How to write the business plan for a grant application?
Small business grants give free money to startups and existing businesses to help them flourish.
Free money doesn’t come easy, though. You’ll need to first research and find the right grant for your business. Then you need to persuade the body offering the grant why they should give one to your business.
Most grants have their own specific application process, where businesses provide information so the body can decide whether it fits their specific funding criteria.
It’s important to accompany your grant application with a strong business plan. Besides, including most of the basic information that goes into a grant application (like the service or product you’re offering and your staffing plan) it also includes a financial forecast - showing the funding body how profitable your business is likely to be.
Writing a business plan also provides another opportunity to convince them that your business objectives align with the grant’s purpose.
If you haven’t written a business plan for a grant application before, don’t worry.
From information on where to find small business grants, to what you need to include in a business plan for a grant application, here are some key points to consider when applying for a small business grant.
What’s the difference between a small business grant and a loan?
Let's first define what a small business grant is, explore why they are given out and then compare it to a business loan.
What is a small business grant?
Small business grants are financial assistance provided by governments, organizations, or institutions to support small businesses in various stages of their development.
Unlike loans, which require repayment with interest, grants are typically awarded as non-repayable funds.
These grants aim to encourage entrepreneurship, stimulate economic growth, and address specific societal needs.
For example, a small retail store might receive a grant to upgrade its storefront and enhance its customer experience, while a local farmer could obtain a grant to invest in sustainable farming practices.
Grants come in different forms and may target specific industries, demographics, or geographic regions.
They can cover a wide range of expenses, including equipment purchases, marketing efforts, research and development projects, and employee training.
Small business owners often apply for grants to access resources that would otherwise be financially out of reach.
However, it's important to note that grant funding is competitive, and applicants typically need to meet certain criteria and demonstrate the potential impact of their proposed projects.
How it differs from a business loan?
While both grants and loans provide financial assistance to businesses, there are key differences between the two.
Unlike grants, business loans must be repaid over time, usually with interest.
Loans are typically provided by banks, credit unions, or other financial institutions, and they require collateral or a good credit history to secure.
For example, a small manufacturing company might take out a loan to purchase new machinery or expand its production facilities.
One of the main advantages of grants over loans is that they do not need to be repaid, which can significantly reduce the financial burden on small businesses, especially those in the early stages of development.
Additionally, grants often come with fewer restrictions on how the funds can be used compared to loans, which may have specific repayment terms and conditions.
However, grants are typically more competitive to obtain, and applicants may need to undergo a rigorous application process, including demonstrating the feasibility and impact of their proposed projects.
Understanding these differences will help you determine the most suitable financing option for your business needs and goals.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
What are the main types of small business grants?
There are four main types of small business grants:
- Government grants
- Research and development grants
- Startup grants
- Non-profit grants
Let's take a look at each one in more detail.
Government grants
Government grants are funds provided by the government to support various types of businesses, ranging from start-ups to established enterprises.
These grants are often aimed at fostering economic growth, innovation, and job creation within specific industries or communities.
For instance, a government grant might support a small retail business in upgrading its technology infrastructure to enhance online sales, or it could help a local farmer invest in sustainable agricultural practices.
In the UK, small business owners can explore grants offered by entities such as Innovate UK, which provide financial support for innovation and business expansion.
Similarly, in the US, the Small Business Administration (SBA) offers grants like the Small Business Innovation Research (SBIR) program, which funds research and development projects with commercial potential.
These grants can significantly alleviate financial burdens and provide crucial resources for small businesses to thrive.
Research and development grants
Research and development (R&D) grants are specifically designed to support businesses in conducting innovative research and developing new products or services.
Small businesses engaged in R&D activities can benefit from these grants to cover the costs associated with experimentation, prototyping, and market testing.
For example, a small manufacturing company may receive an R&D grant to explore and develop eco-friendly materials for its product line.
In the UK, organizations like the UK Research and Innovation (UKRI) offer funding opportunities for small businesses involved in cutting-edge research projects.
In the US, the National Science Foundation (NSF) provides grants to small businesses conducting high-risk, high-reward R&D initiatives.
By tapping into these resources, small business owners can accelerate their innovation efforts and gain a competitive edge in their respective industries.
Startup grants
Startup grants are tailored to support aspiring entrepreneurs in launching their new ventures.
These grants provide essential financial assistance during the early stages of business development, helping entrepreneurs cover initial expenses such as equipment purchases, marketing efforts, and operational costs.
For instance, a budding entrepreneur in the hospitality industry might receive a startup grant to renovate a space for a new café or restaurant concept.
In the UK, organizations like The Prince's Trust offer startup grants and mentorship programs to young entrepreneurs looking to turn their business ideas into reality.
These startup grants not only provide crucial financial support but also offer valuable guidance and networking opportunities for new business owners.
Non-profit grants
Non-profit grants are funds awarded by charitable organizations, foundations, or government agencies to support the initiatives of non-profit organizations.
These grants are typically aimed at addressing social, environmental, or community needs, rather than generating profit.
Non-profit organizations can use these grants to fund programs, projects, or operational expenses.
