For more than two decades, from a Willy Wonka-like studio in New York’s garment district, Michelle Feinberg’s company, the New York Embroidery Studio, has helped amateurs and brand-name designers embellish garments with decorative stitching, rhinestones, sequins and other items. So, when a longtime client, Ralph Lauren, approached her in 2010 and asked her to help create uniforms for Team USA at the Sochi Olympics, Ms. Feinberg jumped at the chance.
The only problem was that to meet Ralph Lauren’s needs in time — the uniforms were all domestically produced for the first time — she would have to upgrade her equipment, an assortment of modern and antique specialty stitching and cutting machines.
That is when she heard about the Fashion Manufacturing Initiative, a public-private program that offers matching financial grants to local manufacturers looking to upgrade their machinery, expand their services or train workers. The program, run by the New York City Economic Development Corporation and the Council of Fashion Designers of America, is intended to support the city’s fashion manufacturing businesses — those that have not moved their facilities offshore to countries with cheaper labor.
Ms. Feinberg applied to the program last August and early this year was awarded $67,000 in matching funds to offset the purchase of new equipment, including an embroidery machine with laser capability, a digital fabric printer and a computer-controlled cutting machine. “I had never applied for a grant before,” said Ms. Feinberg, who was pleasantly surprised to be one of seven winners.
When small-business owners are looking for capital, government grants are not necessarily top of mind. To many owners, it may even seem counterintuitive to ask the government for help, but those owners could be missing an opportunity. Programs at the federal, state and municipal levels are available to help small businesses pay for new equipment, train employees, upgrade facilities and expand into new markets.
Grants, unlike loans, do not have to be paid back. But that does not mean they come without strings. “There are no free rides,” said Ron Flavin, a consultant based in San Francisco and the author of a book on business grants. They are awarded for specific purposes that align with national or local interests. They typically come with strict requirements and accountability measures. And in some cases, like Ms. Feinberg’s, the business must make a matching investment to be eligible.
Mr. Flavin also cautioned that, despite the claims of unscrupulous Internet marketers promising pots of gold, grants are rarely, if ever, offered to pay down debt or start a new business — not even for businesses owned by women, veterans or minorities. He also noted that half of all proposals are rejected because applicants do not follow directions, omit important information or do not understand what information is being sought. If an application is complicated, he said, business owners should seek help. (The Grant Professionals Association is one source.)
So where can you find a business grant? A good starting point is Grants.gov, a centralized site that allows owners to search and apply for more than 1,000 federal programs. The federal government last year allocated more than $500 billion to grants. Most of that money, however, went to nonprofit organizations, schools, and state and municipal government agencies that provide services for the public good. (Those groups sometimes pass along that funding to for-profit businesses through specialized grants.)
Just 5 percent, or $26 billion, of federal grant funds went directly to for-profit businesses, mostly for activities related to research and development through programs like the Small Business Technology Transfer and Small Business Innovation Research.
For most small companies outside the energy, technology and scientific fields, the better hunting grounds are the programs offered by state and local agencies, where grants are often disbursed in the name of economic development. Nearly every state has programs to offer financial assistance to businesses. Mr. Flavin offers a comprehensive list in his book.
Idaho, for example, offers five business grant programs, including the State Trade and Export Promotion Grant, to assist resident companies looking to expand exports. The grant is a pilot program that the state is offering in conjunction with the Small Business Administration.
Cities, counties and other municipal government organizations also offer assistance to local businesses. “Grant programs are a great strategic tool for spurring economic growth” that can give critical momentum to a neighborhood or sector, said Kyle Kimball, president of New York’s Economic Development Corporation. Businesses that benefit “repay the city’s investment many times over in creating jobs, paying taxes and continuing to perform as cornerstones of their communities,” he added.
Even when the grant amounts are modest, they can help companies with vital expenses. In southern Florida, Miami-Dade County offers the Mom and Pop Small Business Grant Program, which provides technical assistance and grants of up to $5,000. The grants can be used to pay for supplies, marketing, inventory, renovations and other uses. Skyward Kites, a kite rental outfit in Miami’s Haulover Park, was awarded a grant to help it upgrade to a larger, solar-powered concession stand.
In 2006, the Kentucky Department of Agriculture was looking for ways to help tobacco farmers transition to other cash crops, and zeroed in on wine grapes, which had flourished in the state before Prohibition. The agency created programs, including the Marketing Cost-Share Program, to help small wineries recoup marketing expenses, as well as a Wholesaler Reimbursement Program that reimburses wholesalers $20 per case of Kentucky wines to encourage them to carry local wines.
StoneBrook Winery was able to recoup half of its marketing expenses to advertise its wines — including its flagship offering, Vidal Blanc — in regional newspapers and magazines. The cost-share program has been instrumental in helping many small wineries establish their brands and persuade wholesalers to pick them up, said Dennis Walter, the fourth-generation owner of StoneBrook. “You need that assist to market your brand when you’re starting out,” he said.
To some extent, the marketing cost-share grant, which is open to all of Kentucky’s small farm wineries, is a victim of its own success. As the number of winegrowers in the area has increased, the grant pool of $50,000 a year has had to be split among a larger number of recipients, reducing the amount available to each.
Some grant programs are structured as competitions. New York City’s Industrial Growth Initiative, now in its second year, is a two-stage process that requires businesses to attend a growth workshop and then apply for a more in-depth workshop series covering topics like human resources and marketing. The program culminates with a business plan competition, where participants put what they have learned to work and create expansion plans to guide their next stage of growth. The plans are pitched to an audience of judges and business leaders, and three winners split a $150,000 prize.
One recent winner was Eric Campione, chief administrative officer for P.A.C. Plumbing, Heating, & Air Conditioning. Mr. Campione submitted a plan to bring the third-generation family-owned business on Staten Island into the digital age with new technology, such as iPads for field technicians. It is about more than money, though.
The workshops, Mr. Campione said, “really open your mind to what other companies are doing and how they are handling things.” With the additional knowledge and funds, he said, he hopes to double his employees, to 30, in five years.
Ms. Feinberg of the New York Embroidery Studio has been similarly inspired by her grant experience. The new equipment has made her shop more competitive, she said. “I can now custom-print any shape jewel or embellishment in any color — things I used to have to order from China.”
An earlier version of this article misspelled the name of a fictional character used to describe the New York Embroidery Studio, owned by Michelle Feinberg. It is Willy Wonka, not Willie Wonka.
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