Are you just starting up or looking to expand? Either way, it’s likely that you’ll need funding for your business at some stage – whether it’s for product development, hiring employees, marketing, or upgrading IT.
Business funding can be the difference between failing and becoming a force in your market. Yet when seeking finance options, it’s easy to feel bewildered, since the funding landscape is in constant flux, often influenced by economic and political shifts. To make your life easier, we've put together this handy guide on small business grants, as well as the other funding solutions available to SMEs in the UK.
Small business grants – the basics
Small business grants are often the best way forward when business owners want to avoid equity funding or getting into debt. They also provide an alternative to borrowing from loved ones – a potential minefield for personal relationships.
Grants are awarded by the EU, government, local authorities, charities, LEPs and other funders. They can certainly help businesses fulfil their potential, but there's plenty to consider before applying for a grant.
Firstly, many grants support specific economic needs including technological innovation, employment and climate change. Others are targeted at certain industries such as agriculture, design or manufacturing, and most funders give money to support individual projects. Cash can be handed out in one go, or released in tranches, at project milestones.
Most grants only cover some of the project costs. Awarding bodies usually match-fund, so SMEs need to part-finance projects to be eligible. New Anglia LEP, for example, gives between £5,000 and £500,000 to businesses in Norfolk and Suffolk. SMEs can apply for a 20% contribution towards finding more funding from banks and investors. In other words, the grant creates important leverage.
Bear in mind, however, that SMEs need to meet strict criteria to secure a grant, and will also have to fend off competition from other businesses that will be competing for the same pot of money. Committing your time to research and planning is therefore essential.
Where to find small business grants
The journey to securing a business grant can be perplexing. To help, we’ve gathered together helpful information about the type of grants currently available.
EU and government grants
Business grants from the EU and central government are up for grabs in areas ranging from technology to conservation, and include:
- The main EU grant programme for SMEs is Horizon 2020, which has up to €2.5 million for high-growth and highly innovative small businesses.
- The RDPE Growth Programme offers funding to projects in England that generate jobs and fuel growth in the rural economy.
- Innovate UK runs a number of innovation competitions, offering funding to businesses in a wide range of sectors from healthcare to transport.
If you can’t secure money direct from the government, you could still access funding at a regional or local level. This may be a grant offered by a town council that wants to encourage businesses to establish offices or factories in their area, or regional grants established to encourage the development of specific industries. All of the below are good starting points:
- Local Enterprise Partnerships (LEPs) are public-private partnerships that support local SMEs to improve economic development. Stay informed by regularly checking in with your nearest one.
- The Regional Growth Fund (RGF), set up to create more long-term private sector employment, offers money for small and time-limited projects in England. No more rounds of the RGF are proposed, but there is still funding available in certain regions.
- Councils such as Caerphilly County Borough offer grants for local startups. It might be worth contacting your own local council to see what funding, if any, it offers to small businesses.
Grants for young entrepreneurs
Young people are supported in many ways these days, and the following schemes offer help to the UK's most promising business stars:
- The Prince's Trust offers business grants to entrepreneurs aged between 13 and 30 through its Enterprise programme. As well as funding, the charity also provides mentoring and training to help young business owners get their companies off the ground. The scheme is available to anyone in the above age bracket who is either unemployed or working less than 16 hours per week.
- The New Enterprise Allowance is open to unemployed people above the age of 18 who are looking to start their own ventures. To be eligible, you need to be claiming Jobseeker's Allowance, Employment and Support Allowance, or Income Support.
- Launched by Shell in 1982, Shell LiveWIRE supports entrepreneurs aged 16-30 with two funding competitions: the annual £25,000 Young Entrepreneur of the Year Award and monthly £5,000 Smarter Future Awards, which recognizes startups offering sustainable living solutions.
Scottish business grants
If your company is based in Scotland, Scottish Enterprise can cover up to 50% of new project costs through its research and development grant. It welcomes applications from the majority of sectors and can also support defence projects, subject to certain restrictions.
When assessing a company's application, Scottish Enterprise will consider its impact on R&D jobs in the region; how it supports other local companies; the global market opportunity for the product or service; and the wider impact on society, including environmental effects.
Search tools for business grants
Online tools can help you sieve through the thousands of grants out there. The below websites let you filter searches by business phase, size, industry and location.
Being part of accelerator programmes and business incubators can also open doors to small business grants in your field. In fact, business networks are generally hotbeds for news of exciting opportunities, so stay plugged in.
The secrets of winning business grants
With plenty of business grants out there – around 6,000 in fact - you could spend hours (and hours) finding the one that best matches your needs. Even if a grant seems unsuitable at first glance, persevere and read the details. It may turn out that you need to approach your application differently in order to meet the criteria. Never be dishonest or misrepresent your business in any way.
Let's say you’ve seen a grant that supports new jobs, but you need cash to develop software. Your application needs to focus on how the project will create new jobs for local people, and you should be prepared to provide evidence of this at a later stage.
Anyone who's successfully secured a small business grant will tell you that each scheme is different. Where some are straightforward, others are long-winded and complicated. Either way, knowing how to secure grants is gold dust to a small business, giving you the edge over competitors. With that in mind. here's some more advice on how to land a small business grant:
- Stay on top of business news – national, local and industry – to ensure you don't miss any new grant announcements. Apply as soon as you can, before word spreads.
- Social media is another excellent tool for finding out about small business grants. Use hashtags such as #SMEfunding on Twitter to track the latest news.
- Don't let closing dates put you off. If a grant is about to close, get in touch anyway. If they've had less interest in the fund than expected, they could still have a lot of cash to hand out.
- Update your business plan to include details on what you would spend the grant on, why your business is applying for that specific grant, and how it meets the requirements. The grant provider may be able to assist with this in some cases, but online resources like the Business is Great Britain website also offer advice on creating a business plan.
- Funders may expect you to report back on how you're investing the money. Before applying, plan how you are going to track spending and measure outcomes.
- You could lose money from the grant, or even the whole amount, if you begin the project before your application has been accepted. Hold fire until you know the final outcome.
- The awarding body may want you to mention them in PR about the grant and the project it’s funding.
- If you need help, get it. Some schemes provide advisers, or you might want to hire a consultant yourself.
- If you think there could be changes to a project after you receive the grant, mention this to the funder before applying. As a small business, you may need flexibility in the grant's conditions.
Technology is giving rise to more alternative forms of business finance, creating greater choice for business owners. If you’re still keen to avoid traditional bank loans, lenders like Fleximize could be the answer. Not only can we fund a company in as little as 48 hours, but you'll also have access to a number of benefits such as repayment holidays, top-ups and penalty-free early repayments.
To apply now, simply click the button below, or feel free to give us a call on 020 7100 0110. We'd be more than happy to discuss your funding needs further.