Raising capital for start-ups or business development in Illinois can be complicated. Just like business loans, grants can help your business accomplish many things. Be it funding for ideation or business operations, a small business grant can give it the extra boost it needs. Also, the best part about grants is that you don’t have to repay. So in this guide, we’ll go over the top small business grants in the state of Illinois. We’ll also take a look at some small business grants for specific areas in Illinois like the city of Chicago and the minorities.
Top Options for Illinois Small Business Grants
In finding the best small business grants for your Illinois business, you have a few things to keep in mind. The best strategy is to look into grants specific to your local community and city. Contrary to what some may believe, we have several local small business grant programs that are available in the state of Illinois. However, most times they are hard to find because they aren’t so well advertised.
So to help with the search process, we’ve picked a mix of both local and national grant programs for Illinois businesses.
#1. Metro East Startup Challenge
This is a competition for small businesses in the St. Louis Metro East region of Illinois state for grants. The competition aims to promote high-growth businesses to relocate or grow in the Metro East area. Applicants to the startup Challenge can submit their applications online. Subsequently, the finalists will then have to pitch their business for 10 minutes. Then, the grand prize winner will obtain a $10,000 grant. However, your business must be profit-oriented and be relocating (or headquartered) to one of the nine counties in the Metro East area to compete in the challenge.
#2. City of Urbana Business Grants
The city of Urbana offers $1,000 to $2,000 grants to new or existing businesses in Urbana, Illinois. Hence, individuals can apply for either a business development grant or a business opening grant. But, to successfully apply for a business development grant, you must own a building. Otherwise, you must have signed a lease for a space located in an eligible district area. You must also be a participant in the city’s free business counseling program.
For the business opening grant, the applicants must also meet the same requirements as that of the business development grant. However, the applicants for the business opening grant can be an ongoing business.
#3. Feed the Seed Business Startup Grants
Another state of Illinois small business grant program is the Feed the Seed Business Startup Grants. They are designed to get innovative business ideas to market within the Kane, DuPage, Kendall, and Will counties. The recipients of the grant must generate no more than $40,000 in revenue in the past 12 months. Also, they must agree to have their headquarters in the above areas for at least two years. However, businesses in the pharmaceutical, restaurant and other nonprofit sectors are not qualified for this grant.
#4. Amber Grant for Women
This grant is a national grant program that awards a total of $145,000 to outstanding women business owners each year. Every month, one woman wins $10,000 to pool into her business. At the end of the year, one of the winners is picked to win an additional $25,000.
Applying to the Amber Grant for Women is so simple. All you need is to fill out an application form stating your business information and other required information. However, you’ll also have to pay a $15 application fee.
#5. Illinois Grant Watch
Keeping up with the latest local and federal grants can be overwhelming. However, Illinois GrantWatch simplifies the process. Illinois GrantWatch is an aggregate site that lists all of the available small business and nonprofit grants in the state of Illinois from government agencies. The website updates daily, so we encourage you to check back frequently to stay updated on the latest small business grant programs in the state of Illinois.
#6. Shuttered venue operators
The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) passed on December 27, 2020, approves $15 billion for a new Shuttered Venue Operators (SVO) Grant. The grant is for eligible theatrical producers, talent representatives, venue promoters, live venue operators, live performing arts organizations, movie houses, and cultural institutions that have been impacted by COVID-19. So, eligible organizations with a reduction in revenue due to the COVID-19 pandemic will have the opportunity to receive a grant under the program.
To get more information on this small business grant for the state of Illinois please visit the Small Business Administration’s (SBA) website.
Small Business Grants and Loans in an Emergency
DCEO is collaborating with partners to provide emergency assistance packages for Illinois small businesses, led by Governor JB Pritzker. Among these initiatives are:
#1. Emergency Loan Fund for Small Businesses in Illinois
The DCEO and the Illinois Department of Financial and Professional Regulation (IDFPR) are established the Illinois Small Business Emergency Loan Fund to provide low-interest loans of up to $50,000 to small businesses.
Businesses situated outside of Chicago that have less than 50 employees and less than $3 million in revenue in 2019 are eligible to apply. Successful applicants will owe nothing for six months before beginning to make set payments at a lower-than-market interest rate for the remaining five years of the loan period.
More information regarding eligibility and how to apply can be found here.
#2. Small Business Stabilization Program for the Downstate
DCEO is repurposing $20 million in CDBG money to launch the Downstate Small Business Stabilization Program in order to help small businesses in downstate and rural counties across Illinois. This Fund will allow small businesses with up to 50 employees to collaborate with their local governments to receive grants of up to $25,000 in operating capital. These grants will be made available on a regular basis.
Communities can find out more about the Notice of Funding Opportunity (NOFO) and eligibility conditions by visiting this page.
City of Chicago Small Business Grants
Illinois has many small business grant programs specifically for businesses in underserved areas, such as the city of Chicago’s South Side. So, if you’re planning to start a business, you can consider looking into areas that could use more revitalization. Generally, there are more grant resources from the local government to support entrepreneurs who are interested in starting or relocating their businesses.
#1. South Side Pitch
This is a business plan competition organized by the University of Chicago Law School’s Justice Clinic. The competition is done for grants to showcase the city of Chicago’s South Side small businesses. Finalists of the small business grants competition pitch their business in front of a panel of judges and members of the city of Chicago community. The top three winners will be awarded $8,000, $7,000, and $5,000, respectively.
For eligibility, your business must have less than 50 employees, generate under $1 million in revenue, and be sited within the South Side area. Your application must show how it has impacted the surrounding South Side community. Also, it’ll show how you plan on using the grant money for your business, and your business’s history.
