Business grants are a great way for new businesses to get capital for growth. This guide will help you understand what business grants are available and how your business can stand a better chance of securing funding.
Business grants explained
A business grant is financial support provided by the UK government or private organisations to help startups and small businesses with funding for their projects, covering expenses that are necessary to get the business off the ground.
A small business grant can come in the form of money, property or services which do not necessarily need to be paid back.
Crest Legal can help your small or medium-sized business to apply for tax-efficient schemes such as Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These schemes raise money by offering tax reliefs to individual investors.
What are the different types of government grants available?
If you're a UK-based business looking for government funding options, there are a variety of different grants available including:
Provided by a variety of funding bodies, such as Innovate UK, to support innovative ideas and business growth, including those from the UK's world-class research base.
The National Lottery Heritage Fund
Provides grants to sustain and transform the UK's heritage. This can include investment in museums, parks, historic places, and cultural traditions.
R&D tax credits
Cash payments from the government to encourage companies to carry out research and development projects that relate to science or technology.
Local Enterprise Partnerships (LEPs)
Voluntary partnerships between local authorities and businesses that provide business funding, support, and guidance in their local areas.
New Enterprise Allowance
Provides funding and support to those looking to start or develop a business. You need to be aged 18 or over and either you or your partner must receive Universal Credit, Job Seeker's Allowance or Employment and Support Allowance or you must get Income Support and be a lone parent, sick or disabled.
The Prince's Trust
Supports young people aged 18 to 30 who want to start and run their own businesses. As well as providing funding and resources, the Trust also provides training and mentoring.
Regional Growth Fund
Provides grants to businesses in specific regions of the UK with the aim of supporting economic growth and job creation.
Exporting for Growth
Designed to help businesses expand into international markets, this grant provides funding for activities such as market research, attending trade shows and more.
Carbon Trust Green Business Fund
Provides funding and support to businesses that are looking to reduce their carbon footprint and become more environmentally sustainable.
Manufacturing Advisory Service (MAS)
This service provides advice and support to manufacturers in the UK and can provide grants for business improvement projects.
Local business support
Local authorities provide grants and funding for businesses within a geographic area. For more information see a full list of schemes available here
Grants for tax relief
Research and Development (R&D) Tax Relief
This grant is aimed at encouraging innovation and research in the UK by providing tax relief to businesses that undertake R&D projects. It allows companies to claim back up to 33% of their R&D costs as a tax credit, which can be used to offset corporation tax.
The Patent Box is a scheme that allows companies to apply a lower rate of corporation tax (10%) to profits earned from patented inventions. This is designed to incentivize businesses to develop and commercialise new patented technologies.
Seed Enterprise Investment Scheme (SEIS)
This scheme provides tax relief to investors who invest in qualifying startups. Investors can receive income tax relief of up to 50% of their investment, as well as capital gains tax relief on any gains made on the investment.
Find out more about seis advance assurance
Enterprise Investment Scheme (EIS)
The EIS is similar to the SEIS, but aimed at larger businesses. It provides income tax relief of up to 30% on investments of up to £1 million, and capital gains tax relief on any gains made on the investment.
Business Rates Relief
This grant provides relief on business rates, which are taxes that businesses must pay on the premises they occupy. Depending on the location and nature of the business, relief may be available for up to 100% of the business rates payable.
Grants for skills development
There are a number of grants available to encourage skills development.
The Apprenticeship Levy
This is a government levy that applies to all employers with a pay bill over £3 million each year. The levy is 0.5% of the employer's pay bill, and the funds collected are used to fund apprenticeships across the UK. Employers can use the funds they pay into the levy to pay for apprenticeship training and assessment for their employees.
The National Skills Fund
This is a government fund that provides funding for training courses and apprenticeships. The fund is designed to help people of all ages gain the skills they need to get better jobs, and to help employers invest in their workforce.
Innovate UK is a government-funded organisation that provides funding and support to innovative businesses in the UK. They offer grants for research and development projects, as well as support for businesses looking to commercialise their ideas. Innovate UK also runs a range of programmes and competitions aimed at helping businesses develop their skills and capabilities.
The Skills for Growth Programme
This is a programme run by the government that provides funding to businesses in certain regions of the UK to help them develop the skills of their employees. The programme offers support for a range of training activities, including apprenticeships, work placements, and leadership and management training.
