How to Find Small Business Grants (and Avoid Grant Scams)
Where to find legitimate federal, state and local small business grants, what they actually fund, how to apply and the warning signs of grant scams.
Start with Grants.gov for federal programs, SBIR.gov for research funding, USDA Rural Development for rural and farm businesses, and your state economic development agency and local Small Business Development Center for state and city grants. Most grants fund specific purposes, not general startup costs. Never pay a fee to get a grant, because that is a classic scam sign.
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Search “free money for small business” and you’ll find ads promising thousands in government grants for anyone who applies. Most of those are misleading, and some are outright scams. Real small business grants exist, but they are narrower, more competitive and more paperwork-heavy than the ads suggest.
The good news is that the legitimate sources are free to search and easy to find once you know where to look. This guide explains what grants really fund, where to find federal, state and local programs, how to apply and how to spot a grant scam before it costs you money.
This is general information, not legal, tax or financial advice.
What small business grants actually fund
A grant is money you don’t repay, which is why competition is fierce. Most grants come with a specific purpose, rules on how the money is spent and reporting requirements.
The first thing to know: the SBA does not provide grants for starting or expanding a business. It says so directly on its grants page. What it does offer is funding for research and development, export promotion through state programs, and grants to nonprofits that give free counseling to business owners.
Grants are most often available for:
- Research and technology development, through SBIR and STTR
- Rural and agricultural projects, such as energy upgrades or value-added farm products
- Exporting, through state trade programs
- Specific local goals, such as storefront improvements, hiring in certain areas or recovering from a disaster
- Workforce training, often through state agencies
- Particular industries or communities, through foundations and corporate programs
General startup costs, paying yourself or covering ordinary bills are rarely funded by legitimate grants.
Key takeaway: Search by purpose, not by “free money.” A grant for a specific project, place or industry is far easier to find and win than a general business grant, and legitimate grants never charge you a fee to apply or receive the money.
Where to find legitimate grants
| Source | What it offers | Best for |
|---|---|---|
| Grants.gov | The official list of federal grant opportunities across agencies | Searching all federal programs in one place |
| SBIR.gov | SBIR and STTR research funding from federal agencies | Tech, science and R&D startups |
| USDA Rural Development | Rural energy, value-added producer and rural business programs | Farms and rural small businesses |
| SBA STEP program | Export support delivered through state governments | Established businesses entering foreign markets |
| State economic development agency | State grants, training funds and incentives | Expansion, hiring and relocation projects |
| City or county economic development office | Facade, storefront and neighborhood grants | Main Street and local businesses |
| Small Business Development Centers and SCORE | Free advice and help finding local programs | Any business that needs guidance |
| Foundations and corporate programs | Competitive grants for specific groups or goals | Businesses that match the sponsor’s mission |
Federal grants
Grants.gov is the official place to search federal grants, and the FTC notes that its list is free. Many federal grants go to nonprofits, governments and research institutions rather than for-profit businesses, so filter by eligibility.
To apply through Grants.gov, you need a Unique Entity ID (UEI) and an active registration in SAM.gov. Registration is free but can take several weeks, and SAM registration must be renewed every year. Start this early.
SBIR and STTR
The Small Business Innovation Research and Small Business Technology Transfer programs fund small companies doing R&D that meets federal agency goals. According to SBIR.gov, eligible firms generally have 500 or fewer employees, are majority-owned by US citizens or permanent residents and do the work in the US. Awards come in phases, starting with a feasibility study.
The programs lapsed after September 30, 2025, and Congress reauthorized them in April 2026. Agencies have been restarting solicitations at different speeds, so check each agency’s current notices on SBIR.gov.
USDA Rural Development
USDA offers grants that can help rural small businesses and agricultural producers. The Rural Energy for America Program (REAP) provides grants and loan guarantees for renewable energy systems and energy efficiency improvements. USDA’s program pages describe grant shares of up to 25% of eligible project costs for many projects, and up to 50% for certain project types such as energy efficiency improvements. Funding levels and rules change, so confirm with your state Rural Development office.
State and local grants
State economic development agencies, cities and counties often run the programs most useful to Main Street businesses, such as facade improvement grants, small business recovery funds and job training grants. Search your state’s economic development website and your city’s small business page, or ask your local Small Business Development Center. Our state top lists can help you find local tech and service providers once you’re funded.
How to tell a real grant from a scam
The FTC warns that offers of free government grant money for personal or business expenses are a common scam. Watch for these signs:
- They contacted you first. Unexpected calls, texts, emails or social media messages saying you qualify for a grant. Real agencies don’t do this.
- They want a fee. “Processing,” “release” or “tax” fees before you get the money. Legitimate grants don’t charge you to receive funds.
- Unusual payment methods. The FTC says no government agency will ask you to pay with gift cards, wire transfers, cash reload cards or cryptocurrency.
- Guaranteed approval. Real grants are competitive.
- Official-sounding names. Scammers use names that sound like real agencies and spoof caller ID to look official.
- Requests for bank logins or your full Social Security number by phone or message.
- Pressure to act now. Deadlines invented to rush you.
