As a small business owner with little funds, running your business operations efficiently can be difficult especially when money is involved. The solution to finding funds for your business operation can be to take a loan or grant in most cases. Grants are often the best choice for small businesses because the money is always free, with no paybacks or interest needed.
What is a business grant?
A business grant is money given to a business by federal, state, or local governments, private organizations, foundations, or corporations to fund their business ideas or grow their businesses. A grant is not repaid and is a good choice for funding a new business.
However, most small businesses do not qualify for small business grants for various reasons, like not meeting the goals of the organization giving the grants.
In this article, we will be sharing with you tips on where and how you can get a business grant.
Difference between a grant and a loan.
It is important to understand the financial options available to help fund your business. There are different funding sources for business but the two common ways are loans and grants. Before you choose which to go for, you need to understand the differences.
- A loan requires that you repay the money you borrowed, most times with interest. While a grant does not require repayment.
- Loans are given to individuals and businesses through financial institutions, private money lenders, family members, or friends, which often require collateral and a signed agreement between the two parties. A business grant is gotten through the government, private organizations, and foundations without any agreement. All that may be needed is your business idea.
- A loan is easier to get and access while a grant is competitive and difficult to obtain.
- The amount gotten from a loan is higher than the amount you can get from a grant, except in rare cases
Why a small business startup needs a grant in Nigeria
The major reason why many small business startups need grants is to fund the business. However, there are other reasons that businesses apply for grants. These are:
- Capital: Startup businesses need enough capital to boost their operations and fulfil their goals as a business.
- Purchase of assets: Growing a business often requires that you purchase assets like machinery, vehicles, or generally what will make your business easier depending on the need of your business.
- Growth funding: Many people need grants to grow their businesses to the next level. Either to increase sales, expand the range of products or services, or move to a new location, a grant can help sort them out.
Related: How to start and run a business on a tight budget.
Where and how to get grants for small business startups in Nigeria?
The process of getting a grant is a very long one, but with the right guide and information, it will get easier since you know what to expect.
How to apply for a grant?
Before applying for a grant, there are factors you need to consider, not all grants are for you.
- Prepare your business plan: Business grants are given ideas to people with good business ideas that will have an impact on society. The goal here is to have a concrete business grant that will convince the granter that you deserve the grant.
- Eligibility: Before applying for a grant, you need to check if you are eligible for it. Some grants are limited to a particular business, location, or sector. Be sure that it is a business grant you are applying for. There are other grants like health, research, or agricultural grants. Every grant has its requirements that you must follow before you can be given the funds. Ensure that you meet all the requirements needed before applying.
- Submit your application: Once you have carried out the previous step successfully, you can submit your application for the grant either physically or online.
Where to get grants?
In Nigeria, there are many sources where you can get grants for your business. Some of them include:
- Tony Elumelu Entrepreneurship Programme (TEEP): This program is launched every year by Tony Elumelu through his foundation, Tony ELumelu Foundation. Every year, 1000 entrepreneurs are selected across Africa after carefully reviewing various businesses based on market feasibility, clear financial goals, and the capability to run the business. The application is always opened at the beginning of the year, check eligibility here.
- Bank of the industry: The BOI runs a Youth Entrepreneurship Support Program for young and talented entrepreneurs who want to start their businesses. The program is aimed at reducing the rate of unemployment of the youths in the country. Check eligibility here.
- Diamond Bank BET program: The Building Entrepreneurs Today (BET) program was designed by the diamond bank to support entrepreneurs. The program is done yearly and people are chosen to undergo 6 training sessions. In the end, the top 5 entrepreneurs are awarded financial grants to start their businesses. Click here to check for eligibility.
- African Women's Development Funds (AWDF) grants: this foundation supports local, national, and regional women's organizations working towards the empowerment of African women. If your business is related to women empowerment you can apply here.
- The Lagos State Employment Trust Fund (LSETF) was created by the Lagos State Employment Trust Fund Law to provide financial support for the people of Lagos state. The funds are to be invested in small-scale businesses to help grow their businesses. For more information click here.
- AYEEN Financial Grants: Africa's Young Entrepreneurs is focused on empowering entrepreneurs in Africa by creating a platform that will help develop the next generation of outstanding African entrepreneurs. The winners are awarded prizes to start up their businesses. The foundation monitors the businesses for a year. Check eligibility here.
If you need pointers on ways to effectively grow your small business, there is a lot of information available on our blog page.
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