Small business grants: what's on offer and how to get it

Small business grants for UK businesses. From government grants to start-up funding, advantages to disadvantages, we cover everything you need to know.

By Martin Brackstone on 30/09/2019

Small business grants | iwoca

Our top small business grant tip? Set aside some time to explore the huge range of grants available to small businesses, start-ups and entrepreneurs in the UK. There's a lot of money up for grabs, specifically intended to help businesses across the country.

With hundreds of small business grants on offer at any one time, where do you begin? What types of small business grants are available? Does my business qualify for a small business grant? Where can I go to get a grant? What are the advantages and disadvantages of small business grants?

Whoa, so many questions! No worries: we're about to answer these and more in this guide to small business grants in the UK.

What's in this guide

What is a small business grant?
What types of small business grants are available?
Can I get a small business grant?
Where can small businesses go for a grant?
Benefits of a small business grant.
Drawbacks of a small business grant.
What if I can’t get a small business grant?
Small business grant case study.

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What is a small business grant?

A small business grant is money given to your business through a specialist funding programme, which you do not have to pay back. Grants are offered by government and by private sector organisations. Any small business that meets the qualifying criteria can apply.

Most small business grants have a specific goal, such as to stimulate job creation, growth, innovation or positive change in certain business sectors or regions. In this way, a grant is more than an injection of capital that directly supports the business – it's an investment in the local economy which benefits the wider community. Win, win and win.

What types of small business grants are available?

You may already be familiar with some of the incentives and grants available for small businesses, but many more fly below the radar. There are literally hundreds on offer, with new initiatives coming on stream all the time. For example, did you know there are at least three separate grant schemes for broadband upgrades? Or if you've developed a patentable product you could cut your corporation tax to just 10% on those profits?

You can get grants for being an energy entrepreneur, grants for boosting young people's digital skills, grants for transforming the life of the elderly, grants for cracking scientific challenges, grants for developing breakthrough medicines, grants for planting trees…

Many businesses are aware of grants, they just don’t know what’s available out there. Including the business featured in our case study. So you’re not alone if you’re one of them. A way to think of small business grants is as a helping hand for innovators, entrepreneurs and agents of change looking to make a positive difference to society. That's you, right?

Below are just a couple of the types of grant that are available.

Direct grants

Direct grants provide cash for a specific purpose, such as investment in technology or help in reaching new markets.

For many grants of this type, you'll need to match the funding you receive with funds of your own. So, although you won't get the project fully funded by a direct grant, having the government pay half is a still a pretty good deal – especially with grants of up to £500,000 available.

The definitive resource for government grants for small businesses in the UK is gov.uk's webpage Finance and support for your business. You can quickly find the most relevant sources of funding on that page by narrowing your search by industry, region and business size.

It's also worth noting that government grants aren't just for start-ups. There's help for established businesses too.

small business grant

Grants for hiring new staff

Launching a new business often calls for new skills and new recruits. So, the government steps in here with a range of support for employee training. This includes help through the Education and Skills Funding Agency (EFS) and apprenticeship grants.

Grants for investing in growth

There are a wide number of small business grants dedicated to investing in growth, mainly because helping boost local economies (and the national one) is one of the key aims of grant schemes. Understandably the government is keen for businesses to grow and offers advice for doing so, including how to secure funding privately and via grants.

Can I get a small business grant?

Finding out if you qualify for a small business grant can feel a bit daunting. There are often a lot of boxes to tick.

However, it’s worth spending some time up front looking into a grant’s criteria, so you don’t invest even more time applying for a grant you haven’t got a hope in hell of getting.

When it comes to selecting the small businesses to give funds to, each grant scheme will have its own qualifying factors. Although, there are four things nearly all of them will be considering.

What’s the key eligibility criteria for a small business grant?

Your business’s purpose. Primarily, what industry sector are you (or will you be) operating in, together with the problem you’re trying to solve, and how much of an impact you want your business to have.

