One type of funding that many small businesses in the UK choose to take advantage of are small business grants.
What Are Small Business Grants?
These are a way to provide a business with additional funding. Typically, these businesses would otherwise struggle to get financing due to their circumstances or the type of company they’ve created or are in the process of creating.
The basics of a UK business grant are that you’re willing to invest the equivalent amount into your business. For example, if you’re given a £20,000 grant, then you’ll need to have £20,000 available to invest too.
The best thing about grants is that you won’t be expected to pay them back, which can be extremely helpful for those looking for financial aid without the stress of returning any money.
How Can I Get a Small Business Grant in the UK?
To secure a grant in the UK, there are a few tips to get you started.
Firstly, you’ll want to talk to the body awarding the grant. Many of them out there are looking to help small or new businesses. Consider what criteria they have and tailor your application to that grant provider in particular.
As a general rule, it’s good to try and tailor each application to the grant provider. This will make them feel like you’ve taken the time to apply rather than create a blanket application for as many grant funding options as possible.
It’s crucial that you have a clear and concise business plan. This is where you’ll outline your uses for the grant funding. Be specific in what the money is being used for and how it will help grow your business.
Make sure you’re looking at application timings, as some will require you to apply fairly early on in the year; others might not have a specific time restriction.
A cash flow forecast is also useful to have in order to manage the business finance and to show the grand provider that you have everything required.
How Do Small Business Grants Work?
Grants work by giving sums of money to businesses. These are typically provided by philanthropists, governments, etc. They’re aimed often at certain regions of the country or within specific industry sectors that may benefit from them the most.
They can be found in a lot of countries, especially here in the UK, with such examples as The Prince’s Trust, Seed Enterprise Investment Scheme and Architectural Heritage Fund.
What Can I Use a Small Business Grant for?
Business grants are often dependent on who is giving out the funding. For the most part, though, most grants can be used for certain things needed to grow a business. These include but are not limited to the following:
- Training for staff
- New equipment
- Helping to reach new markets or customers through promotion
- Paying off any outstanding bills or future invoices.
Do I Qualify for a Small Business Grant?
In order to qualify, you must meet the desired criteria that the grant provider has given. Some will have more stringent criteria than others, so it’s worth taking a good look at each one.
For the most part, though, you’ll need to have the desired money to invest if you’re looking to make use of a grant. Even if that means you only have £5,000 saved up, you can get an additional £5,000 to help with the growth of your business.
When it comes to having more than one grant, there may be some instances in which you can only apply to one at a time or receive one grant, which freezes you out of applying for any others.
What Types of Grants Are Available for Small Businesses?
There are different types of grants available that you may want to consider and compare for your UK business. Here’s a quick breakdown of the types you’ll likely see when searching for financial support.
- Government grants
- Grants for young people
- Small business training grants.
How Does a Small Business Grant Differ from a Business Loan?
You don’t pay back a grant. Any type of business loan is a loan that you would need to pay back. Despite how much you’re asking for, if it’s a loan that you’re being accepted for, you’ll be paying this money back, and there will likely be interest too.
Factors to Consider When Writing a Small Business Grant Proposal
When writing a grant proposal, the likelihood of you having done one before is going to be slim. However, if you have done so before, it’s always good to learn some helpful tips to improve on the success of any future ones.
It’s worthwhile knowing the specific areas to cover when writing your proposal, so here’s a step-by-step guide.
- Cover letter – This is the overview of your grant proposal and one that should bring together everything you’ve mentioned in the proposal. Be clear and concise when it comes to explaining why you want the grant and what you’ll do with it, as well as any other convincing information.
- Table of contents – This will help the reader navigate the document easily and without feeling too overwhelmed.
- Executive summary – Summarise what the document is and what the reader can expect from it.
- Project description – The main part of the proposal. Be very detailed in this section as to what the objectives are and what you’ll require from the grant in order to fulfil these expectations.
- Timeline – The timeline of your project or intentions for your grant should be laid out clearly. This will give the reader an understanding of what’s expected throughout the process.
- Staffing – What employment can you provide from this grant? Many grant funding organisations will want to see what your business could deliver to new job creation. This may be particularly important for government-backed funding.
