How can you create a budget that accurately reflects your small business needs for a grant application?

1 Know the grant requirements

Before you start working on your budget, you need to understand the specific requirements and criteria of the grant you are applying for. Different grants may have different rules, formats, and categories for budgeting. For example, some grants may only cover certain types of expenses, such as equipment, materials, or travel, while others may allow more flexibility. Some grants may require you to match a percentage of the funds with your own money or other sources, while others may not. Some grants may have a fixed or a range of budget amounts, while others may depend on your proposal. Make sure you read the grant guidelines carefully and follow them closely when creating your budget.

2 Estimate your costs realistically

Once you know the grant requirements, you need to estimate your costs realistically and accurately. Your budget should reflect your small business needs and goals, as well as the grant objectives and expectations. You should research the market prices and rates for the items and services you need, and avoid underestimating or overestimating your costs. You should also consider the time frame and the scope of your project, and adjust your budget accordingly. For example, if your project involves hiring staff, you should include their salaries, benefits, and taxes in your budget. If your project involves travel, you should include the transportation, accommodation, and per diem costs in your budget.

3 Categorize your expenses clearly

After you estimate your costs, you need to categorize your expenses clearly and consistently. Your budget should show how you will allocate the grant funds among different types of expenses, such as direct costs and indirect costs. Direct costs are the expenses that are directly related to your project, such as materials, equipment, labor, travel, and subcontractors. Indirect costs are the expenses that are not directly related to your project, but are necessary for your business operations, such as rent, utilities, insurance, and administration. You should use the categories and subcategories that are specified by the grant guidelines, or use the standard ones if not provided. You should also explain the rationale and the calculation behind each expense category in your budget narrative.

4 Track your income sources

Besides your expenses, your budget should also track your income sources. Your income sources are the funds that you will use to support your project, such as the grant funds, your own funds, or other external funds. You should list all your income sources and indicate how much money you expect to receive from each source. You should also show how you will match the grant funds with your own funds or other sources, if required by the grant guidelines. You should also provide evidence and documentation of your income sources, such as bank statements, letters of commitment, or contracts.

5 Review and revise your budget

Before you submit your budget, you should review and revise it carefully. Your budget should be consistent, coherent, and complete. You should check for any errors, omissions, or discrepancies in your budget. You should also compare your budget with your project proposal and make sure they align with each other. You should also ask for feedback from someone who is familiar with your business or the grant field, and incorporate their suggestions if appropriate. You should also be prepared to justify and defend your budget if asked by the grant reviewers.

6 Present your budget professionally

Finally, you should present your budget professionally and persuasively. Your budget should be formatted and organized according to the grant guidelines, or using a standard template if not provided. You should use clear and concise language, and avoid jargon and acronyms. You should use tables, charts, or graphs to illustrate your budget visually and highlight the key points. You should also include a cover letter, a summary, and a narrative to introduce your budget, summarize your main expenses and income sources, and explain how your budget supports your project goals and the grant objectives.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?