Having the right funding in place is crucial for any business. Whether you’re operating a start-up or running a company with a long-established trading history, Karl Hodson of UK Business Finance explains how to get government grants for your business.

Understanding government grants for SMEs

When looking for funding, your instinct may be to turn to your bank to see what they can offer. However, before you rush to secure a business loan or invoice finance arrangement, you may first want to explore whether you qualify for one of the many government grants that are open to new and small businesses across the country.

There are currently over 100 different government grants available, however securing one of these can be challenging. Your company must meet certain conditions to be eligible; these conditions vary with each grant but could be contingent on your business operating in a certain sector, employing staff, and even your age.

As government grants are publicly funded, it is not unusual that a qualifying business must be able to fulfil a certain economic or social purpose with the grant funds; this may include offering training or apprenticeships to young or disadvantaged individuals or working towards meeting a specified environmental target.

What types of government grants are available for businesses?

Direct grants are the most common type of government grant. As the name suggests, these are given in the form of a direct cash transfer to your business. However, even with a direct grant, it is usually the case that grants need to be used to invest in a certain area of your business; be that technology, research, or staff training, rather than just a general injection of capital that can be used in any way of your choosing.

In some cases, a government grant will not involve you receiving any direct cash at all, but rather you will be given a piece of equipment for free or receive a reduction in your business rates or certain tax obligations. While these types of awards may not seem as useful as direct grants at first glance, they could help to free up money which could then be directed towards other areas of your operations.

Some grants, such as business rates relief and National Insurance relief, will be awarded so long as you can prove you meet the stated minimum criteria; others, however, will be more competitive and will be assessed on a case-by-case basis.

As well as government grants, your local authority may also have their own grants on offer. Again, these are likely to have a strict qualification criteria, however, as they are localised, you may find the competition for these grants is less fierce than those that are open nationally.

How do you apply for a government grant?

You can browse a list of available government grants and see if you're eligible to apply for them. Unlike loans, grants do not need to be repaid meaning there really is nothing to lose in applying.

Here are some top tips to maximise your chances of success in a government grant application process:

• Find the best fit - Some grant applications can take a lot of time and effort, therefore you should ensure your business meets the qualifying criteria before you get too deep into the process. This will save wasted time and energy for both parties, allowing you to explore other grants which better suit your needs.
• Focus on the grants use – Although you may meet the qualification criteria, before you apply  ensure the grant will meet a need the business actually has. Remember, most grants will need to be used in a specific way within your business; if your business does not need this help, consider leaving the funds for a business who does.
• Prepare a plan – Once you’re sure you meet the eligibility criteria for the grant and you are satisfied it will be of benefit for your company, now is the time to sell this to the awarding body. Bring to life your vision for the grant and make clear the tangible benefits this will have on your business and the wider community in which you operate. Tailor your application to the grants usage and explain in depth how the funds will be allocated within the project.
• Be prepared to provide evidence – You may be required to provide a business plan, company accounts, or a cash flow forecast to support any grant application.
• Check for fund matching – It’s not unusual that a grant will need to be matched in value by your company before it will be awarded. For example, if you are seeking a grant of £25,000, you will need to also put £25,000 into the project as well. This is known as fund matching. If the grant you are looking for stipulates this as a condition, ensure you can do this before applying.
• Apply as soon as you can – Many grants will have a ringfenced pot of money allocated towards it; once this pot is gone, it’s gone. Get your application in as soon as possible to ensure others don’t get there first.
• Keep checking – While certain pots of funding run out, others are refilled or launched all the time. Just because there is not currently a grant suitable for your business, does not mean there never will be.

About the author

Article written by Karl Hodson, UK Business Finance. Karl is responsible for helping businesses across the UK raise funding for a variety of purposes such as working capital, expansion and capital equipment. He has specialist knowledge of raising finance through invoice and asset-based lending, crowdfunding, loan and equity funds and Government schemes.

See also

What is Entrepreneurs' Relief and how can you claim it?

Green tax reliefs and schemes available to UK businesses

What is Business Asset Disposal Relief?

Find out more

Find government grants (GOV.UK)

Images

Getty Images

Publication date

22 November 2023

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.