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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 small 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 in business and can my company 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 apply for a small business grant, 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, small business grants and start up business 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, small business 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. Small business or franchise 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 small business grants or startup business grants you 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 small business grants or start up business 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.
GOV.UK

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

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.

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.

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.

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.

Crowdfunding

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.

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 2020 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.”

The government has also 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.

Both the CBIL and BBL schemes are due to end at the end of March 2021 and will be replaced by the Recovery Loan Scheme from April. Retail businesses will also be able to apply for Restart Grants of up to £6,000 per premises in a scheme designed to help the High Street businesses to recover. 

06:57

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. 

Startup and small business grant FAQs

  • How to get a grant for a business?

    To get a grant your business is required to satisfy strict qualification criteria. This can mean sometimes only startup businesses can apply, although there are grants available to established businesses as well. You can see what small business grants or startup business grants are available to you via the government website, local business support organisations and banks.

  • Do grants need to be paid back?

    A grant is a sum of money given by the government or a public or private sector organisation that you don’t need to pay back. Although you do not have to pay back a grant, you are required to repay a loan. Grants are sometimes modest sums (up to £1,000) but can reach £100,000 and is awarded to your business to assist in their development.

  • What small business grants are available?

    Although there are over 140 funding choices available, there is typically a lot of competition for small business grants and only a few are available at any one time.

    The government website, local business support organisations and banks are the best places to start when looking to see what small business grants are available.

    The application process for grants can be time-consuming so it is important to manage your time and submit your application before the deadline.

  • How to apply for small business grant from the government?

    Check the UK government website to see which grants are available to you and if your business meets the qualification criteria. If you meet the grant qualification criteria, then submit your application as instructed. It is recommended you submit your application as early as possible due to the level of competition for funding.