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Minority small business grants are designed to provide funds and opportunities to business owners who belong to historically marginalized communities. Unlike loans, these grants offer capital you don’t have to pay back. Plus, many grants also provide free coaching and other forms of support.

Read on for a closer look at how minority business grants work, key places you can find these grants, and how to apply for a small business grant.

How Small Business Grants for Minorities Work

Minority business grants are for people who identify as Asian, Pacific Islander, Hispanic, Latino, Native American, Black, multiracial, and other non-white races or ethnicities. They are designed to provide financial resources to individuals who may otherwise find it difficult to get ahead in the business world.

Grants do not have to be paid back the way a loan would. Depending on the source, this money can be used for a variety of purposes, including:

•   Startup costs

•   Equipment

•   Marketing

•   Payroll

•   Office space

•   New product lines

Applying for small business grants will likely require some legwork. However, those willing to put in the effort could be rewarded with an injection of capital that could help their businesses thrive.

Recommended: Success Secrets of Hispanic & Latine Owned Businesses

Private Small Business Grants for Minorities

There are many minority small business grants that you can apply for. Here’s a list of options that can serve as a jumping-off point.

1. NAACP Black-Owned Business Grants

The NAACP partners with other companies and organizations to offer a variety of grants. Since the group is continually looking for new partners, small business grant opportunities for Black entrepreneurs change from time to time — so keep an eye out for new ones.

A good place to start is the Hello Alice and NAACP partnership site, where you can find a running list of Black minority business grants.

Qualifications vary by grant, though all require that businesses be Black-owned.

2. GrantWatch

GrantWatch provides a database of small business grants that allows you to search by grant topics. When using the group’s search function, you can select “small business” as the recipient and “BIPOC” (which stands for Black, Indigenous, and People of Color) as the category to home in on grants designed specifically for minority business owners. For full access to the database, you need to subscribe to the site ($199/year.)

GrantWatch rounds up thousands of grants, including those for nonprofits, individuals, and small businesses, so there isn’t one standard set of qualifications.

3. Galaxy Grants

Galaxy of Stars is a community of minority and women business owners offering support to other entrepreneurs. They provide business grants for Black women, among others, to help owners start or grow a company. Unlike many other grant options, you only need to fill out a brief form with the absolute basics to enter. Any and all women small business owners are encouraged to apply.

They offer additional financial awards on occasion, so you may want to bookmark this site and check back from time to time.

4. First Nations Development Institute

The First Nations Development Institute offers grant opportunities to Native Americans in 45 states, the District of Columbia, and U.S. territory American Samoa. Their grants change throughout the year, and not all grants are specifically for small business owners, as some may support community groups, education, or other ventures. New grants opportunities are posted periodically on the website.

5. IFundWomen

IFundWomen, now partnering with Honeycomb Credit, is a funding marketplace exclusively for women-owned businesses. The platform provides access to small business grants from corporate partners, along with expert business coaching and connections to other women business owners. By filling out the IFundWomen Universal Grant Application, you put your business in the running for all the grant opportunities that come their way. In addition to upcoming grants, you’ll hear about new funding opportunities and additional resources from the IFundWomen community.

6. Amber Grant

The Amber Grant is a funding initiative designed to support women entrepreneurs, including minority women, in launching and growing their small businesses. Created in honor of Amber Wigdahl, a young woman who passed away before realizing her entrepreneurial dreams, the grant awards three winners $10,000 apiece each month. Additionally, a year-end $25,000 grant is awarded to one of the monthly winners.

7. Comcast RISE

The Comcast RISE grant is a program originally designed to support minority-owned small businesses with marketing, media, and technology resources. The goal of Comcast RISE (Representation, Investment, Strength, and Empowerment) is to empower regional entrepreneurs by offering cash, tools, and resources to help them succeed in an increasingly competitive marketplace.

8. The Fifteen Percent Pledge Achievement Award

Fifteen Percent Pledge, a business group that supports Black-owned enterprises, provides three Achievement Award grants each year ($15,000, $35,000, and $200,000) to e-commerce entrepreneurs. Eligible applicants may have no more than 15 employees and minimum annual revenues of $100K.

