What grants and funding are available to your small business?

08 August 2017

As a small business, finance is a hugely important aspect of getting your SME off the ground. Many new and small businesses operate on a tight budget, meaning the day-to-day is as much about survival as it is about growth.

f you’re wondering about funding and how other small companies procure their funds, then good news: it’s often thanks to the wide range of grants and funding out there to help your start-up.

This article will provide a look at what’s available to your company, whether it’s grants, exemptions or access to the many useful resources you can receive. It’s by no means the conclusive list of funding sources – there are plenty of other schemes that are based on region alone and many other factors, but hopefully, it will help to shine a light on the resources which could help you grow your small business.

sme owner researching funding

What kinds of grants are available to me?

Identifying the kinds of grants available could help you secure that much-needed finance, cover overheads and help your business grow.

Direct grants

A money award that’s given to businesses to cover things like training, employment, recruitment, and investment in equipment. Typically, these kinds of grants require the company to put up around 50% of the cost, but funds of up to half a million are available depending on your businesses’ sector.

To see the full list of available government grants, check out this business finance support finder here.

Soft loans

Similar to a grant, soft loans allow for much more generous terms of repayment compared to other routes of lending. They tend to have lower or no interest rates, and the repayment terms are comparatively longer than under normal financial circumstances.   

While there are plenty of organisations offering soft loans, Start Up Loans is perhaps the most notable. Government-funded, they offer loans of up to £25,000 with a 6% interest rate and a 12-month repayment ‘holiday’, along with free business support and mentoring, too.

With thousands of start-ups funded, it’s well worth a look to see if you’re eligible.

entrepreneur speaking to investor

Equity finance

Though not a grant in the true sense, equity finance involves public funding from investors, who then take an equity share of the business. When your businesses’ value increases, the stake is returned. They’re particularly helpful since the expectations that public fund providers hold are usually less demanding than those of venture capitalists.

How do I qualify/apply?

A slight snag: the process of gaining a grant can be an arduous one. Every scheme has its own set of criteria, with red tape to follow. But whichever you choose to go for, it’s well worth persevering with. To make things easier, here’s a list of things to consider before you make that application.

  • Discuss your plans with the grant award body before you apply. Understand their objectives – why is it being awarded? What does it aim to accomplish? When writing up your application, stick to their objectives as closely as possible to better your chances.
  • A strong business plan is obviously an essential. They’ll be expecting something thorough and professional, and if your business has started trading, then examples of your business position and balance sheets are a must.
  • Will the funding you’re applying for match your available amount? A lot of grants look to equal the amount you’re willing to invest, so be sure to check this beforehand.
  • What will you use the grant for? Since funding is awarded for specific reasons within any given business, you must illustrate how the grant will help your start-up to grow.
  • Strike while the iron is hot. When a new grant first launches, apply early to get a better chance of receiving a grant. Plus, since grants only have a finite pot of money, there will likely be more funding with less competition.  

growth business owner

What else is available to SMEs?

SMEs make up much of the UK’s economy, and as such there is a range of helpful services and resources available to improve their chances of success.

Free/subsidised consultancy

Since start-ups are often small in scale, the lack of manpower often means a lack of particular skills. Luckily, there are schemes available which can help to ‘fill in the gaps’ of your business either for free or at subsidised rates.

The Government business finance and support portal linked above offers free and subsidised advice and consultancy.

Access to resources

Much like the above, start-ups can also lack the physical resources they need to progress with projects or products. The obstacles these omissions might cause can easily be overcome with accelerator and incubator schemes.

Accelerator schemes allow for start-ups to apply for 3-4 month schemes based within a host company’s offices. During this time, you’ll receive mentoring and guidance, opportunities to refine your business model and receive extra funding, and a chance to attract investment down the line, while the company can invest in the start-up in return for a stake.

Incubators provide longer-term support – years as opposed to months. Offering more opportunity for collaboration, while seed funding is also available. The problems that start-ups face are dealt with early on, but the investors offering assistance often look for a larger share of the business in return for their help.

small business team finance options

Small business exemptions

A small businesses’ property can entitle them to business rate relief when they are not entitled to other mandatory reliefs.

If your property’s rateable value is less than £15,000 or you only use one property, you should contact your local council to apply.

This could provide much-needed financial relief, trim overheads and, potentially, boost profits.

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