For scrappy startups and long-standing companies alike, cutting costs to save cash or courting angel investors might seem like the only options for app development funding. But in this guide, we’re exploring another potential solution for today’s brands.

Enter government funding for mobile app development. 

Funding your app development with a grant or government-sponsored loan can help your company overcome financial hurdles on the way to a quality digital product. But where do you start?

In this guide, we’ll break down everything you need to know about government funding opportunities. Below, we’ll explore various options for funding, eligibility considerations, the application process, and the criteria you should expect to meet once you secure financing.

Funding mobile app development: an overview

Securing capital is just one of many hurdles that organizations must overcome as they try to reach, and transform, more users. While private funding from angel investors or crowdsourcing is an option, government funding is another that shouldn’t be overlooked. 

Your company might be able to take advantage of one or more of the following government-sponsored financing opportunities:

• Grants – Grants are often awarded by individuals, organizations, other companies, or the government. And, in many cases, they don’t have to be repaid. Think of a grant as a (conditional) gift.

• Loans – Unlike grants, loans must be repaid. But government-sponsored loans are often more affordable or will feature more attractive terms than other lending options.

• Tax incentives – Companies building apps that meet certain requirements might be eligible for tax breaks. While these won’t necessarily fund your app, they can still make an impact on your bottom line during and after development.

This is just a snapshot of the options available. With these opportunities and more, government funding for mobile app development is well within reach for many evolving projects.

Types of government funding for mobile app development

There are multiple financing opportunities available in each of the categories listed above. Let’s take a closer look at each one. 

Federal, state, and local grants

Since grants don’t have to be repaid (in many cases), they’re often the most attractive option for brands building digital experience. Luckily, they can be fairly easy to find.

One of the largest databases of government grants is Grants.gov. Using the search tools, you can filter funding opportunities based on:

• Keywords or grant titles
• Funding type
• Eligibility
• Industry 
• Funding agency

However, this is just a collection of federal grants. Many states and state agencies offer grant opportunities, too. For instance, the New York State Health Department maintains a list of financing opportunities available to organizations based in the state.

Many counties and cities offer grant opportunities for businesses, too. For example, New York City’s Small Business Services arm offers numerous programs and initiatives for organizations looking to make a local impact.

Government-sponsored loans

Brands looking for government funding for mobile app development should also consider loans. While they have to be repaid in most cases, government-sponsored loans often feature better terms like low interest rates and long repayment schedules.

Most government loans are specifically tailored to small businesses or nonprofit organizations. You can typically find these loan options from one of two sources:

1. State and local governments – Visit your state or local government’s Secretary of State, Department of Economic Development, or Chamber of Commerce to find local loan products.

2. The US Small Business Administration (SBA) – The SBA partners with lenders to offer small businesses easier access to capital. Two of their most popular options are 7(a) Loans and Microloans.

The Research and Development Tax Credit

Federal tax relief is another government-provided path to more affordable, and therefore feasible, app development. Consider the Research and Development Tax Credit, a federal government provision that offers two potential benefits for qualifying businesses:

1. Credit against federal income tax liability – Eligible businesses can apply 6–8% of their annual R&D expenses against their federal income tax liability, dollar for dollar.

2. Payroll tax liability credit – Companies with qualifying expenses can also claim a credit of up to $250,000 per year on their payroll taxes, which could significantly reduce their FICA tax contributions.

Eligibility for government funding

Is your brand or app eligible for any of the opportunities listed above? While you should talk to your app development partner about specific eligibility requirements, this quick run-down of eligibility can get you a few steps closer to choosing a funding option. 

Who is eligible?

Eligibility for government funding can be complex. Generally speaking, the following rules apply:

• A variety of organizations can be eligible for local, state, or federal grants. While your chosen database’s search tools might help you filter results based on eligibility, make sure to read the fine print before investing time into the application process.

• Small businesses typically must meet size requirements and show proof of creditworthiness to apply for government-sponsored loans. The SBA offers a size standards tool to help determine general eligibility.

• While brand new organizations can qualify in many cases, most businesses eligible for the R&D Tax Credit must have gross receipts under $5 million during the tax year when they’re claiming the credit.

The application process

Organizations seeking government funding for mobile app development will have to complete one or more applications to secure financing. What could that look like for your organization? Let’s answer some frequently asked questions about applications.

How do I apply for government funding?

Here’s a quick breakdown of the application process for companies seeking government financing:

1. Find funding sources – First, find the opportunities you’d like to apply for. We’d recommend applying for as many options as possible to improve your adds of securing the funds and ultimately getting your app built.

2. Read the instructions – Each opportunity should feature a list of application instructions. But, if you can’t find them, reach out to the organization sponsoring the opportunity. If you’re applying for an SBA loan, for instance, reach out to them or the lending partner offering the specific financing product you’re seeking.

3. Compile documents – You should expect to submit documents related to your financials, legal structure, mission/vision/values, and project scope (at minimum). Paperwork (physical or digital) can pile up during the application process. Consider adopting a standardized file naming convention to keep track of each document and package.

4. Complete writing portions – While small business loan applications might not require them (and the R&D Tax Credit doesn’t either), grant applications often feature a writing portion. This is where your organization can really shine during the application process. Whether you’re asked to write about your business’s mission, your user base, or your vision for the app development process, make sure that your writing is high-quality and error-free. 