9. Ingredients for Success Entrepreneurs Initiative

The U.S. Black Chamber of Commerce teams up with the Famous Amos cookie brand to sponsor Ingredients for Success. This grant program awards three early-stage businesses $50,000 cash plus a package of mentorship, networking, and educational resources. Companies must be at least 90% Black-owned and can have been in operation for no more than five years.

10. AAPIStrong

The National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship created this program to foster businesses owned by Asian Americans and Pacific Islanders (AAPI) around the U.S. In doing so, AAPIStrong has given out more than $8 million in grants. In recent years it has partnered with GrubHub to award grants ranging from $5,000 to $25,000 to single-location, community-rooted restaurants.

Recommended: 30 Small Business Grants for Women

Federal Grants for Minority Small Business Owners

Many federal government agencies offer grants to businesses, including minority-owned businesses. Here are two resources that can help you find federal grants.

Grants.gov

Grants.gov is a database that helps grant seekers find and apply for federal funding opportunities. It stores information on more than 1,000 grant programs offered by a range of federal agencies, including the U.S. Department of Commerce and the U.S. Small Business Administration (SBA). To apply, you’ll need to create an account, as well as a unique entity identifier, which lets you compete for federal grants and bid on government contracts.

United States Department of Agriculture (USDA) Grants

Though not limited to minority business owners, the USDA provides financial backing and technical assistance for rural businesses to create quality jobs and improve the quality of life in rural areas. USDA Rural Business Development Grants are available to small and large for-profit businesses, as well as nonprofit and tribal entities.

The funds can be used for a wide range of projects, from agriculture innovation to equipment financing to housing, water quality, health care, and rural job creation in general.

Small Business Innovation Research (SBIR) Program

The Small Business Innovation Research (SBIR) initiative and its sister program, Small Business Technology Transfer (STTR), support innovative small businesses. They do so with grants to qualifying small businesses, which then pair up with federal or academic research organizations to develop the business ideas into market-ready products and services.

Minority Business Development Agency (MBDA) Grants

In its advocacy work, the Minority Business Development Agency funds third parties that offer workshops, events, research, and conferences to help underserved entrepreneurs and minority-owned companies. Its website includes guidance in applying for federal grants and cooperative funding agreements.

How Do I Apply for a Small Business Grant?

Small business grant applications vary widely. Some grantors require full grant proposals, while others only ask for a small amount of information. Here are some steps that can help you get started.

1.    Check the grant’s requirements. These are often very specific, so be sure you meet the basic program requirements, including location, business size, industry, and any founder requirements. Some may even require that you have a membership to a specific organization before applying.

2.    Collect all of your documents. You’ll likely need to supply a business plan that lays out why you’re applying for the grant and how you plan to use the funds. In addition, you may need:

•   An employer identification number (EIN)

•   DUNS number

•   Revenue history

•   Organizational chart, including the number of employees

•   Bank statements

•   Tax returns

•   List of contracts your business holds

3.    Fill out the application. This is typically the most time-consuming part of the process. You may need to answer multiple questions about why you need the funds, how you expect to spend the money, and how your business contributes to the community.

5 Tips for Strengthening Your Grant Application

1.    Study previous grant-winning applications as a model. How descriptive, specific, forward-looking, or customer-focused are the winning entries? Imitating their methods may help improve your chances.

2.    Provide numbers whenever possible. These could be a detailed budget, financial statements, profit and loss projections, or even your own market research using a tool like SurveyMonkey. Supporting your pitch with data can be very convincing.

3.    Highlight your personal and business accomplishments. Mentioning past awards, honors, media features, and the like can reassure the grant committee that your company is already on the path to success.

4.    Keep a folder of your crucial business documents up to date. Certain types of documentation are common to many grant applications, as noted above. Taking time now to fine-tune them can help speed along future proposals. Reusable documents may include your business plan, a competitive pitch slide deck, and a written or video summary of how you intend to spend the grant money.

5.    Follow all the directions. When applications specify rules about word count, deadline, number of recommendations, and the like, take heed. Thoroughness and attention to detail give you a better shot at impressing grant judges.

Other Resources for Minority Business Owners

In addition to the above grants for minority business owners, here are some other helpful resources you may want to look into.

