Federal Grants for Small Business: Chasing Clean-Tech Stimulus Dollars

Entrepreneur Kevin Ross is hoping to capitalize on the burgeoning market for clean tech, buoyed by the hopes of winning some funding from th
October 29, 2009

Entrepreneur Kevin Ross is hoping to capitalize on the burgeoning market for clean tech, buoyed by the hopes of winning some funding from the $70 billion earmarked for alternative energy projects in the American Recovery and Reinvestment Act (ARRA).

Ultimately, he says, farmers might be his biggest customer. The idea is to lease part of a farmer's land and make a "solar farm" of ground-mounted panels. The farmer would then receive leasing fees or else partner with SunBanks Solar for revenue sharing, with revenues coming from selling the power to local power companies.

But to build his business accordingly, Ross, who is one of three employees including his wife, needs more resources. He was able to self-fund the company’s launch using about $50,000 of his own money, saved and invested over the years from his civil engineering firm, Land Design Services Inc.  “We don’t have to have the money [to survive] but we could hire sales staff and buy trucks and hire a crew,” he says.

To that end, Ross hired CleanTech PR, a national public relations and grant writing firm, to help apply for two federal grants from the National Science Foundation one of which is a joint application with a university for a $1 million grant, according to Christine Harmel, a partner for CleanTech PR based in Austin. (The NSF fiscal year 2009 budget of $9.5 billion includes $3 billion from the ARRA)

According to Harmel, federal grant money is hard to get even when you have an excellent business plan and a sharply-written proposal. She believes at this point, after submitting the application to the NSF in November, SunBanks Solar has about a 50% chance of receiving any money due to stiff competition.

The effort required in applying for such grants is not trivial. She describes the steps:  find a grant that is available for the type of business that Sun Banks Solar provides, document work or projects that the company has done in the past that fit with the grant’s requirements, identify partners that would jointly participate to fill in any requirements gaps, identify experts in the field, provide resumes and CVs, and so on.   

Even when a company wins an award, there are many strings attached. Gregory Burkart, a Detroit-based managing director at advisory and investment bank Duff & Phelps, has helped clients win ARRA grants in the alternative energy sector. He says that when a federal grant is awarded, clients must meet certain conditions before they can even access the funds. For instance, a government auditor might inspect your manufacturing plant to ensure that it matches the specifications outlined in your application. And, says Harmel, regular reporting of how you are using the money according to the budget that you submitted in your application is required. "The documentation is excessive," she warns.

Burkart’s advice for companies applying for stimulus-backed grants? "You have to remember that it's a recovery act so jobs are very important and you have to be able to demonstrate that," he says. “It requires sophisticated modeling. You just can't pull a number out of the air."

As far as Ross is concerned, the process seems overwhelming and complicated when it comes to his worldview and the goals he has for his company, a newcomer in a promising and maturing clean tech sector. "We could put a lot of people to work [if we got the grant] is the way I look at it."