5. Submit your application – R&D Tax Credit information should be submitted with your organization’s federal income tax return. But for grant and loan applications, submission instructions can be highly specific. Make sure your application package meets the technical requirements (like file size and naming convention standards) described in the application. 

6. Follow up – Depending on the sponsor of the funding source, you might have an opportunity to connect with someone directly about the status of your application. The sponsor may also contact you to ask for clarification on your documents, set up an interview, or ask for additional documents. Make sure to monitor your email (including your spam folder) and other communication channels to avoid missing messages.

Which common mistakes should I be wary of, and avoid?

Since some funding applications can be complex, it’s easy to make mistakes. During the application process, make sure to:

• Triple-check everything – Mistakes or inconsistencies in your application can impact your chances of being selected for funding. Make sure to re-read your materials at least three times or send your package to three separate reviewers. Sending it to someone who hasn’t helped prepare the materials can help ensure that your application is being reviewed by fresh eyes.

• Be honest – Resist the temptation to fudge figures on your application, even if you barely exceed a sponsor’s limits for revenue or staffing. Before you’re granted funding, sponsors will likely perform thorough research, so white lies are almost guaranteed to come to light.

• Strictly adhere to deadlines – Since many applications for government funding are electronic, it’s crucial to meet the deadlines stipulated in the application. Organizations will likely close their electronic submission platforms the minute the deadline passes, so make sure to leave enough time to troubleshoot technical difficulties or complete long upload processes. If you’re filing for the R&D Tax Credit on your federal income tax return, make sure to meet the filing deadline to prevent fees. While late submissions might not impact your ability to claim the credit, they can incur fees that will cut into your project’s bottom line.

What’s the application timeline?

Application timelines can vary. Some grant applications are open for months or years at a time, and sponsors might not make award decisions until after the application window closes. 

For more specific information about the timeline for your funding source, read the instructions for your loan or grant product closely. 

Most importantly, make sure to meet the application deadline. We recommend submitting digital applications as far in advance as possible. 

How much funding is generally available?

Like application and award timelines, dollar amounts also vary by funding source. 

While each product’s instructions or information should provide a funding amount (or a range of figures), there are some important elements to note about each of the funding sources we’ve discussed so far:

• Grants offer a wide range of award amounts, and the award can be based on your project’s scope, organization size, or past revenue. However, some grants can be renewed for multiple periods. If you’ve been awarded a grant, ask the sponsor about renewal opportunities to secure repeat awards.

• While loans typically offer a fixed principal loan amount, ask your lender about opportunities for additional funding throughout the life of your project. Depending on your lender, you might be able to secure more money or disburse loan funds in a piecemeal fashion to help you stay on budget.

• The Internal Revenue Service (IRS) lists limitations for the R&D Tax Credit in its updated tax guidelines. These guidelines are published each year, and changes should be expected. Make sure to stay up to date on potential changes throughout the year to prevent surprises when you file your income tax return.

Potential criteria for government-funded mobile apps

If your organization pursues government funding for mobile app development, you’ll likely have to meet various requirements to remain eligible throughout the life of your project. This is especially important for grants. If your final product doesn’t meet the grant’s criteria, you might have to repay your award. 

Let’s explore a few potential requirements you might have to meet once you’ve received an award.

#1 HIPAA compliance

HIPAA compliance is particularly important for medical apps seeking government funds.

For example, take a look at one of our most recent projects: Counslr, an app designed to provide mental health care access to college students. 

HIPAA compliance was at the front of mind for the Counslr team throughout development, especially for CEO Roy Reichbach. 

“Utility’s highly skilled team and experience building HIPAA-compliant solutions gave us the confidence to entrust them with designing and building our platform.”

Compliance is key for medical apps whether you pursue government funding or not. Be sure to partner with an app development team that deeply understands the relationship between HIPAA and digital health platforms.

#2 Project schedule and piecemeal deliverables

If your grant or loan offers scheduled award disbursements, you might have to meet deliverable deadlines throughout the course of your project to receive funding for each stage of your project. This is something we can help you stick to, as long as you let your team know from the very beginning of your app’s development.

Make sure to pay close attention to requirements related to:

• Scope – Take note of the scoping requirements you’ll have to meet during each project phase. This can help us collaborate on the right timeline, budget, and specific checkpoints we’ll want to meet throughout.

• Fidelity – While some submission stages might only require sketches or mock-ups, others might require functional elements or platforms that can be beta tested by your sponsors. 

• Feedback – Your sponsor might require your team to incorporate their feedback into future versions of your app or, at the very least, respond to their comments. 

Our advice? Set expectations with your sponsor as early as possible so that, together, we can create a detailed, compliant delivery schedule. 

Utility: your partner in mobile app development

Government funding for mobile app development can open doors for your organization. Whether you’re short on startup cash or are looking to maximize your tax advantages, public funding can help you hit the ground running on your next project. 

So can an app development team like Utility. 

To put it lightly, we’re obsessed with product. For over ten years, we’ve been crafting high-quality, custom digital experiences designed to move people. We surround our client partners with support, offering the closest thing you can get to an in-house development team.

We have the experience, expertise, and tech chops you need to develop a healthcare app tailor-made for your patients. Take a look at our portfolio of groundbreaking projects to learn more about what we’re capable of, and when you’re ready, schedule a call.