Your business’s location. As so very often, it comes down to: location, location, location. This can go from country to county, all the way down to an individual town.

Your business’s size. How many staff do you employee? Certain schemes require fewer than 250, while some go down to 50, 20 or even less than 10.

Your business’s time in operation. Some grant schemes are only available to start-ups, while others don’t consider how long your business has been running at all.

Where can small businesses go for a grant?

If you were wondering what government grants are available for small businesses, you’ll find this part of the guide particularly useful. But the government isn’t the only source of grants.

Grants for small businesses come from three main sources: local council, the UK government and the EU (depending on the outcome of Brexit). There are also other organisations that provide grants, such as charities, corporates and universities.

There are hundreds of sources offering small business grants. However, to list them all would make this short guide a very, very long one. So, here are just some of them.

UK government grants for small businesses

These are available from the UK government, Scottish Parliament, Welsh Assembly and Northern Ireland Assembly with the aim to encourage growth, bring wealth and create jobs.

To help achieve this, the government sets aside a chunk of money collected from UK taxpayers to fund these grant programmes. Here’s a little taster.

R&D Tax Reliefs

Designed to reward innovation, R&D Tax Reliefs are great if you’re looking to find extra funding for research and development.

Government apprenticeships

If you’re looking to employee more staff, it might be worth considering taking on an apprentice. Especially as you can get funding towards their training through the government apprentice scheme.

Better Broadband Subsidy Scheme

Struggling to afford a broadband speed of at least 2MB per second? Then you could get up to £350 from the Better Broadband Subsidy Scheme.

Local authority business grants

Local authorities are understandably keen for cities and towns within their borders to thrive and prosper. One of the ways they do this is by offering small business grants. It was through a local authority supported initiative that the business in our case study secured its funding.

It often depends on the individual local authority as to the type of grants available. Below are what some councils are doing, but don’t get too excited, check with your own local authority before you start making a shopping list.

Energy Efficiency Grants, Warwickshire

For businesses looking to cut down their carbon emissions, Warwickshire District Council will fund up to 40% of the installation of energy efficient equipment like LED controls and renewable technology. As well as the energy efficiency grants, they also offer free energy audits.

South East Creative, Cultural and Digital Support Programme

Grants are usually between £1,000 and £3,000, but can go up to £20,000 to support local businesses that operate in the creative, cultural and digital sectors.

Stoke-on-Trent and Staffordshire Grants For Growth

Looking to expand your premises or buy new plant, machinery or equipment? Well if your business is in the borough of Stoke-on-Trent and Staffordshire, you’re in luck. Grants are available from £10,000 to £160,000, providing you privately input a percentage of the project’s cost.

EU grants for small business

Now the elephant in the room here is clearly Brexit. But don’t worry too much, at the moment. ‘Most’ schemes will continue to accept applications and distribute funds until the UK has officially left the EU.

The EU currently offers a huge range of grants that are distributed through structural funds made up of: The European Regional Development Fund. European Structural and Investment Funds (ESIF). The European Social Fund (ESF).

These grants are then passed on to regional governments, local authorities and private organisations in the UK to support small businesses (like the schemes mentioned previously). There’s also an EU grant scheme that you can apply directly to.

Horizon 2020

Horizon 2020 is designed to drive economic growth and create jobs by making it easier for the private and public sectors to work together. It’s open to everyone and employees a simple structure to help projects get off the ground quicker.

Benefits of a small business grant

Receiving a chunk of free cash might be the obvious benefit of a small business grant, but it can help in many other positive ways too. It’s not all about the money, money, money.

Find out how it helped the business in our case study and discover some of the other ways a grant can give your business a boost below.

Retained equity

If you receive a small business grant, you can keep equity in the company that you might have previously had to release to fund your growth plans. Giving you added security and more sleep-filled nights (hopefully).

Validation

You know you and your team are working hard to make your small business succeed. So, when a large organisation approves your plans and ideas, it will naturally give you a boost of confidence you’re on the right path.