National Minority Supplier Development Council

The National Minority Supplier Development Council strives to provide business opportunities for certified minority businesses through training, networking, and funding opportunities. With over 1,500 corporate members, the NMSDC plays a key role in advancing minority-owned businesses and driving economic inclusion.

SBA Microloan Program

The U.S. Small Business Administration’s (SBA’s) microloan program provides up to $50,000 to new and existing startups. These startup business loans are fully funded by the SBA but administered by an intermediary network of nonprofit community-based lenders, rather than traditional banks.

Unlike many traditional loans, SBA microloans are available to small business owners with no credit history, as well as lower incomes. The program is also geared toward businesses otherwise underserved by traditional banks, including women- and minority-owned businesses and those in low-income communities. Exact eligibility requirements vary by lender.

To apply for a microloan, work with an SBA-approved intermediary in your area.

Operation Hope’s Small Business Development Program

Operation Hope’s Small Business Development Program is an intensive course providing business basics like financial counseling, personal development, and access to professional services. It focuses on empowering minority business owners by giving them the tools to succeed in competitive markets.

SBA’s 8(a) Business Development Program

The SBA’s 8(a) Business Development Program aims to help socially and economically disadvantaged people or entities by helping them apply for federal contracting opportunities. The program also offers mentoring and business training.

To qualify, businesses must be owned by U.S. citizens belonging to a disadvantaged group and meet annual revenue standards for their industry. Owners must also submit a social disadvantage narrative to support their application.

Local Economic Development Agencies

On a smaller scale, there are many community-oriented groups and agencies around the nation that provide financial assistance to small businesses. Here are some examples.

•   Local Initiatives Support Corporation (LISC) has 37 local offices and a rural program that reaches more than 2,400 counties in 49 states. With funding from banks, corporations, foundations, and government agencies, LISC provides financing (loans, grants, and equity) to local partners, along with technical and management assistance.

•   The Supplier Innovative Finance Program, administered by New York’s Empire State Development agency, offers up to $5,000 in unrestricted grants to help socially and economically disadvantaged businesses in New York grow. In addition to the money, businesses can access educational resources and be connected to more potential funders. Eligible companies must be certified as minority, women, veteran, or LGBTQ+ owned.

Alternatives to Small Business Grants

Small Business Loans

If grants aren’t available for your business right now or you need faster funding, you may want to look into different types of small business loans. While banks typically have strict qualification requirements, such as at least two years in business and a minimum amount of revenue per year, online lenders tend to be more flexible, as well as faster to fund (though rates are typically higher).

Many of the same organizations that give grants to minorities and women also provide access to small business loans for women-owned companies.

Business Line of Credit

A business line of credit is a type of small business funding that allows businesses to borrow up to a predetermined limit as needed, rather than receiving a lump sum. Similar to a credit card, funds can be drawn and repaid repeatedly, with interest charged only on the amount borrowed.

Microloans

Microloans are small, short-term loans designed to help small businesses and startups with limited access to traditional financing. Typically ranging from a few hundred dollars to $50,000, microloans for businesses are frequently offered by nonprofit organizations, community lenders, or government programs like the U.S. Small Business Administration (SBA). Some sources direct their microloans to women-owned small businesses.

The Takeaway

Small businesses owned by minorities have access to many grants, which award you cash that you don’t have to repay. While researching and applying for grants does take some time, they can be a valuable source of funding to get your small business off the ground or help it expand. Since competition can be stiff, you may also want to investigate other sources of capital for your business.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What is the best source of funding for small businesses?

The best source of funding for small businesses depends on the business’s needs and goals. Common options include small business loans, grants, venture capital, angel investors, and business lines of credit. For flexible, non-repayable funds, grants are ideal, while loans and lines of credit offer structured financing.

Does the government give money to startups?

Yes, there are government programs offering small business loans and grants to startups. Those in specific sectors like technology, research, or those owned by minorities and women may have an easier time finding government assistance, though.

What organization helps small business owners borrow money?

The Small Business Administration (SBA) helps small business owners borrow money by providing access to loan programs, such as 7(a) loans, 504 loans, and microloans. The SBA partners with banks, credit unions, and other lenders, offering guarantees to reduce the risk for lenders and making loans more accessible.

