They usually come from government, corporate, industry, or charity sources and are either recognitions of past achievements or are seed or sustaining funds for some socially, economically, or technically beneficial endeavor. Depending on the stage of development the business is in, perhaps the most important form of grants is for workforce training and education, usually of disadvantaged, or displaced workers. Grants, especially those administered by agencies of the federal government, are to be used for a specific purpose and very rarely involve actual cash. It is more likely that, as in the case of Dwayne Fosseen, whose company, Mirenco, of Radcliffe, Iowa, received a grant from the Department of Energy, services in kind. Mirenco got a fully-tested, manufacturable prototype from DOE engineers.
Debt is the most widely used external source of capital.
The situation is much changed for large companies. They tend to rely far more on equity for capital. Unfortunately, no one knows what the ideal capital structure for a typical small company should be since there is really no such thing as a typical small company. Capital stretchers, rather than sources of capital is joint venturing, cross-marketing, strategic alliances, etc., in which expertise, equipment, facilities, manpower and equipment may be shared by entities engaged in some mutually advantageous undertaking. For instance, brand new equipment or software may be provided to a promising startup as a beta test.