Grants are money you don’t have to pay back. Although there are fewer grants around than there used to be, there are still 6000 grants currently available to UK businesses. You just have to know where to look.
How it works
Grants are usually awarded to start-ups or early stage businesses for a particular project and because they meet a certain set of criteria. This might be because the business is located in a particular geographical region or operates in a particular industry, or because the entrepreneur meets certain age or circumstance criteria – the Princes Trust gives grants to long term employed people under the age of 30, for example. The government has substantially cut the number of grants it offers in recent years but still provides grants for research and development.
Who can borrow – Anyone who meets the criteria of the grant-making body.
How much can you borrow
Grants typically range from a few hundred to a few thousand pounds. Grants are almost always match-funded, meaning that you will have to raise half the money you need from other sources.
You never have to pay the money back providing you use it for the criteria specified. The organisation providing the grant will sometimes offer support in other ways too, for example through mentoring support and publicity. Being awarded a grant can be very prestigious and be seen as a real vote of confidence for your business.
Grants are extremely competitive and difficult to get. It can be time-consuming applying for them so you need to make absolutely sure you fit the criteria first.
Things to consider
Grants are usually given on the condition that work on the project for which they are provided has not been started yet. Confirmation that you’ve won a grant could take several months, so you need to make sure your project can be postponed that long. You also usually only get paid the grant after work on the project has been completed so you need to make sure you have enough money in the bank to cover all costs until then.
You can search for grants available across the UK and Europe on one of two databases – Grantnet.com or J4bgrants.co.uk
Sue Acton managed to get a grant of £15,000 to fund the start-up of her venture Bubbles and Balm, which makes Fairtrade body care products such as soap bars and liquid hand wash, in 2009. She discovered the existence of the grant by chance after ‘endless googling’ and was delighted to find she met the criteria. The grant was provided by Innovation Networks, a government-backed grant scheme which is funded by the European Regional Development Fund and Advantage West Midlands. It is solely for businesses with an innovative new product, process or service projects which will provide benefits to the West Midlands economy.
Sue, who runs her business from her home in Leamington Spa, used the grant to pay for ingredients, packaging and labelling for her products, which were some of the first Fairtrade body care products sold in the UK and are bottled in distinctive recyclable aluminium bottles. Her products are now sold in Waitrose supermarkets, Oxfam and high street shops, and the enterprise has a turnover of £100,000. She said: “It was so fantastic to be given a grant. It meant I was able to invest in better equipment and to be much more professional in the way I set up the business.”
An alternative to getting a grant is to win a competition. There are several competitions for start-up entrepreneurs run each year in the UK and if you are short-listed or win you will benefit from much publicity too. Shell Livewire gives the winner of its Young Entrepreneur of the Year competition a cash prize of £10,000, for example, while The Pitch competition run by Business Zone, provides its winner with £50,000 worth of business support.