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Could your startup or small business get a grant?

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?

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What is a grant and can my business get one?

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. 

The truth about small business grants

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.

Where can I find out about startup and small business grants?

  • GOV.UK

    Government website GOV.UK is a good place to start if you want to find out what grants your startup or small business can apply for.

  • Local business support organisations

    You could contact your local council, enterprise partnership (LEP), chamber of commerce or other local business support organisation for information about grants available to you or your business. 

  • Banks

    Your bank or trade association might also be able to provide some pointers.

  • Search online

    You could try searching on the Idox Grantfinder website or similar.

  • The Prince's Trust

    If you’re aged 18-30, you might qualify for a grant from The Prince’s Trust.

How to apply for startup and small business grants

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Other sources of startup or small business funding

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.

Non-bank loan

You might be able to get a startup loan from the Start Up Loans Company, for example, a UK government-backed programme that offers startup loans of between £500 and £25,000 at a fixed interest rate of 6% per annum.

Find out more

If you’re aged below 30, The Prince’s Trust could be another option. Also, contact your local business support organisation (eg Local Enterprise Partnership in England) to see what non-bank loans are available to startups or small businesses in your area.


Bank loan

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

A bank will carry out a credit check on you if you’re not an existing customer, but it may not expect any security for smaller amounts. And you can usually get a decision very quickly after applying, especially if you’re an existing customer.


Private investor

Your small business may be able to find an investor to provide some of the funding you need, whether that’s an angel investor or private equity firm.

Find out more

This is likely to involve conceding some ownership and control over your business, but the investment and contacts it can bring could make a huge difference to your ability to achieve your business ambitions.



In recent years, many startups and small businesses have been able to raise money through crowdfunding. This is where groups of investors pay relatively small sums to together fund businesses seeking investment.

Find out more

For pledging a small amount, investors receive a stake in the business or a return on their investment or other benefits (eg discount on products or services). Crowdcube, Growthdeck and SEEDRS are all popular crowdfunding platforms.


Grants for businesses impacted by coronavirus

Approximately 700,000 of the smallest businesses in England will be entitled to a one-off grant. This was initially set at £3,000 during the Spring Budget 2020 but less than a week later was increased to £10,000. 

This is payable to those small businesses that are currently eligible for Small Business Rate Relief (SBBR) or Rural Rate Relief. Any business eligible for those reliefs can apply for the emergency funding direct from their local authority. 

It is important to note that the £10,000 Coronavirus grant only applies to small businesses in England because business rates in Scotland, Wales and Northern Ireland are devolved to their respective administrations and so it will be for them to determine whether or not to offer anything similar. In fact, Scotland has already announced an £80 million fund to provide grants of £3,000 to small businesses in sectors that suffer the worst economic impact of Covid-19. Any small business in Scotland that wants to apply for such a grant should contact the business Coronavirus helpline on 0300 303 0660. 

On Tuesday 17 March the Chancellor also announced that smaller businesses without sufficient insurance cover would be eligible for a cash grant of up to £25,000 per business, providing they had a rateable value below £51,000.

Your business may also be eligible for the Coronavirus Business Interruption Loan Scheme. The scheme has been set up to provide “financial support to smaller businesses (SMEs) across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the Covid-19 outbreak.”

More recently, the government has launched the Bounce Back Loan scheme which is aimed at businesses that are not eligible for CBILs. 

  • Apply for a loan up to £50,000.
  • 100% underwritten by the government.
  • No fees or interest paid in the first 12 months.
  • No need for credit checks or to validate the viability of your business.

According to GOV.UK: “There are 11 lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender yourself via the lender’s website.”


Video: Explaining CBILS and Bounce Back Loans

by Alternative Business Funding

Our partners Alternative Business Funding discuss the funding landscape for small businesses with reference to the Coronavirus Business Interruption Loan Scheme and Bounce Back Loans. 

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