3 Reasons Why Business Grant Proposals Are Rejected and How You Can Fix It

Rejected Business Grant Proposals
Why Business Grant Proposals Are Rejected?

In this post, I’m going to explain some of the top reasons why business grant proposals are rejected, and more importantly, steps you can take to increase your chances of winning a business grant.

The U.S. Federal government awards anywhere from $600 billion to more than $700 billion in grants each year. Of these, only about 4% (slightly more than $6 billion) are awarded as business grants. And while 4% seems pretty small in the overall scheme of government grants, $6 billion in federal business grants is no small number.

And if you add businesses that form strategic partnerships with schools, universities, governmental agencies, cities, states and other public entities, the annual dollar amount of government grants for businesses jumps by at least $1 billion. For 2020 and 2021, the dollar amount of government grants for businesses is likely to be higher than previous years. Already, about $350 billion in federal grants have been awarded in 2020, and we’re still not one-third of the way through the year!

spending over time chart

Having worked for years as a funding proposal reviewer and team leader for a variety of federal, state and private funders, I have led or been part of decision-making teams that have awarded more than $1 billion in funding. In other words, I know the ins- and outs of why business grant proposals do and don’t get funded.

Most business grant proposals are rejected and not funded. Based on my personal experience, combined with research and discussions with colleagues, I estimate that the average success rate of business grant proposals to be anywhere from about 3% to no more than 8% to 10%.

First, it is essential to understand the most common reasons why most business grant proposals are rejected, then we can talk about steps you can take to increase the likelihood that your proposal will stand out and your firm will be among the few that actually win federal business grants.

First, let’s take a quick look at the top three reasons more than 90% (on average) of business grant proposals are denied for funding:

In my experience, this is the number one reason that most business grant proposals are denied. Most commonly, they don’t follow the directions by leaving sections of the proposals blank, not addressing review criteria in the proper context (in other words, not providing reviewers with the information they want to see), or not including required attachments. Each section or component of a business grant proposal counts for a certain percentage of the overall proposal score.

Making one or more of these critical errors by not following the directions dramatically lowers your overall score. When more than 90% of business proposals are rejected, every point counts.

A well-written business grant proposal should be consistent from start to finish. In the most simple terms, a strong business grant proposal should emphasize a problem-solution perspective, outlining the problem and then telling the reviewers the steps you will take to solve that problem.

But instead, when reviewing proposals I often feel as though I’m reading the tale of a pinball as it makes it journey up and down, side-to-side and all over the place in a pinball game. Once this happens, you’ve immediately lost the reviewer’s attention and you are basically out of the game.

Many entrepreneurs or founders seeking non-dilutive funding through business grants often take a ‘shotgun’ approach, writing and sending out as many proposals as possible in the hopes that sooner or later, one of them will stick and be awarded funding. As an experienced reviewer of grant proposals of all types, I can tell you that this approach is almost certain to fail.

The various government grants for businesses are all prepared with specific purposes in mind. When looking at business grants, federal and state funding agencies only award fundings to businesses and projects that support specific, local, regional, state or national strategic priorities.

If your funding proposal is not directly aligned to the specific priority of the funder or grant program, I can guarantee you that your business grant proposal will be rejected. With that being the case, there is no point in wasting your resources in proposal development if your business or project is not in full alignment.

  • Follow the Directions the Funder Provides: Funders always provide directions for business grant proposal development directions available for potential applicants. Although these directions are often difficult to understand and seemingly ambiguous at times, with this in mind, it is essential to understand the requirements and directions for preparing your business grant proposal. Each grant maker has a distinct set of qualifications for submission. If these basic requirements are not met, the application won’t even make it to the review phase. If you are unsure or have any doubts, you should reach out to the agency contact or hire a professional who is experienced in understanding these directions.
  • Ensure Your Proposal Elements are Consistent and Fully Support Your Overall Goals, Objectives and Outcomes: Your business grant proposal should have a specific goal in mind. As such, each proposal component (e.g., problem-solution statement, background research, etc.) and every objective, outcome or task you propose, should be directly related to or support attainment of, your identified goal. The overall purpose of your proposal should be consistent in every section of the proposal. You can think of your overall proposal goal as the central ‘spine’ that runs through each section of the proposal. Using this train of thought, it can be easier to ensure that all of your information and activities directly support attainment of the solution you have proposed.

When reviewers finish reading through your proposal, three points should be abundantly clear:
1) why this;
2) why now; and
3) why you.
I’ll be talking more about these three points in an upcoming post.

And while a business grant proposal does not have to read like a novel, when presenting your case, you want to maintain the attention of the reviewers with compelling text that makes them want to move on to the next section of the proposal.

Grant experts also note that grammar is also an important aspect when writing a strong business grant proposal. Again, if you are unsure about your writing abilities, you might want to consider hiring an experienced business grant writer to handle this undertaking. Also be certain that every line item of your proposed budget is reasonable, necessary, allowable and directly supports attainment of the goals, objectives and outcomes you have outlined in your proposal.

As I’ve already pointed out, for most people, the odds of getting your business grant proposal funded on the first try are stacked against you. But if your proposal is denied, don’t give up. Instead, use that denial to learn how you can refine, strengthen and improve your proposal, the next time around.

There is always a chance that your business grant proposal will be approved during the next cycle of funding. First, contact the program officer and request a copy of the reviewer comments. Many funding agencies will automatically send this information with you having to even ask. But if you don’t receive it automatically, don’t be shy — contact the program office and request a copy of the feedback.

If the person says that this feedback is not provided, then at the very least, you can file a Freedom of Information Act (FOAI) request to obtain a copy of a business grant proposal that the Federal government did fund. This can give you a sense of how the success applicant responded to the grant proposal review or evaluation criteria.

And as I’ve said before — if you don’t feel confident or ready enough to write your own business grant proposal, then you can always hire an experienced professional to write the proposal for you. Together, my team and I have secured nearly $1 billion in funding for our clients.

Interested in learning more? Contact me today and let’s talk!



I love entrepreneurship and helping businesses and organizations build foundations for growth and funding success. Let’s talk startups, growth and leadership!

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Ron Flavin

I love entrepreneurship and helping businesses and organizations build foundations for growth and funding success. Let’s talk startups, growth and leadership!