5 Grants for SaaS Founders To Help Build A Capital Stack

March 3, 2022

A grant is money that is issued to businesses usually by government agencies. Unlike loans, grants don't have to be paid off. The money is not being borrowed, so there is no interest attached.

Small business grants can come from federal, state, and local governments, as well as corporations. Each of these funding sources has its benefits and drawbacks. For example, the federal government has more grants available, but local government is more likely to reward businesses that give back to the community.

Each grant has a specific focus, and business owners will want to apply to those grants that specifically meet their needs. Unlike loans, grants can't be spent on anything the business deems fit. Instead, grants must be applied to the specified areas explained in the application.

In addition to government and corporate grants, there are special interest grants. A special interest grant is one devoted to empowering potential minority groups. For example, there may be a special grant for women-owned businesses or grants designed to promote job creation in a certain sector..

Grants can be a component in building a capital stack and serve as a way founders can gain working capital for their business concept or start-up.

4 Main Types of Grants

1. Competitive Grant –Based on merits and awarded through a competitive process.

2. Formula Grant – Awarded to predetermined recipients based on a formula as to how the grant funding is allocated, such as start-up grants.

3. Continuation – Provide current recipients the option to extend or renew funding of an existing program.

4. Pass-Through Grants – Issued by a federal agency, transferred to states and local governments to determine eligible groups and eligibility terms.

5 Specific Grants for SaaS Founders

While many different grants are awarded in the United States, we’ve rounded up five specific ones with SaaS founders in mind:

1. Small Business Innovation Research (SBIR) Program

Innovative tech startups that can demonstrate scientific excellence and technological innovation are eligible for this grant and can be awarded $150,000-$1M. Funding is awarded to explore technological potential with the incentive of commercialization, further stimulating high-tech innovation and helping to build a strong national economy.

2. U.S. Economic Development Administration (EDA)

The U.S. Economic Development Administration focuses on innovation and regional collaboration. Awards are granted to startups to build sustainable job growth and strong regional economies. Founders can use the EDA as a resource to find all types and sizes of grants.

3. FedEx Small Business Grant Contest

FedEx offers U.S.-based small businesses the chance to win $50k along with print and business services credit to help support their business. The contest is open to for-profit small businesses with 1-99 employees that has been operating for more than six months and has  shipping and printing needs.

4. Amber Grant

Amber Grant awards $10,000 monthly to a  woman entrepreneur in the U.S. and Canada, with an additional $25,000 grant awarded annually to one of the 12 winners.

5. Federal Agency Assistance

On a final note, the U.S. Department of Commerce has set up an agency that focuses on helping minority businesses. The Minority Business Development Agency (MBDA)  is the only federal agency solely dedicated to the growth and global competitiveness of minority business enterprises. The MDA invests in a national network of MDA Business Centers, Specialty Centers, and Grantees.

For additional information on available small business grants, check out these resources:

sba.gov

uschamber.com

usbusinessgrants.com

usa.gov

If you are looking to learn more about the best funding option for your growing business, talk to us!

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