Could your startup or small business get a grant?

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. 

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.
 

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.