For example, a non-profit focused on environmental conservation might receive a grant to implement a recycling education program in local schools.
In the UK, non-profit organizations can explore grant opportunities from entities like the National Lottery Community Fund which supports a wide range of community projects and initiatives.
In the US, organizations such as the Bill & Melinda Gates Foundation or the Ford Foundation offer grants to non-profits working on issues such as healthcare, education, and poverty alleviation.
These grants play a crucial role in enabling non-profit organizations to make a positive impact on society and address pressing social challenges.
Where can I find small business grants in the UK?
The financial aid available to your business will depend on where in the UK you're based, your business’ size, your industry and whether you’re a startup or looking to expand your business.
By tapping into these resources, you can uncover potential funding sources to support your business endeavors in the UK market.
Need inspiration for your business plan?
The Business Plan Shop has dozens of business plan templates that you can use to get a clear idea of what a complete business plan looks like.
Where can I find small business grants in the US?
Small business grants in the US can be valuable resources for entrepreneurs looking to start or grow their businesses.
Understanding where to find these grants is essential for accessing financial support.
In this section, we'll explore some key avenues where small business owners can discover grant opportunities.
Government agencies
Government agencies at the federal, state, and local levels often offer grant programs to support small businesses.
For example, the Small Business Administration (SBA) administers various grant initiatives aimed at fostering entrepreneurship and economic development.
Small business owners can visit the SBA's website or contact their local SBA office to explore available grant programs.
Additionally, state economic development agencies and local chambers of commerce may also provide information on grants tailored to businesses within their jurisdiction.
Private foundations and Non-profit organizations
Private foundations and Non-profit organizations also play a significant role in providing grants to small businesses.
These entities may focus on specific industries, geographical regions, or social causes.
For instance, a non-profit organization dedicated to supporting women-owned businesses might offer grant opportunities exclusively for female entrepreneurs.
Small business owners can research and identify relevant foundations and nonprofits that align with their business goals and values.
Online platforms like GrantWatch or Foundation Directory Online can help streamline the search process by providing comprehensive databases of grant opportunities.
What is a grant application?
A grant application is a document or set of documents that is submitted to a grant-giving body with the purpose of securing funding for a startup or an existing business venture.
Normally, grants are awarded to small businesses with the aim of generating jobs, energizing local communities and strengthening the economy.
While there’s an abundance of grants available to small businesses, obtaining one from the government can be quite tricky. Government grants are renowned for being quite complex and have a lot of stages.
Each grant will come with its own unique criteria for applying, too. For example, if you’re applying for a research grant from a UK-based foundation then they may require that all your research is carried out within the UK. Or if you’re seeking funding as part of an initiative to make your business more sustainable, you might need to prove your business’s dedication to carrying out eco-friendly practices.
Whether you’re a startup or an existing business, the same rule applies when taking your first step in applying for a grant: research the funding body and the grant in question as thoroughly as possible so you know exactly what they’re looking for in a grant application.
What information do I need to have before applying for a small business grant?
According to Swoop, businesses should prepare the following information before applying for a small business grant:
- Create a realistic financial forecast to show your business’ financial position
- Provide evidence that shows how your business meets the specific grant qualifying criteria
- Specify exactly what your business plans to do with the money allocated
- Provide evidence that your team will be able to successfully meet this objective
- Be clear about the exact outcome you expect and whether there will be a return on the grant funder’s investment. This enables them to evaluate the efficiency of their grant.
Why do you need a business plan for a grant application?
The rationale behind writing a business plan for a grant application is simple: funding bodies want to know that they’re giving their money to a business they can trust.
Writing a business plan will be an opportunity for you to neatly present all the information listed above. If you're not sure how to go about structuring a business plan, you can use business plan software. Most business plan software comes equipped with an inbuilt structure and instructions, ensuring you include all the information a funding body expects to see.
If you’re a start-up, a business plan also provides the perfect opportunity to show the grant-giving body that your business’ mission aligns with its own specific mission and purpose.
If you’re already in operation, a business plan will show your business’ financial position and, if applicable, the positive impact it’s had on your community thus far. This helps alleviate any fear that your business is at risk of going under, making them more likely to get involved.
Understanding the importance of a business plan is paramount when it comes to securing grant funding for your small business.
What should you include in a business plan for a grant application?
Crafting a compelling business plan is crucial when applying for a grant, as it provides potential funders with a comprehensive understanding of your business and its potential impact.
Let's delve into the key components that should be included in your business plan for a grant application.
Executive summary
The executive summary serves as an overview of your entire business plan, highlighting key aspects of your business in a concise manner.
It should include a brief introduction to your business, its mission, objectives, target market, and unique selling proposition.
For example, a small retail business seeking a grant to expand its operations might include information about its successful track record, customer base, and growth potential in the executive summary.
Company description
The company overview provides detailed information about your business, including its history, legal structure, ownership, and management team.
For example, you could state that your business is owned by four shareholders, each contributing 25% to total equity and that it is a limited liability company based in London.
Description of your product/service
This section outlines the products or services offered by your business, emphasizing their unique features and benefits.
Small business owners should clearly define their offerings and explain how they address the needs of their target market.