#2. Neighborhood Opportunity Fund
Established in 2016, they support the city of Chicago’s small businesses in underserved neighborhoods with grants. Business owners located in Chicago’s West, South Sides, and Southwest commercial corridors can apply for grants. Thus, the grant funding can be used to pay for the construction or rehabilitation of new business projects.
So, business owners can apply to receive one of two types of funding: small projects or large projects. The small projects can receive up to $250,000 in grant funding. However, the applicants must be located in an eligible commercial corridor. Large projects can receive grants of more than $250,000, and applicants do not necessarily have to be located in specific areas.
Illinois Small Business Grants for Minorities
#1. Paycheck Protection Program
The program is making $284 billion available for businesses to use for job retention and other expenses through March 31, 2021.
The Small Business Administration (SBA) started accepting PPP applications on January 11, 2021. They aim at promoting access to capital for minority-, underserved-, veteran- and women-owned small businesses in Illinois through grants.
For more information including eligibility and the application procedures, visit the SBA’s website: SBA Paycheck Protection Program
#2. Business Interruption Grants Program (BIG)
Launched in June 2020, BIG, the largest program of its kind in the nation, leverages federal funding provided by the CARES Act to help offset COVID-19 related losses for Illinois small businesses.
The State of Illinois provided grant awards to small businesses located in industries and geographies hardest hit by the ongoing COVID-19 crisis especially the minorities. Hence, nearly half of the awards were made to businesses in economically disadvantaged areas. 80 percent of funds were made to businesses with $1 million or less in annual revenues while 40 percent of awards were made to minority-owned businesses statewide. Also, $105 million or 3,100 awards were provided to downstate communities.
The program was implemented on a rolling basis, issuing on average hundreds of awards weekly. These grants may be used to help small businesses owned by minorities with working capital expenses, like payroll costs; rent; utilities; and other operational costs.
To see a list of BIG grants made and eligibility, or to review our FAQ – please visit the BIG program page.
#3. Rebuild Distressed Communities Program
This is a $25 million economic recovery program to support Illinois small businesses owned by minorities that have sustained property damage as a result of civil unrest during protests and demonstrations on or after May 25th, 2020 with grants. The program has made the first and second rounds of funding.
#4. Downstate Small Business Stabilization Fund
DCEO is pooling $20 million in CDBG funds to stand up the Downstate Small Business Stabilization Program. This grant will offer small businesses of up to 50 employees the opportunity to partner with their local governments to get grants of up to $25,000 in working capital. These grants will be offered on a rolling basis.
How to Discover the Right Illinois Small Business Grant
Once you’ve done your research and found a couple of interesting grant opportunities you’d like to apply to, it’s time to familiarize yourself with the grant application process. So, here are a couple of things to keep in mind as you go about your grant search.
#1. Note the steps required
Applying for an Illinois small business grant, like applying for an Illinois business loan, takes a lot of preparation. In addition to gathering financial statements and submitting documents, you’ll have to allocate enough time to write your grant proposals, which can eat into your time spent running your business. We recommend starting the process as early as possible. In fact, you may want to start the application process a few months ahead of time. Also, we suggest hiring an experienced consultant who can look over your application.
#2. Note the eligibility for application
The key to applying for Illinois small business grants is having a complete understanding of your business’s eligibility/requirements. This means that you ought to know your business industry and goals. Also, you should know the community that your business serves.
So, if you don’t have the basics of your business noted down already, you should try to get answers to these questions:
- Your identify (gender, race, ethnicity)
- The industry which your business fits (e.g., biotech)
- what you need the grant money for
- Your company’s goals and mission
- The jobs you can create with your grant
- Your locality (state, county, community, etc.)
- The size of your business
- Where your company renders services to.
#3. Look out for Grant Scams
It’s quite unfortunate to know that grant scams are common instances. There are many scammers out there trying to take advantage of small business owners. So, be sure to verify the credibility of any organization offering super easy applications. Also, have it in mind that applying and receiving a small business grant is usually a very long and tedious process. So, if an organization approves an application easily, you should think twice.
Can Illinois small business grants be used for any purpose?
No, Illinois small business grants can only be used for specific purposes, such as business expansion, equipment purchases, or workforce development, as determined by the grant program.
Can Illinois small business grants be combined with other forms of financing?
Yes, Illinois small business grants can often be combined with other forms of financing, such as loans or investment capital.
Are there restrictions on the use of Illinois small business grants?
Yes, there are typically restrictions on the use of Illinois small business grants, such as limitations on the types of expenses that can be covered and requirements for reporting on the use of funds.
How long does it take to receive the funds from an Illinois small business grant?
The timeline for receiving the funds from an Illinois small business grant varies depending on the specific grant program and the length of the application process.
Are Illinois small business grants tax-free?
The tax implications of Illinois small business grants vary depending on the specific grant program and the use of the funds. It is advisable to consult with a tax professional to determine the tax implications.
What is the reporting requirement for Illinois small business grants?
The reporting requirements for Illinois small business grants vary depending on the specific grant program and may include regular progress updates and financial reporting.
What happens if the small business does not meet the conditions of the Illinois small business grant?
If a small business does not meet the conditions of an Illinois small business grant, the grant may be revoked, and funds may need to be returned.
Conclusion
Securing a small business grant for your business in Illinois requires a lot of upfront investment and energy. You might likely have to apply for multiple grants to get the hang of the process. So, don’t give up if you aren’t able to get a grant on your first try. So many grant programs allow businesses to reapply again.
However, if you don’t manage to secure a small business grant, you can always look towards other small business loan options. Although business loans come with repayment terms and interest rates, they offer better options if you’re looking to get funds more immediately.
