Determining your eligibility for funding is a very important aspect of the application process. While critical to funding success, it can be difficult to determine if a funding line is truly a fit for you or your small business. There are a lot of hidden requirements that you may not be aware of and since applying to any funding line can be a time-consuming, tedious, and confusing process, no one wants to waste time applying to a funder that is not a fit.
We first covered this topic in 2017 (https://www.ebhoward.com/determining-eligibility-for-funding/) but find the issue every bit as relevant today. Perhaps even more so with new funding lines entering the scene due to COVID-19. More people and small businesses than ever before are eligible for equity-free grant funding from the federal, state, and local government as well as from some non-profits or corporations. Whether you pursue a federal or private funding line there are some eligibility criteria to keep in mind.
Government or research grants generally have stipulations concerning the industry, program activities, budget, and other factors. Many grants cannot be used for building on existing products or programs and must be entirely rooted in high-risk innovation and development. Others must serve a specific need as defined by the government or be in a specific industry such as health, transportation, defense, or ecology. In terms of federal COVID-19 grants, many place eligibility restrictions on what you can use the grant money for. The Paycheck Protection Program, for instance, must be repaid unless it is used solely for payroll costs, mortgage interest, rent, and utility and all employee and compensation levels must be maintained.
Foundation funding can be notoriously tricky. Many require 990 forms which require the organization to file a U.S. tax return and hold tax-exempt status from the IRS. This also means that a funder with these requirements would not fund organizations with fiscal sponsorship. Audited financials are another common eligibility requirement, however, many new organizations do not yet have these. Regarding COVID-19 funding, many foundation funding lines require applicants to be in a certain industry (e.g. non-essential, hospitality) or in a certain location to be eligible.
Your time is valuable! Do not waste it applying for funding opportunities for which you are not a fit!
We help high-growth startups find and apply for non-dilutive funding. Schedule a consult call with us HERE.