The SBA says it only communicates from email addresses ending in @sba.gov. Treat anything else claiming to be SBA as suspicious. For more on spotting fake messages, see our guides to phishing emails and scam texts. If you’ve already paid, follow our steps for what to do if you got scammed and report it at ReportFraud.ftc.gov.
How to apply for a small business grant
- Define your project. Write a 1-paragraph description of what the money would pay for, the cost and the result, such as new equipment, jobs created or energy saved.
- Get your registrations in order. For federal grants, get your UEI and SAM.gov registration. Have your EIN, business registration and bank details ready.
- Search by purpose and location. Use Grants.gov, SBIR.gov, USDA, your state agency and your city, filtering for for-profit eligibility.
- Read the full notice. Check eligibility, deadlines, matching fund requirements, allowable costs and reporting rules. Many grants require you to cover part of the cost or spend first and get reimbursed later.
- Gather documents. A budget, financial statements, tax returns, quotes from vendors and a short business plan are common.
- Write to the scoring criteria. Grant reviewers score against published criteria. Address each one directly and clearly.
- Get help. Small Business Development Centers and SCORE offer free application help. Be cautious about paid grant writers who promise results.
- Submit early. Federal systems can be slow near deadlines.
- Plan for reporting. Track spending and outcomes so you can meet the grant’s reporting requirements.
Taxes and strings attached
Grants often come with obligations:
- Taxes. Many business grants count as taxable income. USDA, for example, notes that REAP grants are taxable and recipients get a Form 1099-G. Ask your tax professional how a grant affects your return.
- Matching funds. Some grants pay only part of the project cost.
- Reimbursement. You may have to spend first and get paid back.
- Reporting and audits. You may need to show how money was spent and what it achieved.
- Restrictions. Funds may only be used for approved costs.
If grants don’t fit your plans
Most businesses won’t fund their whole plan with grants. Other options include SBA loans, microloans, community development lenders and, for some, online business loans, which are faster but can be far more expensive. Energy-related projects may also qualify for tax incentives; our guide on whether solar is worth it after tax credit changes covers recent changes.
The bottom line
Legitimate small business grants exist, but they fund specific projects and are competitive. Search official sources first, including Grants.gov, SBIR.gov, USDA Rural Development, your state and your city, and use free help from SBDCs and SCORE. Never pay to receive a grant, and treat unexpected grant offers as scams until proven otherwise.
Sources
- SBA: Grants — SBA’s grant programs and its statement that it does not fund starting or expanding a business
- Grants.gov: Applicants quick start guide — UEI and SAM.gov registration to apply for federal grants
- SBIR.gov: Eligibility tutorial — SBIR and STTR eligibility rules
- USDA Rural Development: Rural Energy for America Program — REAP grant shares and eligibility
- FTC: Government grant scams — warning signs of fake grant offers
- Congressional Research Service: Small business research programs reauthorized — April 2026 SBIR and STTR reauthorization
Frequently asked questions
Does the government give grants to start a small business?
Generally no. The SBA says it does not provide grants for starting or expanding a business. Federal grants for for-profit businesses usually fund specific goals such as research and development, rural energy projects or exporting. State and local governments sometimes offer startup or storefront grants, so check your state economic development agency and city small business office.
Where can I find legitimate small business grants?
Start with official sources: Grants.gov for federal programs, SBIR.gov for research funding, USDA Rural Development for rural and farm businesses, your state economic development agency, and your city or county. Small Business Development Centers and SCORE mentors can point you to local programs for free. Some foundations and corporations also run grant competitions for specific groups.
How do I know if a grant offer is a scam?
Treat it as a scam if someone contacts you out of the blue, asks for a fee to release funds, wants payment by gift card, wire or crypto, guarantees approval or asks for bank logins. The FTC warns these are common signs. The SBA only emails from addresses ending in @sba.gov. Report suspicious offers at ReportFraud.ftc.gov.
Are small business grants taxable?
Often yes. Many business grants count as taxable income, and some agencies issue a Form 1099-G. USDA, for example, says its REAP grants are taxable. The tax treatment depends on the program and how you use the money, so ask a tax professional before you spend grant funds or file your return.
What is the easiest small business grant to get?
No legitimate grant is guaranteed or truly easy. Local grants tied to your city, neighborhood or industry usually have fewer applicants than national programs, which can improve your odds. Small, specific programs such as facade or storefront improvement grants are often more realistic for Main Street businesses than large federal awards.
Do I need to register on SAM.gov to get a grant?
For federal grants, yes. You need a Unique Entity ID and an active SAM.gov registration to apply through Grants.gov. Registration is free but can take several weeks, and it must be renewed every year. State, local and private grants usually have their own simpler application processes and don't require SAM.gov.
Can I pay someone to find grants for me?
You can hire a grant writer, but be careful. Never pay anyone who promises guaranteed grants or charges a fee to "release" money, which the FTC flags as scam signs. Small Business Development Centers and SCORE provide free help finding and applying for grants. If you hire a writer, check references and get the scope and fees in writing.
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Manishdai
Manishdai writes about the technology that is reshaping every industry — from AI agents and cloud platforms to healthtech, fintech and the IT companies building it all across the United States.
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