Your Guide to Small Business Grants in the UK: How to Access Free Funding
If you run a small business in the UK, you know how crucial funding is for growth, innovation, and keeping operations running smoothly. While loans and investments are useful, wouldn’t it be even better to secure funding without the burden of repayment? That’s where business grants come in.
Business grants are non-repayable funds provided by the government, local authorities, and private organisations to help small businesses grow, innovate, and solve specific challenges. In this guide, we’ll explain the types of grants available, where to find them, how to apply, and tips to improve your chances of success.
1. What Are Business Grants?
A business grant is a non-repayable sum of money awarded for a specific purpose. Unlike loans, grants don’t require repayment or come with interest charges, and they don’t require you to give away equity in your business.
Grants are typically awarded to support specific projects such as training, expansion, sustainability, or research and development (R&D). However, most grants come with conditions on how the money must be spent, and the application process is often highly competitive.
Key Points to Know About Business Grants:
Non-repayable: You don’t have to pay back the money, though most grants will be subject to tax depending on how the funds are used.
Specific purposes: Grants are usually awarded for specific projects or goals, such as job creation, environmental sustainability, or innovation.
Eligibility criteria: Grants often have specific requirements regarding the business’s sector, size, location, or the demographic of the business owner.
Cash flow considerations: Some grants are reimbursed after expenses are incurred, which can impact cash flow and may require additional financing.
2. Advantages and Disadvantages of Business Grants
Advantages:
No repayment: Unlike loans, grants don’t need to be repaid, allowing you to invest the money in growth.
Retain equity: Unlike equity finance, you won’t have to give up any ownership of your business.
Synergy with other finance: Grants can be combined with other forms of finance, such as loans or equity, to create a balanced funding strategy.
Waterfall effect: Securing one grant can increase your chances of securing others, as grant bodies often view previous awards as endorsements of your business.
Disadvantages:
Match funding: Some grants require businesses to match the funding awarded, meaning you’ll need to contribute your own capital as well.
Highly competitive: Often fewer than 10% of businesses that apply for a grant are typically successful.
Time-consuming: Applications can be lengthy and may detract from daily business operations.
Specific eligibility: Grants often have narrow eligibility requirements, such as location, sector, or even the demographic characteristics of the business owner.
Cash flow impact: Some grants are paid retroactively, meaning you’ll need to spend your own money upfront.
One-off awards: Grants are often one-time awards and cannot be relied on for long-term funding.
3. Types of Business Grants Available in the UK
There are various types of grants available, each designed to meet different business needs. Here’s an overview of the main types of grants available in the UK.
Government Grants
Government grants are some of the most widely sought-after. These grants are designed to support economic growth, innovation, and job creation, often with a focus on specific sectors or projects.
Examples include:
Innovate UK Grants: Focused on research and innovation, Innovate UK provides funding for projects that drive new technologies and ideas. These grants often require businesses to be involved in R&D or innovation-driven industries.
UKRI (UK Research and Innovation) Grants: UKRI offers grants to businesses engaged in scientific research or technological development.
Local Enterprise Partnership (LEP) Grants: LEPs offer region-specific funding to help local businesses grow. LEP grants are often aimed at job creation and local economic development. Check your local council or LEP website for available grants.
Regional and Local Authority Grants
Many grants are offered at the local level to boost regional economies or address specific local challenges.
Examples include:
Devon and Somerset’s Mobile Boost Scheme: Aimed at improving mobile connectivity in rural areas, this scheme supports businesses and households with inadequate mobile coverage.
Worcester City Council Business Start-Up Grant: Provides funding for start-ups in Worcester to help cover costs like equipment, website construction, or premises refurbishment.
Sector-Specific Grants
Some grants focus on specific industries such as green technologies, creative arts, or manufacturing.
Examples include:
Sustainable Innovation Fund: This Innovate UK grant supports businesses working on sustainability and clean energy projects.
Help Musicians Fund: This fund supports grassroots organisations offering musical activities for young people in London.
Young Farmers and New Entrants Start-Up Grant: Targeted at individuals starting or taking over agricultural businesses for the first time.
Start-Up Grants
Start-up grants are designed to help new businesses with initial capital, training, or mentoring.
Popular start-up grants include:
Prince’s Trust Enterprise Programme: This programme provides financial support and mentoring to young entrepreneurs (aged 18-30). Check out the Prince’s Trust website
Government Start-Up Loans: Though not a grant, this scheme provides start-up loans to help new businesses get off the ground. More information can be found on the UK Government’s business finance support page.
Green Grants
With increasing emphasis on sustainability, there are a variety of grants designed to help businesses reduce their carbon footprint or adopt environmentally friendly practices.
Examples include:
Green Business Fund: Offers support to small businesses in the form of energy-saving equipment and advice on improving sustainability.
Resource Efficiency Grants: Many local authorities offer grants to help businesses adopt green technologies and improve energy efficiency.
4. How to Apply for Business Grants
Applying for a business grant can be a lengthy and competitive process, but the potential rewards make it worthwhile. Here’s a step-by-step guide to help you through the application process.
Step 1: Research Available Grants
Start by researching available grants that match your business’s needs, sector, and location. Use online resources like the GOV.UK grants directory and your Local Growth Hub. Industry associations can also be a good source of information.
Step 2: Check Eligibility
Carefully review the eligibility criteria for each grant. This can include the size of your business, your location, the sector you operate in, and the project you intend to use the funds for.
Step 3: Prepare Your Application
Your application should clearly demonstrate how your business meets the grant criteria. Provide a detailed breakdown of your project, business plan, financial projections, and an explanation of how the funds will be used to achieve specific goals.
Step 4: Submit and Follow Up
Submit your application before the deadline and be prepared for a wait. Most grants take time to process, and some may require additional information. If your application is unsuccessful, ask for feedback to improve your chances next time.
5. Tips for Securing a Business Grant
Given the competitive nature of grants, here are some tips to improve your chances:
Research thoroughly: Make sure you understand the grant provider’s objectives and tailor your application accordingly.
Be detailed and specific: Outline your business operations, how you meet the eligibility criteria, and your plans for the grant funds. Provide clear objectives and expected outcomes.
Clarity is key: Avoid jargon or overly technical language. Keep your application clear and easy to understand.
Tick all the boxes: A comprehensive business plan can strengthen your application, and in some cases, it may be a mandatory part of the process.
Apply early: Many grant pools run out of funds over time, so applying early can improve your chances.
6. The Future of Small Business Grants in the UK
With the UK economy facing ongoing challenges, grants will continue to be an important tool for supporting small businesses. In particular, expect to see more grants focused on green innovation, digital transformation, and job creation.
Regularly check for new grants, and when opportunities arise, be ready to act.
Need Further Support? If you need guidance on finding or applying for the right grant, we are here to help. Get in touch today to discuss your options and maximise your chances of success.
Nothing on this page is intended to be or should be construed or taken as accountancy, investment, tax or any other kind of advice. We recommend individuals and companies seek professional advice on their circumstances and matters.
More from our Blog
