and technical assistance for start-up or expansion, and is delivered through specially designated intermediary lenders (nonprofit organizations with experience in lending and technical assistance).

The Federal CDC/504 Loan Program

This program is a long-term financing tool for economic development within a community. The 504 Program provides small businesses requiring “brick and mortar” financing with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. A Certified Development Company (CDC) is a private, nonprofit corporation set up to contribute to the economic development of its community. CDCs work with SBA and private sector lenders to provide financing to small businesses. 

Typically, a 504 project includes:

• A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost;
• A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture with a junior lien covering up to 40 percent of the total cost; 
• A contribution from the borrower of at least 10 percent equity.

Eligibility To be eligible for a CDC/504 loan, the business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

Federal small business grants assume that you are not making a profit and therefore the grant does not have to be repaid. To start and operate a profitable business you would most likely need one of the above resources to get financing for your small business. The federal government and local state government agencies do provide those resources for you.

See also:
BusinessWomenGrants.org
BusinessWomenLoans.org