Many people have a common misconception that grants are free money and can be used for anything the recipient wants. This is simply not true, and as a matter of fact, grant money is actually not designed to provide capital for any long duration of time.

Note that all allotted money comes with a request for a proposal that explains in very clear details the terms under which the grant can be applied to. Grants have specific uses like alleviating operating costs for new businesses or enterprises, multiplying an existing business venture, or compensating for a one-off only fee until a self-sustaining fund can be afforded.

If a student was awarded money to pay for his or her college education, all expenses such as books that accrued with that are expected to be covered through the funds awarded. Truthfully, obtaining a small business grant can be a lot of work, however, the funds received from the grant might be all the help your company needs in order to succeed.

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

Every grant from each establishment has a specific focus, and business owners will want to find and apply to those grants that pointedly meet their needs. Unlike loans, grants can’t be spent on anything the business deems fit. Grants are expected to be applied to the specified areas explained in the application. Depending on the company, that money may be allocated specifically to hiring fees, land, building, technology, programs, sustainability, etc.

Have it in mind that carrying out research to find the right grants for your business can be quite challenging. Again, when you find the right grants, the application process can take time to complete. Competition may be very stiff, so it is imperative you spend whatever time is needed to truly portray why your company deserves it.

Most financial experts agree that when an individual is searching for financial aid in the form of a grant, it is best to not apply for every grant that is available. Reading the request for proposal terms should give a better understanding of what that group’s money can be used.

This is because many applicants get caught up in the process and if the reason for needing the grant in the first place doesn’t amalgamate well to the grant’s terms, they begin concentrating on what they can do to earn it anyway.

What Are The Various Uses of Grants in the United States?

To answer this question, an individual will have to consider what the money is needed for and whether that will be in the form of a one-time expense or continued compensation.

Have it in mind there are different categories and terms grants fall under. The following list outlines some of the various grants available and how that money can be spent, so an applicant can ascertain which is most suited to their needs.

  1. Seed Money Grants

This sort of funding is also referred to as a Start-up grant. Start-up funding can be spent on initial costs to start a business or venture. For instance, in order to open a retail store, both a building and surplus would be required. Seed money could be used to acquire these things.

  1. Project Grant Funds

This simply refers to a particular expenditure or onetime cost for a cause or venture. An example of the way project grant money can be spent would be buying computers for a learning institution.

  1. Operating Grant Funds

Have it in mind that this money is available to spend on continuous expenses such as paying the rent of a building in which a business is operating out of each month.

  1. Restricted Grant Funds

Restricted funds are more or less like project funds in that it is spent on individual one-time purchases such as buying cash registers for a grocery store. It is for meeting one aspect of a company’s need among other requirements.

  1. Challenge Grant

Note that these kinds of grants are very common in the business market and you often hear them being offered at radio stations or television stations. It is when a grant will be given for a specified amount if another source can raise the exact amount given. If a radio station needs to raise $30,000 and a $15,000 challenge grant was offered, callers would need to donate the remaining $10,000 to make the entire amount required.

  1. In-Kind Grant

Have it in mind that these funds are for donated items other than money. A non-cash example would be the donation of office furniture.


If it weren’t for the availability of grants, many people would not be afforded the opportunity of education, let alone a career. A grant is a sum of capital that does not have to be reimbursed to the donor.

Grants can be awarded by various modes including organizations, foundations, companies, and ordinary citizens who have extra funding to spare. However, grants do come with restrictions—the money has to be spent in a particular way as outlined by the grant provider. And if you don’t play by the rules, there could be penalties.