For example, a small manufacturing company applying for a grant might showcase its innovative product design or eco-friendly manufacturing processes to demonstrate its competitive edge.
Market analysis
A thorough market analysis is essential for demonstrating market demand and identifying potential opportunities and challenges.
Small business owners should research their target market, industry trends, competitors, and customer demographics.
For instance, a construction company seeking a grant may analyze local housing trends, demand for specific construction services, and competitor pricing strategies to inform its market strategy.
Strategy
The strategy section outlines your business's approach to achieving its objectives and gaining a competitive advantage.
Small business owners should define their marketing, sales, and operational strategies, as well as any plans for expansion or diversification.
For example, a business services firm applying for a grant may detail its digital marketing strategy, networking efforts, and plans to introduce new service offerings to attract clients.
Operations
This section provides insight into the day-to-day operations of your business, including production processes, staffing requirements, and facilities management.
Small business owners should describe how their operations support the delivery of products or services to customers efficiently and effectively.
For example, a hospitality business applying for a grant may outline its staffing structure, customer service protocols, and inventory management systems to showcase its operational capabilities.
Financial forecast
The financial forecast projects your business's future financial performance, including revenue, expenses, and cash flow.
Small business owners should include detailed financial projections, such as income statements, balance sheets, and cash flow statements, to demonstrate the viability of their business model.
For example, a small agriculture business applying for a grant may forecast revenue growth based on anticipated crop yields, pricing trends, and market demand for its products.
Whilst writing your business plan, we recommend that you have the grant-giving body’s mission and purpose open on a separate tab. Where possible, refer back to the foundation’s mission in your business plan to show how it aligns with your business’ own values.
You could even go a step further by adding buzzwords from the funding body’s mission statement in your plan to show how much you’ve thought it out.
How long should a business plan for a grant application be?
The length of a business plan for a grant application can vary depending on the specific requirements of the grant provider.
In general, however, it's best to keep your business plan concise and focused, typically ranging from 10 to 20 pages.
Small business owners should prioritize clarity and relevance, focusing on presenting essential information in a compelling manner.
By keeping the business plan concise, applicants can ensure that funders can easily grasp the key aspects of their business and make informed decisions regarding grant funding.
Need a solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
What tool should I use to write my grant application business plan?
If you haven’t written a business plan for a grant application before, the process can feel a little overwhelming.
Using business plan software is a great way to create a high-quality business plan quickly and efficiently.
There are many business planning software out there, so it’s important to choose the right one for you.
Most business plan software generate three full financial statements for you, helping you give the foundation as realistic a picture of your business’ finances as possible.
For grant applications, we recommend going with a business plan software that lets you model grants. This gives the funding body total transparency as to how exactly their grant would be used within the business.
Attractive visuals and a striking cover page with your business’s name and logo will also help your business stand out. So we recommend choosing a business plan software that breaks your numbers into colourful, easy-to-read charts and tables and automatically generates a cover page for you.
If you’re not sure which business plan software to go for to create your business plan for a grant application, we recommend trying The Business Plan Shop.
As well as having the features listed above, our online business plan software enables you to:
- Create a financial forecast to show your business’ financial potential
- Run a quality check to identify any issues with your forecast before sending it to a funding body
- Follow clear instructions to write a professional business plan
- Draw inspiration from the templates stored within our business plan software
- Track your actuals against your forecast
Above is an example of how your business plan for a grant application might like look in PDF format, including a table of contents and stylish cover page.
By leveraging these tools, you can streamline the process of creating your business plan and present a compelling case for grant funding.
Business plan templates for a grant application
When applying for a grant, having a well-structured business plan is essential to showcase your business's potential and suitability for funding.
Whilst our current business plan templates aren’t designed solely for grant applications, they can easily be tweaked to make it for that purpose.
The structure remains the same as illustrated in the outline above - all you need to do is replace the numbers and text with your own details!
The Business Plan Shop offers you templates for most industries, including retail, hospitality and services.
Need a solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
Key takeaways
Now that we've covered the essential aspects of preparing a business plan for a grant application, let's recap the key points to remember.
- Use business plan software such as The Business Plan Shop to turn writing a business plan for a grant application into a breeze.
- Understand the different types of small business grants available: government grants, research and development grants, startup grants, and non-profit grants offer various opportunities for financial assistance.
- Thoroughly research grant opportunities: explore government agencies, private foundations, and nonprofit organizations to find suitable grant programs for your business.
- Tailor your business plan to the grant requirements: customize your business plan to align with the specific criteria and objectives of the grant you're applying for.
- Be prepared to demonstrate financial viability: provide realistic financial projections and evidence of your business's ability to generate revenue and sustain operations.
- Follow application guidelines carefully: pay attention to the requirements and deadlines specified by the grant provider, and ensure your application meets all criteria for consideration.
- Seek assistance if needed: don't hesitate to reach out to business advisors, mentors, or grant specialists for guidance and support throughout the grant application process.
Also on The Business Plan Shop
- How to do market research for a business plan
- How to write a business plan for a bank loan
- How investors analyse business plans
- The difference between a business plan and a business case