Opening and operating a coworking space can be an exciting and rewarding endeavor, but it also requires significant upfront costs and ongoing expenses. Seeking grants is one potential way for current and prospective coworking space owners to secure funding to cover costs like real estate, build-outs, furniture, technology, marketing, and more. With some research and well-crafted applications, grants from government agencies and private organizations could make launching or expanding your coworking business more feasible.
Small businesses are mighty — and money is out there
According to statistics from the US CHamber of Commerce, 78% of small business owners use their own funds to launch their businesses. However, lots of small businesses will eventually need funding at some point. The total amount of outstanding loans for small businesses reached $645 billion in 2019, and this number is so high because the average SBA loan is approximately $417,316.
And per lendio.com, 41% of small business owners state their number one challenge is related to the economy and inflation, with another 14% struggling most with financial concerns.
- 10 million+ new small businesses were launched from 2021 to 2022.
- Small businesses make up 99% of all U.S. companies.
- Small businesses employ 61 million people and nearly 50% of all private-sector workers.
- Small businesses saw a gross revenue of $13.3 trillion annually.
Government grants for coworking operations
Several federal agencies offer grants that coworking spaces may be eligible for, especially if you plan to focus on certain niches like tech startups or creative businesses.
The U.S. Small Business Administration (SBA) has microloan programs that provide up to $50,000 for equipment, furniture, leasehold improvements, and working capital. The SBA also offers funding through its Community Advantage Pilot Program for underserved communities.
The U.S. Department of Agriculture (USDA) Rural Development program supports business growth in rural areas through guaranteed loan programs and special grants, like the Rural Business Development Grants program.
The U.S. Economic Development Administration's Public Works and Economic Adjustment Assistance programs offer grants for construction, renovation, equipment acquisition, and other projects aimed at revitalizing areas facing economic distress or supporting innovation-based businesses.
Banks and credit unions, especially community development financial institutions (CDFIs), often grant funding with dual goals of small business growth and community revitalization.
Your state or local government may also have relevant grant programs. Research what's available through your state's commerce, economic development, or small business agencies. Many local governments and community development organizations also offer grants to boost entrepreneurship and spur commercial growth in specific districts or neighborhoods.
There are real and viable garnet opportunities out there for coworking and flex space businesses, whether you are looking to launch or upfit or grow.
Women-owned Small Businesses (WOSB) received more than $26 billion for the fourth straight year, accounting for 4.6% of the Fiscal Year 2022 total eligible dollars, slightly below the 5% target. The overall dollars granted to WOSBs increased from $26.2 billion in Fiscal Year 2021 to $28.1 billion in Fiscal Year 2022. Moreover, the funds set aside specifically for WOSB firms amounted to $1.56 billion in Fiscal Year 2022, showing a remarkable 17% surge.
Private grants help seed startup or expansion costs for coworking businesses
In addition to government funding sources, many private companies and foundations provide grants that could assist coworking spaces. And sometimes these programs include advisory services, accelerator coaching, and more.
Sources such as Hello Alice collect small business grant information from across industries. And corporate giving programs like those from Lowe's, Home Depot, and PepsiCo specifically aim to support small businesses with grants up to $25,000 or more. They look for concepts that fill a need, benefit the community, and have a social impact.
Philanthropic foundations like Kauffman Foundation and Surdna Foundation have grant programs focused on entrepreneurship and economic development. While larger amounts go to major initiatives, they do offer some "fast pitch" style grants up to $150,000 for smaller projects.
The Workers Lab is to give new ideas for and with workers a chance to succeed. Their Innovation Fund is one of the ways they achieve this purpose — investing in innovators and entrepreneurs who are serving workers and addressing the challenges faced by workers.
Coworking spaces aligned with specific missions — such as increasing opportunities for minorities, women, veterans, or those with disabilities—- should look for foundations dedicated to supporting those goals. For instance, Eileen Fisher's grants advance women owned businesses.
Industry associations and nonprofit organizations related to your niche may provide project grants or sponsorships. For instance, a tech-focused coworking space could look at opportunities from organizations like National Center for Women in Information Technology or ACM SIGGRAPH.
Do your research and think creatively about grants
You might not be able to find something as generic as a “Local Coworking Grant.” Rather, take a look at local and national opportunities for discrete and specific use cases, and consider how you’d apply.
For example, a quick search for Grants for Small Businesses on GrantWatch.com shows some interesting opportunities:
HVAC systems in California
Capital projects in Ontario, Canada
Waste management investment in Missouri
Solar energy in Puerto Rico
Environmental programming in Pennsylvania
And so much more.
Tips for effective grant applications
With numerous options for federal, state, local, and private grant funding, here are some tips to make your applications as competitive as possible:
- Seek out grantors whose priorities align with your coworking space's mission, target members, and offerings.
- Follow instructions carefully and submit all required information and documentation. Grantors want to see you can follow rules.
- Articulate a clear business concept or project plan, demonstrating feasibility and viability.
- Quantify your financial need and how grant funds will be used, with a detailed budget.
- Emphasize community impact and ability to further the grantor's goals, not just how a grant benefits you.
- Describe your experience and capacity to successfully execute your concept.
- If available, include data or information on market demand, member acquisition plans, etc. to prove viability.
- For grants to assist with space build-outs or renovations, include bids, floorplans, permits, etc.
- Follow up after submitting to ensure your proposal was received and see if they need any additional information.
Often the information you need will be the same across grant applications, so be organized with it, collecting things like:
- The electronic mail address
- Your business’s name
- The URL of your company’s website OR a brief description of your company
- IRS letter of determination
- Board of directors list (names and their affiliations)
- IRS form 990 (Tax Return)
- Audited statements or a review of audited statements (if you have them)
- Operations budget (for your current fiscal year)
- Year-End financial statement or budget to actual (that compares your actual budget figures to your projected budget for that year)
Applying for grants takes time and effort, but can provide coworking spaces with essential startup or expansion funding. With thorough research into options and targeted, well-crafted applications, securing grants is an attainable goal.