Are there grants specifically for minority women business owners?

Yes, there are many business grants offered to minority women, including some grants for Black women in particular. Here are some additional opportunities:

•   Run by Black Girl Ventures, the BGV Pitch Competition for underrepresented female business owners granted a total of $30,000 to the top three winners in 2024.

•   DigitalUndivided’s Breakthrough Program offers $5,000 business grants for Black women and Latinas running their own small companies.

•   Directed at Native Hawaiian, Asian, and Pacific Islander women business owners, the Hawaii FoundHer accelerator program supports its selected entrepreneurs with a $20,000 grant and a $4,000 family care stipend.

•   The HerRise microgrants program distributes $1,000 each month to women of color entrepreneurs.

How competitive are small business grants for minorities?

Small business grants for minorities can be quite competitive, as the need is widespread and the grant options for your business size, type, or sector may be few. Entrepreneurs of color face more challenges in securing capital overall, whether that comes as a grant or a loan.

Photo credit: iStock/mapodile

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Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.


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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-003

Small business grants can make starting a new business or growing an existing one easier. Unlike loans, which have to be repaid, grant money typically does not require business owners to pay it back.

Figuring out how to get a small business grant is the challenge. It can be complicated if you’ve never done it before, and the grant landscape can be competitive. Understanding more about what’s needed to qualify can help when you’re trying to get grant money for business initiatives.

Here’s an overview of grant options, plus tips that may help you find and secure the small business grant that will work for you.

Recommended: 13 Funding Options for Startups in 2025

What Is a Small Business Grant?

Small business grants are typically cash awards given out to help small companies get established, grow, or achieve entrepreneurial goals. The grantors may also offer mentoring, planning or other forms of assistance along with the money.

Types of Small Business Grants (Federal, State, Local, Private)

Ambitious entrepreneurs can find any number of ways to get grant money for business ventures. Federal, state, and local governments or agencies often fund small business grants, directly or indirectly. Some industry groups and associations sponsor grant competitions. Foundations set up by individuals or corporations frequently award grants to spur business development and entrepreneurship.

Most grants go to early-stage or fledgling companies, but in some cases you can get a grant to start a business.

Why Apply for a Small Business Grant?

The beauty of a grant is that it’s free money. Unlike a small business loan, there’s no repayment schedule, no interest charges, and no debt.

Also, because many small grants are awarded monthly or quarterly, more applicants have a chance of securing a grant. Such successes can help grant recipients build credibility for future grant applications.

Having your business’s financial files carefully compiled for grant pitches can be useful for future loan applications too. When you need to negotiate for, say, vendor financing or a business line of credit, you’ll have your documentation ready and you will have experience discussing it in detail.

How To Successfully Apply for a Grant in 7 Steps

Applying for a grant can be a long process, but taking it in stages can make it more manageable. Here are seven steps to get you to the finish line.

1. Get Familiar With the Grant Options

One of the keys to getting a small business grant is simply knowing what’s available. Some grant programs offer funding to any kind of business, whereas others may be more selective as to which types of business owners they support.

For example, when searching for grant opportunities, you may come across:

•   Business grants for women

•   Small business grants for minorities

•   Business grants for disabled entrepreneurs

•   Grants and loans for disabled veterans

•   Grants for immigrant business owners

If your business fits into any of those categories, looking for relevant grants could help you find additional possibilities in your search for funding. (You may also run across lenders who specialize in minority business loans and other niche credit options.)

2. Know Where to Look for Grants

Grant money for small businesses can seem elusive unless you know where to look. A general web search can turn up some results, but there are a number of websites that aggregate different kinds of small business grant opportunities in one place.

Some of the options you might consider include:

•   Grants.gov: This government-run website houses information on more than 1,000 grants as well as additional resources for potential applicants.

•   GrantWatch: This subscription-based website allows you to search for grants using different criteria and provides information about other resources, like grant writer referrals.

•   Minority Business Development Agency (MBDA): This government-run website lists some grant competitions as well as providing other resources for small businesses.

•   Small Business Administration (SBA): The SBA is involved with some grantmaking, particularly in the area of research and development, and also grants funds to community organizations.