What Can Business Grants Be Used For?
The money can be invested in various ways, such as:
- Training: Business grants can be used to fund training programmes for employees to improve their skills and knowledge, which can ultimately improve the business's productivity and profitability.
- Equipment: Business grants can be used for purchasing new equipment or upgrading old equipment to enhance production processes, efficiency and introduce new technology.
- Marketing: Grants can be used for advertising and promoting the business to reach new markets, which can increase the number of potential customers.
- Research and Development: Business grants can be used for research and development of new products and services, which can help grow the business and create a unique market position.
How can business grants help small businesses?
For small business owners, grants can be an invaluable source of funding that can be used to support their business plans and strategies.
Business plans are essential for small businesses as they provide a blueprint for success, outlining the business's goals, objectives, and strategies. Small business grants can help fund the implementation of these plans, enabling small businesses to invest in the resources and infrastructure required to achieve their goals.
Small business funding can be challenging to secure, especially for new businesses. Small business grants can help new businesses get off the ground by providing funding for initial expenses, such as equipment, rent, and marketing. This funding can also help small businesses hire employees, train staff, and develop new products or services.
For small business owners, grants can provide a significant boost to their finances and help them overcome the challenges of running a small business. These grants can help cover unexpected expenses, such as repairs or legal fees, and provide a cushion for times when business is slow.
How do I get funding for a startup UK?
Start your funding journey by researching the different types of funding available to determine which ones are the best fit for your business. Popular options include government grants, loans, and crowdfunding.
Government grants can provide a significant amount of funding for businesses that meet eligibility criteria. However, these grants are often targeted at specific industries or startups, so it's essential to research which are most relevant to your business type.
Applying for a business loan from a bank or other financial institution is another option to consider. Although loans can provide a large amount of funding, they often require collateral and a strong credit history.
Crowdfunding is an excellent option for startups that want funding from a wide range of investors. Platforms like Indiegogo and Kickstarter allow entrepreneurs to pitch their business idea for funding from backers.
Tips for Successfully Applying for Grants
When applying for grants, it's important to keep a few key factors in mind to boost your chances of success. Here are some tips to keep in mind when applying for grants in the UK
Timing is critical when it comes to applying for grants. You need to ensure that you're applying at an appropriate stage and have a clear opportunity to take advantage of. Keep an eye on new funding opportunities that open all year round, so you don't miss out on opportunities.
Define the Opportunity
Before applying for a grant, be sure to define the scope of your business and ensure you're eligible to apply for the grant. Spending time applying for grants that aren't suitable for your business is a waste of resources.
Outlining your Project
Make sure your project has a defined outline and highlight the impact it will have to align with the grant's scope. Ensure your application is worthy of receiving funding by doing all the necessary preparation.
Outline Costs Involved
One of the important factors when applying for grants is outlining the costs involved in the project. Ensure you justify why they are needed and how much is required to cover these costs.
Share Your Objectives Clearly
It's crucial to outline your objectives clearly in your grant application. Ensure you're clear on what success looks like as a result of taking on the small business grant. State how you will know when you've reached your objectives and what economic and social impact your project will have.
Outline a Timeline
Outlining a timeline and projections of progress expected to be achieved is an important step. These factors will be monitored closely if you are successful, and they are usually mentioned within the scope of the grant. Having a clear timeline of your project's progress helps the grant provider see that you have a clear plan of action and can manage the funding appropriately.
Is grant funding right for my business?
If you're unsure whether grant funding is the best choice for you and your business, there are other alternatives worth considering, such as business loans and equity finance.
With a business loan, you borrow a lump sum of money and then repay this amount with added interest. You can usually borrow up to 25% of your annual turnover or £10,000 to £50 million from a variety of lenders, including high-street banks, online lenders, challenger banks and small local specialists.
On the other hand, equity finance is a way of raising fresh capital by selling shares in your company in return for a share of profits, usually a portion of the ownership (equity) of the business and/or a share in the running of the business. This can be a good alternative for small or new businesses that are struggling to obtain a loan.
Can you get a grant to start a business?
If you're looking to get a grant to start a business, a good option is the Seed Enterprise Investment Scheme (SEIS). This scheme provides tax relief to investors who invest in new and early-stage businesses. SEIS can make it easier for businesses to attract funding and can be a great way to kick-start a new venture.