A guide to UK government business grants

This guide provides an overview of the types of grants available and general advice on navigating the application process.

What are business grants?

Small business grants represent a form of support provided by different levels of government—from national to local—and by various organizations. These grants aim to foster the growth and development of small businesses across diverse sectors, offering a critical financial boost. This support can be crucial for businesses looking to expand, innovate, or increase their workforce without depending solely on traditional financing methods like loans from high street banks.

Grants are typically awarded based on specific eligibility criteria, requiring businesses to demonstrate their qualifications through a detailed application process. Given the competitive and selective nature of these grants, understanding and meeting the eligibility requirements is essential.

It's important to note that the criteria and availability of grants can vary, reflecting changes in economic policy, funding priorities, and government initiatives. For the most accurate and up-to-date information, prospective applicants should consult the official websites of the granting organizations.

What are the different types of business grants?

The UK offers a diverse array of business grants, spanning over 100 different forms to support various sectors and industries. These grants are categorized into several types, including:

• Start-up grants: Initiatives like the New Enterprise Allowance and organizations such as the National Lottery Heritage Fund and the Prince’s Trust provide funding to support new business ventures, with a focus on creating job opportunities and offering skills training, especially for the youth.
• Innovation grants: UK-based funding body Innovate UK offers support of up to £10 million for businesses making developments and innovative leaps in key areas, such as technology and active research.
• Resource and training grants: There is specific funding set aside for businesses looking to access specific expertise or skills development. This can also include funding options like innovation vouchers, local business support, networks, and helplines.
• Direct grants: This is perhaps the simplest form of government grant, where they agree to match any funding a business can raise independently towards certain goals or projects. Direct grants often come with specific conditions about how the money can be spent.
• Tax relief grants: Aimed primarily at the R&D sector, these grants offer small businesses the opportunity to reduce their tax liability, covering costs related to staff, raw materials, and more.
• Environmental grants: These focus on specific environmental issues, e.g. the air quality grant scheme, which assists businesses attempting to introduce clean air zones.

There are also numerous other governmental financial support options available, tailored to a business's size, focus area, type of opportunity, and other criteria. It's important to note that the availability and specifics of these grants can change, so it's advisable to consult directly with the relevant bodies or official government websites for the most current information.

What are the eligibility criteria for specific grants?

The eligibility for various grants and funding opportunities for small businesses in the UK can vary widely, reflecting the diverse nature of these financial aids. Common factors considered by funding bodies include:

• The size of the business
• The location of the business
• The sector or industry in which it operates
• What the grant money will be used for

For instance, eligibility for R&D tax relief typically requires a business to have:

• An employment base of 500 or fewer staff members
• Turnover of under £100 million or a balance sheet of less than £86 million

Other grants, especially those targeting start-ups or specific sectors, might have more detailed criteria, including age or geographic location requirements. It's crucial for applicants to thoroughly review the current eligibility requirements set by the funding body to ensure compliance and increase their chances of success.

Given the dynamic landscape of grant funding, criteria may change; hence, consulting the latest information from official sources or directly contacting the funding organizations is strongly recommended.

How to find and apply for grants

As outlined above, government grants can be an excellent way for small businesses to secure funding outside of the traditional methods, e.g., loans from high street banks. Finding grants requires research and understanding of the specific criteria involved.

A good place to start is with resources such as the government’s Business Finance Support Finder or the British Business Bank, which offer comprehensive information on available funding options.

Upon identifying suitable grant opportunities, the next steps involve preparing for the application. This typically includes:

• A solid business plan, including evidence of a sound cash flow forecast
• A tailored application to the organisation that is being applied to
• A clear outline of how funding will directly impact business success, in terms of growth and employment
• A timely application, as funding pots are often limited

Clear and straightforward proposals, which illustrate a business's alignment with the grant criteria, are essential for the application process. Amongst other things, eEffective proposals are concise, they articulate the business'’s alignment with the grant criteria, and they underscore the potential return on investment (ROI) for the project.

Fuel business success with grants

Government grant resources exist to help businesses grow and succeed and benefit the local and national economy. These grants represent a valuable opportunity for organizations that qualify, offering an alternative to traditional funding methods. A significant benefit of grants is that, unlike loans, they do not require repayment.

Your business may have a better chance at a successful application by having a clear understanding of the eligibility criteria and effectively demonstrating how your business aligns with these requirements. With more than 100 small business grants available in the UK, it is worth exploring different options to see how they can help.

In addition to government funding, there are other non-government options to help grow your business in a cost-effective way, such as loans and other dedicated finance options.

It's advisable for businesses to consider a broad spectrum of funding sources to best support their growth objectives.