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Securing funding for your small business can be a challenge, and with so many different schemes and government business grants available to apply for, it can be tough to know where to start. But it’s worth taking the time to find out, because business start-up grants can save you money, cut your start-up costs, and kick-start your company’s growth.
What are business grants?
Grants are sums of money given to businesses by the government, philanthropists, or other companies. In most cases, they are non-repayable, and since securing a small business grant doesn’t require you to give away any equity in your company – a condition of winning investment – they’re an attractive form of financing for many companies.
Small business grants are often aimed at specific regions, specific industry sectors, specific types of businesses, or specific community groups, which can make grants hard to access for certain companies. For example, some grants for new businesses may only be available for women, while other government business grants may be solely available for start-ups in the environmental sector.
The application process is highly competitive – everyone wants free money, after all – while the size of business grants can vary considerably, from several hundred pounds to hundreds of thousands. It’s also important to remember that applying for business start-up grants can be an intense, time-consuming process, with lots of tricky steps, procedures, and processes to get to grips with.
What are the different types of business grants?
There are many types of small business grants, from tax relief schemes to cash awards. Generally, business start-up grants can be broken down into the following categories:
Direct grants – When most people think about small business grants, they’re thinking about direct grants. These are given directly to businesses to cover the cost of a specific project. For example, the Regional Growth Fund offers grants or loans to eligible businesses via local or national organisations.
Resource and training grants – Many businesses lack access to the resources they need to develop projects. However, there are numerous first-time business grants that can help. For example, Innovation Vouchers provide small businesses with up to £5,000 to pay for external experts to support your company’s growth and development.
Soft loans – While soft loans aren’t technically small business grants, as they need to be paid back, they can be an attractive option. They offer much more generous repayment terms than regular bank or building society loans, as well as lower interest rates. For example, the Start Up Loans Company offers start-up businesses loans of up to £25,000 at 6% interest.
Tax relief – There numerous tax relief schemes designed to reduce the cost of paying taxes for small businesses. For example, Employment Allowance allows you to reduce your National Insurance bill by up to £3,000 a year.
How do you apply for a business grant?
There are thousands of business grants available at any one time in the UK, so how do you maximise your chances of securing the one you want? Here’s the best way to apply for a grant:
Find a grant you’re eligible for – As there are so many grants you could potentially apply for, you’ll need to narrow down your options. You can use the business finance support finder to search for government business grants based on industry, size, or locality.
Research your chosen grant – After you’ve settled on a grant, it’s time to research. Contact the awarding body to assess your chances, read up on the objectives of the grant, and check that the grant’s time frame fits with your needs.
Ensure you have the necessary funds – Many grants require you match the amount of grant money, meaning that you’ll be putting up 50% of the cost of the project. If that’s the case for the grant you’re applying for, ensure these funds are available.
Make your application – Finally, it’s time to make your application. Provide a thorough business plan, a clear work plan, and an outline of your business history. You should also address the objectives of the grant and explain how the awarding body will be meeting their own objectives by selecting your business.