What are small business grants, and can your business benefit from them?

Have you ever dropped a fantastic business idea just because you didn’t have sufficient money to kickstart it? 

Well, no fretting anymore. Just like how college has become affordable over the years due to the availability of scholarships and grants offered by financial or government institutions, a similar has come true for businesses.

You can now start your dream business you have always wanted since high school or college by acquiring grants from the government or the private sector.

Have a business plan ready in your hand? Start by acquiring a small business grant.

What are small business grants?  

A small business grant is an amount granted to your firm by the government, a corporation, or a donor to give your business a head start. Grants are practically free money because you are not required to repay the money. 

The mission of these entities is to help small enterprises. They frequently aim towards job development, projects that traditional lenders would not fund, and improving economic advantages for these communities.

Grants come with many benefits, the obvious one being capital. There are multiple types of grants available that small businesses can benefit from. Winning highly competitive grants is a big deal and is announced on the multiple channels which contribute towards free advertising for the business.

Moreover, this free and competitive money also gives rise to a feel-good factor and a confidence boost.

Who receives these grants?   

The prime focus of small business grants is on certain kinds of businesses, like innovative startups, healthcare-related businesses, women/minority/veteran-owned businesses, rural businesses, and ‘green’ businesses, in particular, are more likely to qualify for grants than others.

What are the different types of small business grants you can claim?  

Equity finance  

Grants for equity finance are in high demand because they offer new businesses tax and investment reductions. Your business may be eligible for equity finance if it has fewer than 25 employees and is under two years.

Direct grants  

As a start-up company, direct grants are beneficial since they cover many essential start-up costs, such as equipment purchases, investment in staff training, and sales and marketing.

Soft loan  

Not precisely a grant because you must repay the amount after acquiring the soft loan. The terms and conditions of the repayment tend to be more flexible and lenient than traditional loans.

As a small business in the UK, there are many grants you can have access to. Below are some of them.

Covid 19 Support

As the covid-19 outbreak slowed many businesses to the extent of almost shutting down. The employers had no money to pay salaries to their employees, less opportunities available for job seekers, etcetera. Due to the rise of these financial and unemployment crisis, the COVID-19 support grant came into existence.

It is an initiative the UK government took as a part of one of the covid relief measures to help such businesses stand tall again. 

Gigabit Broadband Voucher Scheme

It is a government grant that focuses on providing much-needed high-speed internet access to businesses established in rural areas.

The government sets up a broadband connection for your business. Your business will be eligible for this grant if you operate your business from an area where the broadband speed is 100Mbps or lower. 

Gov Apprenticeship Scheme

If your business needs extra hands, however does not have money to backup  an employee financially, the GovApprenticeship scheme can benefit you.

Hiring an apprentice can be a gratifying experience since it allows you to teach interns all the essential skills necessary to be a part of the industry. In addition, you get a helping hand in completing the work, which soothes your work burden.

If you hire an apprentice, the government allows you to claim £4k. This type of funding is available for almost any kind of apprenticeship.

Bounce Back loans

The bounce-back loan scheme supports both small and medium businesses in the UK. As it has ‘loans’ attached, you can borrow up to 25% of your turnover (capped at £50,000) to help your business grow through the difficult time.

There is no interest or fees for the first year, and any business can apply for this loan except for state-funded schools, banks, or insurers.

The Prince’s Trust Enterprise Program

In most cases, the assistance offered consists of training programs aimed at helping young entrepreneurs launch their businesses.

The program’s eligibility requirements are listed below.

• You must live in the UK and be between 16 and 30 years old. 
• If you are studying in a school, you must study less than 14 hours per week. 
• If you are employed, you will need to work fewer than 16 hours a week.

With this program, you can get financial assistance with course fees, equipment, tools, licenses, and transportation to a new job.

Capital schemes

There are four types of capital schemes in the UK that will help small businesses raise some funds, and they are as follows.

