Small businesses account for 99.4% of all companies in Alabama, and they are the driving force of the state’s economy. For this reason, there are numerous efforts taken to support people starting small businesses in the state, and offering small business grants is one of the most impactful of those efforts.
With small businesses in Alabama facing headwinds like rising costs and economic uncertainty, there are plenty of cases where they may need a cash infusion. This is where small business grants come in, providing businesses with a lump sum of cash they can use to fund their ventures.
To help small business owners in Alabama get the grants they need to start and grow their businesses, we’ve put together a complete guide to small business grants in Alabama. Below, you’ll find helpful information on how small business grants work, the top small business grants for 2025 in Alabama, and how to apply for them.
Small business grants are simply funds that are awarded to businesses to support their growth and development. Unlike loans (which have to be paid back with interest) or venture capital funding (which requires giving up equity in your business), small business grants don’t come with any strings attached. They don’t have to be paid, and they are the equivalent of free money for the businesses that are fortunate enough to receive them.
Small business grants can come from federal and state governments, private corporations, or nonprofit organizations. They often focus on specific goals and are awarded to the businesses that are aligned with those goals. For example, some grants strive to support minority-owned businesses while others focus on revitalizing the local economy in a specific area.
Alabama offers several state-specific grant programs to support small businesses. These grants are designed to support job creation and economic development in the state, and they are targeted toward a variety of industries and needs. This includes grants designed to foster innovation and new technological developments and grants that support out-of-state trade:
The Innovate Alabama Supplemental Grant Program is intended to support projects that expand research and development in the state. This grant is awarded to businesses involved in technological innovation or scientific research, and it provides additional funding to businesses in Alabama that have already received a Federal Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) grant.
For businesses that have received a Phase I award, the Innovate Alabama Supplemental Grant Program provides 50% of the SBIR/STTR grant amount (up to $100,000). For those that have received a Phase II award, the program provides 50% of their federal grant amount up to $250,000.
Since the program was started, the Innovate Alabama Supplemental Grant Program has awarded over $14 million to 68 small businesses in the state.
To apply for the Innovate Alabama Supplemental Grant Program, you first need to have received a Federal Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) grant. If your business is the beneficiary of one of these federal grants, you can apply for additional funding by visiting the Supplemental Grant Program page on the Innovate Alabama website. Applications open in January 2025.
The Alabama State Trade Expansion Program (STEP) Grant is designed to support small to medium-sized businesses that export products outside the state. The grant’s funds are used to help Alabama businesses pay for eligible export marketing expenses, and these expenses must be pre-approved before the grant is awarded.
Funds for the Alabama STEP grant are made available thanks in part to a grant from the Small Business Administration (SBA). However, the program is managed at the state level by the Alabama Department of Commerce.
Information about the Alabama State Trade Expansion Program (STEP) Grant is available on the Made in Alabama website, and you can request more info and apply by sending an email to [email protected]. To be eligible for this grant, your business must meet the following criteria:
In addition to state programs, Alabama businesses can take advantage of federal grant opportunities. These programs are often competitive and targeted toward specific industries such as technology, healthcare, or rural development.
These grants are managed by various federal agencies and are typically made available to businesses in all states (which is part of what makes them so competitive). However, federal grants can still serve as an excellent source of funding for Alabama small businesses, and honing your application will help improve your chances of being chosen.
While there is a wide range of federal grants available to Alabama businesses, here are a few of the bigger and more popular programs:
This is a program that we’ve mentioned already, and it provides funding to small businesses that are engaged in research and design projects. The program is particularly geared toward businesses in the technology, defense, and healthcare industries, but any business that’s working on developing new innovations can apply.
The SBIR Program operates in three phases:
If your business is awarded this grant, be sure to keep in mind the Innovate Alabama Supplemental Grant Program that we covered earlier, as this program awards additional funding to SBIR grant recipients.
To be eligible for an SBIR grant, you have to be a for-profit small business with fewer than 500 employees. Your business also needs to be engaged in a research or development project with a strong potential for commercialization. Applications are submitted through participating federal agencies such as the Department of Defense or the National Institutes of Health. For submission deadlines and application resources, you can visit SBIR.gov.
This program is similar to the SBIR program, except that it provides grants to small businesses that are actively working with research institutions. The program is designed to encourage partnerships between innovative small businesses and non-profit research organizations.
The STTR program operates in the same three phases as the SBIR program, and the grant amounts are the same as well. Like SBIR recipients, recipients of an STTR grant in Alabama are also able to apply for additional funding through the Innovate Alabama Supplemental Grant Program.
The U.S. Department of Agriculture (USDA) offers grants to promote economic development and job creation in rural areas. These grants typically range from $10,000 and $500,000, depending on the project’s size and its potential impact on the area’s economy.
To apply for a USDA Rural Business Development grant, your business must be located in a rural area with a population of under 50,000. Applications must include a detailed plan for using the funds and a description of the expected benefits to the community. To learn more about how to apply and to download the application form, you can visit the USDA website.
Not all small business grants come from government agencies. In addition to public funding, small businesses in Alabama can also secure grants from private organizations. Private grants are often offered by non-profit organizations and foundations, but many for-profit organizations offer grants as well as a way to give back to their communities.
Every year, FedEx holds a contest to award grants that consist of cash and free FedEx services. The FedEx Small Business Grant Contest is open to businesses across all industries and is designed to reward those that demonstrate innovation, growth potential, and community impact. In addition to $50,000 in cash, the winner of the grant also receives $7,500 in FedEx services.
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