Small businesses are always giving back. They give people places to work, communities a way to acquire services, and me something to write about. They also give governments lots of their hard-earned cash. According to the IRS, corporations pulling in under $250 million per year generated over $38 billion in income tax in 2013. Not a bad haul.
Now, instead of going on about how we need to fix this, that, and the other thing about corporate income taxes, all I’m going to say is this—for any amount of money, let’s hope those businesses get something in return.
The “something in return” we’re looking at today is a snapshot of assistance that small businesses can get from the federal government. These are programs you can tap into in order to expand your business. Some are very targeted, and some are broad.
Take a look and see which ones work for your business and goals, and then go see if Uncle Sam is willing to help out those who help him.
Fun fact: Uncle Sam didn’t have a standardized appearance until James Montgomery Flagg painted him for the famous “I Want You” poster in 1917. Sam had been floating through popular culture since the early 1800s, with one of the more well-known, though almost certainly false, stories claiming he was based on Sam Wilson, a meatpacker, who supplied troops during the War of 1812.
Back to the money.
I’m listing these out in order from broadest to most niche, so you can fill your boots at the top and then search further down the list for potentially overlooked gems.
1. Tax breaks for small businesses
Before you spend hours/weeks/years chasing small government grants and filling out forms in triplicate, check out the government’s largest and easiest small business assistance program—tax breaks.
You can write off expenses such as:
- Utility bills
- Meals consumed in the pursuit of cash
- Rented machinery fees
- Professional fees (for example, the money you’re going to pay your incredible accountant)
Taxes can eat up a huge chunk of your revenue—Toyota paid about $8 million in taxes in 2016—so try to keep some of it in-house.Founders tend to focus on the best-case scenario and big wins, but prioritization and ROI are the name of the small business game. Tax breaks are predictable, simple to manage, and can make a real difference, so focus on those first.
2. SBA-backed loan guarantees
This is one of the most straightforward ways in which the U.S. government can help you. The Small Business Administration (SBA) steps in to make you look more attractive to lenders by backing your crazy, simple, or “disruptive” idea.
In the SBA’s own words: “The SBA guarantees that these loans will be repaid, thus eliminating some of the risks to the lending partners. So when a business applies for an SBA loan, it is actually applying for a commercial loan, structured according to SBA requirements with an SBA guaranty.”
While this is a great setup for businesses, it’s unlikely that you’ll just run out and fire this up tomorrow. SBA-backed loans are meant to be used only when the borrower doesn’t have access to “other financing on reasonable terms.”
The requirements for a general purpose SBA loan are fairly clear. The basic qualifications include the following:
- You’re operating at a profit
- You have a decent bit of equity in the business
- You can demonstrate both a need and a good plan for the money
- You don’t owe the government any cash
There are a handful of exceptions. You’re not allowed to be engaged in illegal activity (for some reason), but most small businesses should be able to meet the demographic requirements.
3. SBA’s 8(a) Business Development Program
If you run a small business, and you fall under the SBA’s definition of “socially and economically disadvantaged,” you may be eligible to participate in the sexily named 8(a) Business Development Program. Rolls off the tongue, doesn’t it?
Ignoring its branding problems, the Business Development Program is a great source of funding and support for some business. Its stated mission is to “help small, disadvantaged businesses compete in the marketplace,” which it does through education, contracting, and the creation of joint ventures.
For instance, as an 8(a) participant, you work with a group of specialists who can help you understand and bid on government contracts. They’ll support you while you learn the system and may even be able to set you up with other businesses to participate in larger proposals.
All of this has the higher level goal of growing small, historically disadvantaged firms and graduating them from the program. However, 8(a) work won’t be your sole source of income, since you have to balance government contracts with external revenue.
Hopefully, the SBA’s assistance will give you the resources to compete with bigger players, at which point you move on from its embrace and become a mentor and small business cultivator yourself.
4. Grants.gov small business grants
If you’re not into the whole repayment thing, you might be looking for a grant. Or maybe you just want to rob Mel Gibson. Payback is an underrated movie. There. I said it.
Grants give you funding for a specific venture, unlike loans, which can be used for more general financial purposes. As such, you’ll need to have a specific purpose that the government deems worthy of American taxpayers’ cash.
Grants.gov is the website you use to search and apply for federal grants. Each grant is given a category, so be sure to check out the “small business” grants. Then, settle in for a long read.
Right now, there are over 1,000 grants listed in the site’s small business section. I’m guessing there’s something for everyone, but I didn’t read through all the options, and I don’t know all the people, so that might not be true.
To give you an idea of the range, we’re talking about everything from “Supporting Tunisia’s Agribusiness Sector” to “Renewable Energy Systems and Energy Efficiency Improvements Program.”
You may have already guessed from the titles, but a lot of these grants are meant to be used for education and research.
Grants.gov is great if you’re in tech, scientific research, or anything related to medicine, as those areas often have targeted goals that align well with grant programs.
5. SBIR/STTR programs
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are both designed to give small businesses and entrepreneurs access to federal funding for research and development.
According to the SBIR, the program has “awarded over $43 billion to research-intensive American small businesses” since its inception in 1982.
Styled as “America’s See Fund,” the programs focus on either federal R&D with commercial potential (SBIR) or R&D pursued alongside a research institution (STTR). Due to some overlap—like when federal research takes place at a research institute—the line between the two programs is fuzzy, at best, to outsiders.
In fact, In4Grants published a whitepaper a few years back helpfully titled “SBIR vs. STTR: Do you really understand the differences?” No, seems to be the general consensus.
Bonus! Wood Utilization Assistance!
Saved for last, we’ve reached the best. The Department of Agriculture will hook you up with a grant if your business helps with forest management. I love everything about this grant.
Recipients get $50,000 to $500,000 on average (nice tight range; thanks, DoA) for projects such as “building with wood and cross-laminated timber,” “overcoming building code barriers for tall wood buildings,” and researching “ woody biomass energy systems.”
Dust off the undervalued softwoods and get applying today.
Finding a balance
Relying too heavily on government assistance for your small business is a shortcut to a bad time. One of the things I love about the 8(a) program is its focus on helping you grow a sustainable and non-government dependent business.
With the exception of the tax breaks—and even including some of those—there is no guarantee with these programs. So instead of relying on them entirely, take some of the small wins you can gain from them and leverage them to boost your skills and business resume.
From there, you can go out and conquer the world on your own terms. If you’ve used any of these programs in the past or have others that have worked well for you, drop a line in the comments or shoot me an email. Good luck!