•   USDA Rural Business Development Grants: The Rural Development division of USDA provides grants (and loans) to encourage the development of housing, healthcare, first responder services, utilities, and other essential services.

You can also research how to get a small business grant at the local or state level. Your city’s chamber of commerce or state business development agency may be good starting points for finding grant opportunities.

3. Review Individual Grant Criteria

When it comes down to applying for small business grant funding, researching the qualification criteria is critical. This can help you pinpoint the grant opportunities you’re most likely to qualify for, while weeding out ones that aren’t a good fit.

Every grant is different, and again, one of the main criteria for a specific grant might be whether you operate a woman-owned business, belong to a minority group, or have veteran status.

Beyond that, however, consider other minimum qualifications, such as:

•   Time in business

•   Type of industry

•   Annual revenues

•   Number of employees

•   Planned use for grant funding

Like startup business loans, some small business grants may be aimed at early-stage companies, while others may be geared toward helping established businesses grow. Some grants may place conditions on how the money can be used to further business activities.

These are all things you should know before starting on any grant writing project. If you and your company aren’t eligible for a given grant, applying for it wastes your time and effort.

4. Know What Registrations You May Need to Apply

Depending on the grant program, you may need to register your business before you can apply. For example, applications can require any or all of the following:

•   Federal employer identification number (EIN)

•   DUNS number

•   SBA-certified small business or woman-owned business documentation

•   Business license or articles of incorporation

If you’re applying for grants through a portal like Grants.gov, you may also need to register for an account with the site first. Make sure you have all the necessary registrations in place before you apply; it can save you time later.

Recommended: Small business equipment financing

5. Update Your Business Plan

It’s typical for lenders to ask to see a copy of your business plan when you’re applying for loans. For SBA loans, for example, lenders will require a business plan when considering your application.

It’s not uncommon to need an updated business plan when you’re trying to get grant money for your small business. If you haven’t updated your business plan recently, or if you’ve never drafted one, that’s one more thing to cross off the list before you apply for funding.

A business plan should contain certain details about how you run your business. The basic format typically includes:

•   An executive summary

•   Company description

•   Market analysis

•   A description of your organization and management

•   Details about your products or services

•   Financial projections and expected growth

Remember that getting a business grant can hinge on how you present your business. Your multi-year business plan, along with the details you include in your application, is your chance to make a strong case for why you should receive funding.

6. Complete the Grant Application

Perhaps the most important step in how to get a small business grant is filling out the application. This part of the process can take days or even weeks, depending on how extensive the application is and what the grant-making organization requires in the way of supporting documentation.

Here are some tips to keep in mind as you fill out the application:

Know your due dates

Grant applications often have deadlines and you don’t want to miss out on a chance to secure funding. Make note of when the application is due and give yourself plenty of time to complete it.

Read it through at least once

Give the application a thorough review so you know what’s covered and what you’ll need to provide when you’re ready to submit it.

Be truthful

Avoid including inaccurate or misleading information on your application, since that could cause you to be disqualified for grant funds.

•   Be thorough. One thing to note about how to apply for small business grant money is that less is not more. In other words, if the application asks for a detailed description of how you plan to use the money, then don’t offer up a one- or two-sentence explanation.

•   Don’t leave anything out. If a grant application asks for specific documentation, such as a copy of your business plan or a recent profit and loss statement, don’t fail to include it. An incomplete application could be rejected right off the bat, so make sure you’re submitting all requested documents.

Before you hand in your grant application, proofread it for spelling or grammar errors and correct any you find. You may also want to have someone who’s experienced with small business grants or grants in general look it over, as well. You could also consider hiring a grant writer to review your application. A second set of eyes may discover overlooked mistakes or areas you could improve.

7. Follow Up if Appropriate

Once you’ve sent in your grant application, the waiting game begins. The application review and approval process can take weeks or even months, depending on the grant.

During this time, you may want to reach out to the grant organization and check up on the application. Specifically, you could ask if there’s any additional information or clarification needed as your application is being reviewed.

You don’t want to be a nuisance, but following up could help you get a small business grant if it keeps you on the grant-maker’s radar.

