A guide to business grants
Are you looking for finance to help start a business or expand an existing business? If so then a business grant could be a great option. There are hundreds of different business grants available across the UK. Whatever your industry and whether your business is big or small, there is probably a business grant that’s right for you.
In this guide we explain everything you need to know about business grants. We also answer common questions like “how does a business grant work?” and “how long does it take to get a business grant?”
Table of Contents
- What is a business grant?
- Pros and cons of using business grants
- How to apply for a business grant
- Frequently asked questions?
What is a business grant?
Business grants are a type of non-repayable funding for businesses. They are usually given for a specific purpose like training, employing staff, research, renovating property or regenerating a local area.
Grants are awarded by national and local governments, as well as other grant-making bodies. You will need to fill in a grant application form and explain how you will use the grant and the financial details about your project.
How does a business grant work?
A business grant works by giving your business money for a specific project. You will need to apply for the grant with a detailed proposal explaining how you will use the grant money. The application must be in line with the aims of the grant for you to be accepted. For example, if you’re applying for a grant that’s focused on improving fitness, you will need to explain in detail how your project will improve fitness in the local community.
Most grant-making organisations require applicants to contribute at least 50% of the funding. This means you may need to arrange separate finance or fund part of the project yourself. You will also need to wait until you receive the money before starting the project as most grants aren’t available for money already spent.
If you’re accepted for a business grant you will need to provide regular reports to show you are using the money for the intended purpose.
What is a business grant for?
Business grants can be used for a variety of different uses depending on the type of grant and the details of your application. Here are some of the uses for business grants:
- Funding a particular project.
- Paying to train staff.
- Buying equipment for your business
- Cover cost for an emergency (e.g. grant to help businesses recovering from Covid 19).
- Helping business pay for business rates.
What different types of business grant are available?
There are many types of business grant. Some are designed for businesses in different industries including construction, events management, recruitment, land, science and research, culture and the arts, charity and social enterprise. Other grants are available for businesses in certain geographical regions throughout England, Scotland, Wales and Northern Ireland.
What business grants are suitable for new businesses?
Many types of business grants may be suitable for new businesses. However, most grant providers will only give funding for a specific project so you need to have a clear business plan. Also, most grants require businesses to put up 50% of their own funding and this may be difficult for new businesses.
Some business grant providers offer loans as well as grants. These loans will need to be paid back, but may have better terms than a commercial loan. Startup loans, for example, are low cost loans designed for businesses that have been trading for less than 2 years.
Pros and cons of using business grants
The main pros and cons of using business grants are as follows:
Pros:
- Cheap funding - you won’t need to pay back the grant money you receive. This means you can save on interest and capital repayments.
- No loss of control - unlike equity finance, you won’t need to sell and potentially lose some control of your business.
Cons:
- Complex application process - many grants require a detailed grant application form which can be time consuming to fill in.
- Ongoing administration - most grant providers ask for a regular beneficiaries’ report to show how you are using the grant money.
- Competitive - there is tough competition for some business grants so it’s possible you won’t be accepted.
- Slow to arrange - there is a complex application process and you may have to wait for a grant decision.
- Can’t start your project - most providers expect you to wait until the grant money is received before starting the project. This may not be possible in all cases.
- Some existing funding needed - many grant providers will expect applicants to provide 50% of the funding themselves.
How to apply for a business grant
Each type of business grant comes with it’s own application process and eligibility criteria. The application process can be lengthy for many grants and competition can be strong.
To give yourself the best chance of a successful grant application it’s worth spending time researching all the grants relevant to your region and industry. By applying for the most relevant grant you’ll give yourself the best chance of success.
Before you apply for a grant you should check the following:
- You meet the criteria of the grant scheme.
- You have some money or private funding to match any grant money. That’s because many providers want you to match the grant funding with 50% of your own funding.
- Your business needs the money for a specific, not something general like paying off debt.
- You can afford to wait and start the project once the money is received.
You will need to provide the following information on your grant application:
- A detailed description of the project.
- An explanation of the benefits of the project.
- A business plan with full details of expected costs.
- Information on the relevant experience of yourself and your team.
- A completed application form.
Where to get a business grant
There are many different types of government business grants. Some are designed for certain industries and others are available for businesses in different UK regions.
A good place to start is by using the UK government’s finance and support for your business tool. It is possible to filter the grants available by region, industry, number of employees and business stage to find the one most suitable for your business.
For English businesses, the Local Enterprise Network website provides more information on local grants. You can search for local support available in your area.
If your business is based in Scotland then the ScottishEnterprise website has information on local business grants.
For Welsh businesses, take a look at the Welsh government’s funding locator to find a suitable grant.
If you’re in Northern Ireland then visit the NIbusinessinfo website.
Frequently asked questions
You will not need to pay back business grants but you may need to provide a regular beneficiaries’ report to show how you are using the grant money.
New businesses may be able to apply for government grants and loans, depending on your circumstances. In some cases a loan may be more suitable as you will need to raise some of the funding yourself and wait until you receive the grant before starting your project. Visit the government’s finance and support for your business website to look for a suitable grant.
Read the grant eligible criteria and any guidance to make sure you are covering all the relevant information. Here are some tips for your application:
- Be specific - explain the aims of your project in detail, for example, we will provide 2 exercise classes per week for disabled adults for 12 months, these classes will be for 10 people.
- Include detailed costings - be specific about what money is required for, don’t include miscellaneous costs.
- Keep focused - write about how your project will fulfil the grant priorities, for example if the funder focuses on activities for disabled adults then explain how your exercise classes will benefit disabled adults in the community. Be as specific as possible.
- Explain the need - give evidence of how your project is needed and will make a difference.
- Include all relevant information - make sure you include all documents the grant-making organisation has requested.
- Meet the deadline - make sure you submit your proposal before any deadline.
- Stick to one provider for the same project - if you’re accepted by 2 providers you’ll have to turn one down.
You may be able to get a business grant with bad credit. You will need to have a suitable business plan for your project and to meet the grant provider’s eligibility criteria.
It may be possible to get a grant to start a new business. Take a look at the government’s finance and support for your business tool to find a suitable grant.
You could also consider alternative funding like a startup loan, crowdfunding or an Angel investor.
There are many local business grants available for businesses in England, Scotland, Wales and Northern Ireland.
The Local Enterprise Network, the ScottishEnterprise, the Welsh government’s funding locator and Northern Ireland’s NIbusinessinfo website all provide information on local grants.
Business grants are free but there may be some additional administration time and costs. For example, researching and applying for business grants is time consuming and complex. You may also need to produce an audited beneficiary report showing how you are using the grant funding.
Business grants are usually taxable because they’re counted as a form of income. You may be able to subtract some tax reliefs to help with cost. Ask your accountant for more information.