If your startup or small business is looking for funding, one option is to apply for a business grant. However, with the strict eligibility criteria and fierce competition for funds, what do you need to consider before applying?
A grant is a sum of money given by the government or a public or private sector organisation either for a general purpose (eg to start a business) or something more specific (eg to research specific overseas markets).
To access grants, normally you or your business must satisfy strict qualification criteria. Sometimes grants are only available to startups, in other cases more established firms can apply. You may have to operate in a certain sector or location. A grant might only be available to those who sell or want to sell overseas or to a business owner from a specific group, whether that’s linked to gender, ethnicity, age or other criteria.
You do not have to pay back a grant, of course, but you are required to repay a loan. Sometimes relatively modest sums (up to £1,000) are available via grants, but others offer UK SMEs up to £100,000 or more in grant funding.
In reality, grants are few and far between and competition is fierce. For various reasons, applications are not always successful, although there are many things you can do to increase your chances of approval.
In some cases, grants might only cover a proportion of costs, for example, if they are given for projects. So, you may need to work out whether your business can come up with the rest of the funding and work out how this will affect your cash-flow. You may not receive a grant until a project nears completion.
Applying for grants takes time and effort, which creates a cost implication for your startup or small business. But you should never rush the process and your research must be thorough. You should apply in good faith and not include any information that isn’t truthful or accurate, otherwise, you may be asked to repay a grant.
Those who administer grant funding could ask to see a project or business plan as part of your application. Grants are normally only made available before a project starts, not after you start, so your timing is key. You need to manage your time well if you are to get your application in before the deadline.
As we've highlighted, making a successful grant application can be difficult. It's good to keep your options open.
Aside from borrowing money from friends and family, here are some of the most common funding routes for startups and small businesses.
Startup and small-business loan-approval rates from UK high-street banks are reported to be much higher than they were a few years ago.Find out more
The government website lists the various grant schemes available nationally and locally.Read more
We've looked at the wide-ranging options available to startup businesses when it comes to funding.Read more
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