Common Mistakes to Avoid When Applying for Grants

When gathering information on how you can get a grant to start a business or support one, it’s crucial to thoroughly understand each funder’s requirements. For example, as noted above, if the application asks for a detailed discussion about how you plan to spend the money, writing just one or two sentences won’t suffice. Here are some other pitfalls to avoid.

Ignoring Grant Guidelines

Even if your application is strong, it could be automatically rejected if it fails to adhere to strict guidelines and deadlines. These could be as basic as formatting rules or page count. They could also encompass broader concepts such as eligibility requirements and alignment with the funder’s mission.

Submitting Incomplete Applications

Make sure you’re submitting all requested documents so that your application won’t be rejected right away. Required documents, such as your business plan or recent balance sheets, are a must. Other essentials to include are a well-structured project timeline and a comprehensive budget that explains each line item.

Underestimating the Competition

Grants are usually highly competitive, with many qualified businesses vying for the money. It’s prudent to research other businesses applying for similar grants to see what they bring to the table and how you could constructively set your application apart. The more impressive the other candidates are, the stronger your application will need to be.

Resources to Help You Apply for Small Business Grants

You don’t have to go through searching and applying for business grants all by yourself. Many resources exist to help you along the way. Here are a few important ones.

•   Online grant databases: In addition to Grants.gov and the other websites mentioned above, there are many small business grant databases. State and local governments, corporations, foundations, interest groups, and business development agencies are some of the entities that list grants online.

•   SCORE and Small Business Development Centers: SCORE is a nonprofit partner of the U.S. Small Business Administration (SBA) with locations nationwide. It offers a slew of free mentoring and training, including workshops on grant writing. Small Business Development Centers, also sponsored by SBA, provide small business owners with counseling and support; advisers there can help entrepreneurs access capital and improve financial management.

•   Local chambers of commerce: Networking with other business owners in your area may help you find peers who have grant experience and can advise you. You may also learn about local grant offers you might have overlooked.

The Takeaway

Grant money for small businesses can be a financial lifeline if you’re hoping to launch a new venture or grow a business you already have. Understanding the details of how to get a small business grant can help you find the best grant options and deliver the strongest application possible.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What are the eligibility requirements for small business grants?

Eligibility for small business grants typically depends on factors like the size of the business, location, industry, and the purpose of the grant. Many grants also require that the business meets specific criteria, such as being independently owned or serving a particular community or demographic group.

How do I find small business grants?

You can find small business grants through government websites like Grants.gov, local chamber of commerce listings, and nonprofit organizations. Additionally, private corporations and foundations often offer industry-specific or competition-based grants to support business innovation or community development.

What is the application process for small business grants?

The application process generally involves filling out a detailed proposal or application form, providing financial documents, and outlining how the grant will be used to support business growth or specific projects. It’s important to follow the grant guidelines carefully and submit all required documentation to increase your chances of approval.

Can I reuse my application for different grant programs?

You can certainly reuse factual information on many different grant applications. This might include your business’s background, financial details, and how you plan to use the funds. Otherwise, though, it’s best to tailor your application to the specific grant and funder, so that you make a strong and personalized case with each submission.

How long does it take to hear back about a grant decision?

Each grant has its own timeline for approval and notification, and it varies by funder. Federal and state grantors often post their processing times on their public websites. Foundations’ review schedules can range from 30 days to eight months.

Photo credit: iStock/sakkmesterke

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-002

If you recently graduated from college or are about to, congratulations. Those closest to you will typically celebrate your achievement, and some gifts may come rolling in, often in the form of cash.

As you get ready to start the next chapter of your life, you may wonder what to do with any money you receive. Should you pay down debt, invest the funds, go shopping?

The answer will depend upon your personal finances and your goals, but here are 25 ideas to inspire you.

1. Jump-Starting an Emergency Fund

Establishing an emergency fund can be a great first step toward financial stability. Having this cushion can help you to handle a financial setback, such as a costly car repair, trip to the ER, or loss of income, without having to rely on high interest credit cards.

A good target is to have enough money set aside to cover three to six months of living expenses. It’s fine to start small, however, and build this fund up over time.