Enterprise Investment Plan (EIS)– This plan provides tax breaks to new investors who wish to invest in your business. It also allows you to raise £5 million every year. To be eligible for this plan, you must have less than 250 workers.

Seed Enterprise Investment Scheme (SEIS)– SEIS, like EIS, assists you in raising funding for your firm by providing several tax breaks to potential investors. The main distinction is that SEIS is oriented primarily at small firms, with a maximum employee headcount of 25.

Social Investment Tax Relief (SITR)– This plan is quite similar to both EIS and SEIS; however, its sole purpose is to assist social entrepreneurs in gaining capital through investments.

Venture Funds Trust (VCT)– This arrangement enables enterprises to raise capital through long-term investments in which investors receive considerable tax relief.

Before applying, always look out for the objectives you want to fulfil by acquiring the grant. Research the grant thoroughly and if you are still confused regarding the it’s purpose, you can reach out to their respective helpline for more understanding. 

Grants have extremely selective acceptance criteria, however it involves long and generally very time-consuming applications and the same is true for its result announcement. 

Sometimes, grants may come with exclusive terms and conditions like generating and donating a certain amount of profit to the provider, therefore, reading the fine print is crucial. 

Here are some of the terms and conditions to look at before moving forward and applying to claim your small business grant.   

Terms & Conditions

While these T&Cs can be subjective, some common ones often emerge on the surface. 

• The funds may only be spent on certain items or in specific locations in some grants. 
• Before you can access the money, you may have to complete some form of orientation or training. 
• They may also have a time constraint, such as you need to complete your R&D within 12 months.
• You might have to put up an equivalent amount or combine it with other funding.
• You might be required to defend your use of the grant or disclose findings if you utilised the funds for R&D.

How to find these grants? 

Ideally, there are two places you can find it.

1. Government Websites: Here is the link to the UK government page, where you’ll find grant options. 
2. Your chartered accountant: Some accountants in your networks or even a family referred finance person generally know these things or these resources may even help you get in touch with a business that has previously received a grant.

Now that every grant type is at your fingertips, it’s time to dive into how to apply and claim it.

How to apply?   

Don’t rush through the process

Be prepared to dedicate a significant amount of time to the application. Therefore, before you commit, do some research into whether the grant fulfils your expectations. 

First, examine the time line — how long will it take to apply and receive a response? Can you manage to wait that long, or is another source of finance a better option?

Customise your application

Research on what is the objectives of the grand. Your application should demonstrate how your company meets the grant’s objectives, how the funding will benefit your company and make a more significant difference.

Take your time

Expect to offer information about yourself, your product or service, market demographics, and how you intend to use the award. This may include the use of charts, graphs, and budgets. It sounds like a much more time-consuming task, however is necessary as well. 

Know your company’s strengths and create your business strategy with the strengths as an epicentre and how you plan to overcome the weaknesses.

Key Takeaways   

• Grants are effective ways of acquiring capital for your business. 
• While submitting your grant application:
  • You should always include a detailed copy of your revised business plan.
  • Pinpoint how you intend to use the money you will get if your application is approved.

• When pitching, demonstrate that your company is the best fit to help them in achieving their goals and that you have a full grasp of what they are looking for in an application and the applicant’s activities.

It is wise to apply for as many grants as possible to help your business grow or kick start your business. 

Yes, it’s competitive, but so are you. That’s what makes you an entrepreneur. 

FAQs

Q. What amount do businesses receive as grants? 

Ans: Grants might range from a few hundred pounds to hundreds of thousands of pounds. The majority, though, are less than 10,000 pounds. As a result, they are used consistently with other funding options.

Q. Explain a government small business loan.

Ans: Small business loans sponsored by the government are more readily accessible than grants. This is because the government does not supply the funds. Instead, it provides lenders with a guaranty on the funds they provide you. This reduces the risk for banks in lending you the finances you require.

Government small company loans, unlike grants, must be returned. However, the loan rates are frequently lower than those offered by a traditional lender. Mentoring and training may also be given as further business help.