What are the Pros and Cons of Small Business Grants?
There are pros and cons for UK small business grants worth acknowledging. That way, you can make the best decision for your business and what type of financial support will work for you.
Pros:
- It’s free money that you don’t need to pay back.
- There’s a lot of information regarding grants that can help make the right choice financially.
- With one grant received, it opens up the floodgates to receive more.
- Provides credibility to your business.
Cons:
- The research and development required and the application process for each one is time-consuming.
- Difficult to receive.
- Uncertainty when it comes to getting them renewed.
- Often strings are attached.
Can I Get a Small Business Grant If I Have a Bad Credit Score?
As grants are free money, a bad credit score isn’t really going to impact your chances of getting it. It’s more to do with the eligibility of your business and what your intentions are for the grant itself. The grant provider will assess your grant application based mainly on the business rather than on how your credit score is looking.
The reason for this is that you’re not paying it back, so it’s not like getting a loan from a lender. However, it’s always beneficial to improve your credit score where you can, especially if you might need to take out a business loan in the future.
Where Can I Find Small Business Grants in the UK?
There are plenty of places where you can find organisations that provide business funding. There are some very reputable and notable options that we’ve mentioned already. However, depending on where you live in the UK, you may have different grants available.
Some are for both new and established businesses whereas others are only for one or the other. Here are some grants that UK businesses can take advantage of.
Here is a list from GOV.UK.
Small business grants in England
For England, UK small business grants are readily accessible for anyone looking to fund their business. There are currently 38 regional growth hubs that can be found on the Business Board Network.
Small business grants in Scotland
In Scotland, there will be certain grants available from Scottish Enterprise, but there are always grants from the Highlands and Island Enterprise. You’ve also got local councils that you can apply to.
Small business grants in Northern Ireland
In Northern Ireland, there are many resources, including NI Business Info, offering information from government support to research and development grants.
Small business grants in Wales
For Welsh government grants, there’s a finance locator that can be found on the Business Wales website. Funding can also be found via the Welsh government, UK government, charitable organisations and local authorities.
It’s worth checking out these websites to get the right resources for your business and the region you’re in. The internet has a wealth of information that you can use to benefit your search when finding the right grant for your business.
How to Find Your Small Business Grant Using the UK Government Search Tool
For small businesses, knowing where to start to find funding can be challenging. However, for those looking at government grants, there’s a handy UK government search tool.
This is an easy-to-use method of searching through all of the UK. You can filter the results depending on your business stage, the industry you’re in and the number of employees you have. It’s an excellent way to find specific grants that you’ve perhaps heard about before.
From this tool alone, you’ll soon find that there is plenty of support for businesses, especially when it comes to government aid.
Final Thoughts
Business support comes in a variety of ways. Financially, if you have your own business, you may find a benefit from getting a grant. Even established companies will use grants to help fund their projects.
If you’re thinking of applying for a grant, be prepared for each and every application. The more time and effort you put into the grant application process, the more likely you’ll get it. Once you’ve got the grant, getting other ones further down the line can be easier.
FAQs
Am I required to pay back a grant?
No. Using agrant is beneficial because you won’t be expected to pay the money back. Some of those that have received the funding have opted to pay it back when they get to a position to do so. However, you don’t need to pay the grant back once you have it.
What are the alternative funding options to small business grants?
If you don’t feel as though cash grants are right for you or you find you’re not applicable, then there are some alternative funding options to consider. These include angel investors, crowdfunding, peer-to-peer lending and, of course, traditional loans that you borrow from lenders.
Can I get a grant to start a business?
Whilst not all grant providers will provide the money to start a business, there are some that will. There are also loans available to help companies start up, which are unsecured loans. This means that you won’t need to put any collateral to act as security, and neither will you need to match the loan with your own money; you’ll just need to pay it back eventually.
Are small business grants taxable?
Many grants will be taxable, just like the recent local Restrictions Support Grants provided for both businesses and self-employed individuals who were affected during the pandemic. It’s worth making sure this is added to your accounting/bookkeeping records for tax returns in the future.