2. Paying Off Credit Card Debt

It’s not uncommon to accumulate credit card debt in college. Laptops and textbooks can be costly, and it can be hard to have time to work a significant number of hours. The sooner you pay off any balances you are carrying, however, the less you’ll pay in the long run and the easier it will be to handle new expenses, like rent and car payments.

3. Buying Interview Clothes

Whether you graduated from college early or just completed grad school, you may be job hunting. While the knowledge, skills and attitude you can bring to a company may be what’s most important, how you dress for the interview can also form a lasting impression on potential employers. Depending on your industry, that might mean a suit for men and a suit or dress for women.

4. Reducing Your Student Loan Debt

If you took out a student loan for college or graduate school, you may want to use some of your graduation money to start paying down your loan balance. The more you can knock down your loans, the less interest you’ll owe and the less you’ll pay overall.

If you make an extra payment, however, it can be a good idea to make sure that your loan officer applies the extra amount to the balance, rather than next month’s payment.

5. Saving up for an Apartment

If you’ll be moving into your own place after graduation, you’ll likely need to come up with your first and last month’s rent, plus a security deposit, in one fell swoop. You may also want to save up for furniture and household items, like dishes, cookware, and linens, to set up your new place.

6. Investing in Mutual Funds

While investing can sound intimidating, one easy way to get started is to invest in one of the different types of mutual funds. While these funds typically charge an annual fee and involve some risk, they are managed by professional investors who typically spread your money over a mix of securities, such as stocks and bonds. You can choose a mutual fund based on its past performance, how aggressive (or stock-heavy) it is, and the type of fees they charge.

7. Opening a High-Interest Savings Account

Traditional savings accounts typically offer very low interest. If you are saving your graduation money for a short-term goal, like buying a car or building an emergency fund, you may want to put it in an account that offers higher interest than a traditional savings account, but is still insured and allows easy access to your money. Some good options include: a high-yield savings account, money market account, online savings account, or checking and savings account.

8. Getting a Start on Retirement Saving

It’s never too early to start saving for retirement. Thanks to compounding returns (which is when the money you earn on your money also earns money), the earlier you start putting money aside for retirement, the easier it will be to meet your goal. If your employer offers a matching program for your 401(k), you may want to consider taking full advantage of it and contributing at least up to their match.

Recommended: The Average 401(K) Balance by Age

9. Going on a Trip

Before you jump into the working world, you may want to take some time off and explore some new destinations. Traveling is not only fun, it can also be a way to learn more about the world, gain insights into different cultures, and potentially even make some new connections.

The experience of traveling may also energize you and help you gain clarity about what you want your future to look like.

10. Saving up for Grad School

If you’re planning to pursue a higher degree, you may want to use your graduation money to jump start your grad school fund. In general, it can be better to pay for your education out of pocket rather than taking out student loans which, thanks to interest, make the cost of higher education even higher.

11. Putting Money Into Real Estate

You may not have enough money to purchase a home yet, but you could try investing money into a REIT (real estate investment trust). Modeled after mutual funds, REITs offer a lower-cost way to invest in the real estate market.

These trusts are also liquid, which means you can sell at any time. Like stocks, you can buy and sell REIT shares on an exchange. As with any investment, investing in a REIT involves some risk.

12. Buying a Car

If you’ll be needing a car to get around, it can be a good idea to start saving for a down payment or, even better, paying for the car in cash. Whether you buy a used or new vehicle, the more cash you can put down initially, the less you’ll have to finance, and the less you’ll end up paying for that car.

13. Joining AAA

Whether you already have a car or you’re planning to buy one, you may want to use a bit of your graduation money to join AAA. Having a AAA membership can provide peace of mind when you’re out on the road, and can end up paying for itself should you get a flat tire or two, or need a tow in the wee hours of the morning. AAA membership also gets you discounts on many hotels, rental cars, and other products and services.

14. Starting a Business

If you are planning to launch your own business straight out of college, you may want to funnel your graduation money right into your new venture. If you need additional cash for your start-up, you might also consider taking out a small business loan or crowdfunding your idea on a site like GoFundMe and Kickstarter.

15. Joining a Wholesale Club

As you transition from dining hall or parent-supported dining, you may want to look into joining a wholesale club like Costco, BJ’s, or Sam’s Club. These member-only stores can save you a lot of money when you buy in bulk, and could especially come in handy if you’re splitting costs with your roommates.