Non-repayable

They say nothing in life is free. Well, small business grants are – within reason. There might be certain restrictions on how you spend the money, but ultimately you could receive anything from a couple of hundred pounds to thousands of pounds that you don’t have to pay back.

Boost in structure and organisation

To qualify for a small business grant, you’re normally required to punctually deliver detailed plans and progress reports. This inevitably needs a degree of organisation, which can lead to your business working in a more structured way.

Drawbacks of a small business grant

Understandably there are many benefits of a small business grant. However, it’s not all plain sailing.

If you only had to fill in a one-page form and sit back as the money rolled in, every business would be doing it. And although this isn’t the case, there are plenty of small businesses still applying, which is one of the downsides. Here are just some of the drawbacks of a small business grant you should consider before you rush off and start filling in your application form.

Strict criteria

There are normally restrictions on grants to how the money can be spent. Make sure you check exactly which areas of your business the money can be used on. A new coffee machine probably isn’t one of them.

Time consuming

The day you receive the grant money in your bank is a really special one. But to get there can take time.

Time in the duration of your application being processed. And the time you need to invest in doing all the research required to understand what type of small business grant is right for you. Although, hopefully this guide will help speed things up for you.

The other option you can consider is paying a consultant to do the research and application for you. This might be costly initially, but it allows you to stay focused on the business, and the grant money (if you get it) will off-set the consultant’s fee.

research (1)There are plenty of places to apply for a business grant, but you need to do your research to know which one is most likely to bear fruit for your specific business.

Fierce competition

As you know, you’re not the only small business out there. And you certainly won’t be the only one applying for the grants on offer.

There’s no way of sugar-coating it, it’s not going to be a walk in the park. But that shouldn’t stop you applying. You’ve got to be in it to win it.

Deadlines

Often you’ll only receive the grant money once you have completed a segment of work by a certain time. Therefore, you’re governed by this strict deadline. You may also need to cover costs on your own until this point.

What if I can't get a small business grant?

Support is still available

If your business doesn’t meet the criteria for a small business grant, or you’ve applied for several grants and not been successful, fear not. We might be able to help your business grow.

We believe in giving small businesses the opportunity to fulfil their true potential and expand their possibilities by lending them the money to do this. And doing it without all the usual time-consuming groundwork usually demanded by high street lenders.

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We’ve already made funding available to over 50,000 businesses since 2012. So, whether you run a salon or a solicitors, apply today or check your elgibility.

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Small business grants case study – Frank Recruitment Group

An introduction to the company

Frank Recruitment Group is a global, niche technology recruitment firm. They’ve grown from a single premise in Newcastle-upon-Tyne in 2006, to 20 offices around the world, from London to New York and Singapore.

Why they applied for a small business grant

Frank Recruitment Group knew the user-experience of their website was pivotal in terms of their success or failure. While financing something as crucial as a functional, user-friendly website was a no-brainer, they still needed to find the outlay to make sure they got it right.

How they found the application process for a small business grant

Although they were aware that business grants existed, they hadn’t looked into financing their business before in this way or how to go about checking things like eligibility. They found the key was looking at their expenses and investment first, before reaching out to see if any local grants were available.

Despite being unsure about how their application would be received, they were confident in the strength of their business model. Because of that, there was very little, if any, apprehension or trepidation.

The type of small business grant they got

They applied for a grant from North East England Investment Centre (now Invest North East England) and secured £8,000.

The application process was relatively straightforward. In it, they outlined why they wanted the grant and how they thought it would allow them to develop, compete, and hopefully flourish as a business.

How the small business grant benefitted their business

It came at a crucial stage in the company’s timeline, and enabled them to maximise a highly-functional website, without which they would not have been able to make the impact they did on the European market.


Martin Brackstone is a senior editor and copywriter who has years of experience writing about a broad range of topics, including business finance, pensions, home and motor insurance, premium bank accounts, reward credit cards and personal loans.