Small business grants are cash/resource funding provided for all or part of a specific project a business wishes to carry out. For example; starting a new business, securing equipment or developing an innovative project to support the local economy are all examples of potential grant funding eligible projects.
Unsurprisingly, getting hold of what is effectively free money is fiercely competitive, which is why most grants come with strict eligibility requirements. Some are only available to specific regions, others come with rigid qualifying conditions, and many are competitions, with awards going to the winning business. You also have to consider the likelihood of securing a grant. Grants rarely exist without the aim of supporting a specific project, and you may only be able to allocate the money for particular ventures.
Most grant schemes are reserved for companies aiming to positively impact the lives of others, boosting a particular industry or contributing to the overall economy. Awarding bodies therefore look for a meaningful output to come from their grants, such as job creation or innovation. Bear in mind that you will have to indicate what the money will go towards and how you will use it to make a positive impact.
What types of grants are available?
The most well-known type of grant available is a cash grant, otherwise known as a direct grant: a lump sum of money paid in one or several instalments, either at the beginning or near the end of a project. Many direct grants are match funded, meaning that as the applicant company, you must be able to raise enough finance to provide 10-70% of the overall project.
Another non-cash type of grant comes in the form of resource and training grants. These are usually vouchers, supplied by the government and worth up to £5,000 in value, to use towards enlisting experts for help in a specialised field. The expertise typically goes towards product design, intellectual property management or technological innovation.
Most councils offer their own sorts of grants by way of ongoing formative support. The government may provide fully-funded workshops, expert advisory services, training programmes and accelerators.
Another government-run grant scheme focuses on business tax relief. This form of equity finance reduces the income tax payable by young companies and startups, provided they have fewer than 25 employees and have been running for less than two years.
The final grant schemes offers soft loans. Usually government-backed, these loans provide milder repayment conditions and are often more generous than typical bank loans. Some won’t accrue interest or have far lower interest rates, and many come with extended repayment deadlines.
Is your business grant eligible?
Each grant scheme comes with a set of qualifying conditions that you must satisfy before being considered. These vary according to the programme and the issuing body, but eligibility usually depends on the following factors:
- The size of your business: some grants are only available to companies with less than a certain amount of employees
- Industry: some schemes are industry-specific, usually in sectors that contribute significantly to the national economy (if your business activities fall outside these certain industries , acquiring a grant will be more difficult, and there are likely to be tight restrictions on how you can use the money).
- Your business classification: some issuing bodies reserve their grants for limited companies, for example
- Location: regional grants are available for different parts of the UK. Your local council will be able to provide information on what’s available in your area. Note that in certain cities, such as London, there’s higher competition for grants
- The grant purpose: certain organisations will only issue grants for specific projects.
How do you apply?
For most grants, you will have to apply directly to the grant provider’s website. Before that, make sure you’ve gone through the following steps:
- Check your eligibility: be sure that you fulfil every requirement. Most rejected applications fail to meet one of the qualifying conditions.
- Make sure you can match the granted funds: for match-funded schemes, make sure your business can provide its share of the funding. The awarding organisation will want evidence of this before they accept your application.
- Set clear objectives: demonstrate that you have a clear idea of which projects the funding will go towards and what you intend to achieve.
- Leave enough time: most grant applications are long and complex. Make sure you have ample time to apply properly before the deadline – this includes applying for the grant pack, which can take several weeks.
- Provide evidence: awarding bodies will want to see proof of your claims and objectives before they consider you.
Grants are notoriously competitive, so it’s imperative to follow the above steps to avoid wasted time and boost your chances of securing funding. On top of this, it’s a good idea to find a contact within the organisation issuing the grant, who you can turn to for guidance and advice when completing your application. They’ll be able to advise you on exactly what their organisation looks for in the allocation process. You can also consider hiring a consultant to assist with more complex applications.
Finally, before you apply for a grant of any kind, you’ll need a solid business plan to boost your credibility and show your company’s direction and strategies for development.
Where can I find small business grants?
There are hundreds of organisations offering grants to small businesses, funded by the government, private bodies as well as charities. Finding all the available schemes can be time-consuming.
We’ve therefore curated a comprehensive list of business grants that will take you through all the available options for your small business, including the amount available and eligibility conditions, covering both private and government-funded grants.
What about other finance and funding options?
Most startups seek initial investment from angel investors and venture capitalists: high net-worth individuals and professional investors who provide significant seed money in return for a share of the company’s equity.
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Schemes like the EIS and SEIS offer considerable tax breaks to incentivise private investors to back early-stage businesses. Another option is crowdfunding, which uses a similar investment model, but raises a large amount of capital through smaller contributions from multiple sources. Another common way of raising capital is through debt finance using borrowings and loans.