16. Donating to Charity

Donating some money to charity can be a solid option when you’re deciding what to do with graduation money. If you have a particular cause you’re passionate about, you can look for relevant charities on Charity Navigator.

If you give to a tax-exempt 501(c)(3) organization, you may be able to write the charity donation off on your taxes.

17. Taking Your Parents to Dinner

If your parents helped pay for your college education, you might want to show your gratitude by taking them out to dinner. It doesn’t have to be anything fancy; the idea is to let them know that you truly appreciate their love and support. This could apply to a grandparent, family member, or a friend who funded your education as well.

18. Saving for a Home

While owning a home might not be in your immediate future, you may want to use your graduation money to start saving up for a down payment.

To get a sense of how much you might need, you can start looking at real estate prices in the area where you would like to live. Ideally, you would want to put 20 percent of the purchase price down and avoid private mortgage insurance.

19. Saving for Your Wedding

Weddings can cost on average more than $35,000 for the ceremony and reception. Of course, there are ways to have a cheaper wedding, such as keeping it small or having it in your backyard, but wedding costs can still add up quickly. If you’re engaged or planning to be soon, you might want to use some of your graduation money to start a wedding fund.

20. Paying for Additional Classes or Certifications

Even though you graduated with a degree, you may find that you need some additional training to stand out in your field.

To be more competitive when it comes to the job market, you might want to use your graduation money to pay for additional classes or certifications. This could possibly lead to an increase in your salary as well.

21. Paying for Personal Care

When you go in for job interviews, you’ll want to look your best. Along with buying professional clothes for your interviews, you may also want to invest in other aspects of your personal appearance, such as getting your hair cut or styled, getting your nails done, or having your teeth whitened. Putting your best foot forward can help you feel more confident.

22. Moving to an Area with a Stronger Job Market

If your home town doesn’t have the best job market for your field, you may want to consider moving somewhere that offers more opportunities. You could put your graduation money towards moving expenses, such as renting a truck or professional movers.

23. Hiring a Career Coach

If you’re having trouble finding the job you want, you might consider using your graduation money to hire a professional career coach. These pros can help you revise your resume, improve your LinkedIn profile, build your network, and help you plan out your career. Typically, the best career coaches will have extensive experience in human resources and/or recruiting.

24. Getting Health Insurance

If you graduated from college later than your peers or you’re finishing up grad school, then you may no longer be on your parents’ health Insurance. You may want to start by looking for a health insurance policy on the government marketplace. As you compare policies, it can be a good idea to keep your medical needs, such as prescriptions and specialty doctors’ visits, in mind.

25. Paying Back Anyone You Owe

If you borrowed any money from family or friends during college, you may want to use graduation money to settle up. This shows that you are responsible and true to your word. If you end up in a bind again in the future and need to borrow, your family and friends will know that you can be trusted to pay them back.

The Takeaway

If you’re not sure whether to spend or save your graduation money, it can be helpful to look at both your short-term needs, such as paying off credit cards and buying a car. as well as your long-term goals, like creating a comfortable retirement nest egg.

The answer to how to use graduation money is different for everyone, but it can be a good idea to weigh all of the options before you make any major spending decisions.

Whether you’re saving for something specific or storing cash until you’re ready to invest, finding a bank account with low or no fees and a good interest rate can be a smart move.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What are you supposed to use graduation money for?

What you opt to do with your graduation money depends on your personal finances and goals. Some things you might choose to do with the money include using it to build an emergency fund, saving up for a car, using it to rent an apartment, or putting it toward your student loans.

What is the smartest thing to do with your graduation money?

One smart thing you could do with your graduation money is use it to pay off high-interest debt, such as credit card debt. You could also choose to save for your future, such as for retirement or a down payment on a house. Ultimately, however, what you choose to do with the money is up to you. Be sure to weigh all your options before making a decision.

Is $1,000 a good graduation gift?

Yes, $1,000 is typically considered a good graduation gift. The amount is generous and can be helpful in getting you started on your life after college. For example, you could use it to pay down debt, such as credit cards or your student loans, or put it toward creating an emergency fund.

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Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

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SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

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