What’s the difference between a grant and a loan?
A loan is money you receive for your business that you will have to pay back within an agreed timescale. A grant is an amount of money that you won’t be expected to pay back. This is the case as long as you keep to any conditions that are attached to the grant. This could be terms such as a job creation target or deadline.
You will need to write a funding proposal in order to receive a business start-up grant. Often, multiple organisations will be applying for a funding opportunity. A funder will evaluate the grant proposals that are submitted to them. They’ll award funding to businesses that will put their money to best use and achieve the most value for money.
Start-up business grants in the UK usually cover only part of the total costs involved for projects or a start-up. A lot of the time, you will likely need to provide match funding alongside any business grant you receive. Every grant will have a different application process which will be stated in the grant documents.
What is a small business grant?
There are many different types of business grants to start a business available covering an array of sectors. They come in all shapes and sizes. From council business grants to R&D funding and charity funding to start-up grants. In general, government business grants can be split into the following three types:
This when money is granted directly to a new business to cover start-up essentials, including staff training and equipment. It is unlikely you will have a business grant that covers all costs. They will often expect you to provide a percentage of the value of the business grant.
A soft loan isn’t a grant, it’s a government-backed loan. As mentioned above, you will need to pay the money back via the agreed repayment terms and conditions. These will often be more generous than those offered by banks and building societies. This means that your business could enjoy longer repayment periods or pays lower interest rates.
An equity finance can offer start-ups and young businesses reductions on income tax and investments. Typically, they can offer them if a business is less than two years old and has less than 25 employees.
What type of business start-up grants are available?
There are a wide array of business start-up grants available across the UK. They can be for a variety of organisations, businesses and charities. For example, business grants for small businesses, business start-up grants for over 30s, business start-up grants for the unemployed etc.
Start-up business grants in the UK
You are able to find various start-up grants across the UK. These schemes and start-up funding for UK businesses enable support for new organisations. Often, there will be grants available to start a business in England, Wales, Scotland and Northern Ireland.
The UK government offers start-up grants for business across the UK. However, there are also business funding opportunities specific to businesses operating in each country independently. Business start-up grants for small businesses may be available from regional and local authorities.
Innovation funding grants
Businesses that undertake research and innovation as part of their core business may be eligible for research and development grants. Innovate UK has grants in accordance with the Department for Business, Energy and Industrial Strategy (BEIS). There are also other funding opportunities including research and development. The UK government R&D funding is at its highest level in four decades. This is because the government is wanting to level up the UK. They are encouraging businesses to be innovative, sustainable and have a focus on research and development. If you’re thinking of starting up a business that specialises in R&D, it may be worth looking into available grants.
Business start-up grants Scotland
If you’re based in Scotland, there are Scotland-specific business start-up grant opportunities available. These grants can be provided by the government, local councils and private organisations. There are also business start-up grants in Scotland that can help businesses affected by Coronavirus.
A new Scottish funding model came into place at the end of February 2021. The funding model creates a more simple and inclusive funding model that helps create jobs and a greener economy. The majority of their grants will be delivered as funding calls. There will be a series of funding rounds that open and close for fixed amounts of time.
The main business start-up grants in Scotland have the objectives of:
- Creating jobs
- Specialising in research and development
- Creating social, environmental and economic benefits
- Encouraging collaborative projects leading to new technology or ideas.
Green jobs call
The Scottish green jobs funding has been developed as competitive funding calls. It aims to support businesses to create and maintain jobs that improve the environment. They also support projects that align with the Scottish Government net-zero policies.
It opens on the 18th of May 2021 and this call:
- Is for businesses located in the Scottish Enterprise area. Or those businesses looking to set up in the trading location in the area before 1st October 2021.
- Offers grants between £50,000 and £500,000.
- Can support between 10% and 50% of eligible project costs depending on factors such as company size, location and activity.
- Is for businesses looking to create jobs that are directly related to sustainability and reducing carbon emissions.
- For businesses undertaking activities that will result in green jobs. This includes investing in premises, purchasing capital equipment or conducting research and development.
- Involves a claims process rather than a single up-front payment. This means you’ll need to pay for your project costs and then claim eligible costs back from your grant.
- Is a competitive discretionary grant. Applicants will be assessed based on their merit against scoring criteria. Not all eligible applicants will receive funding.
You will be able to request the amount of business grant funding you need. However, you must be able to demonstrate why you need this amount. Funders will consider your eligible project costs, public funding rules and your activity types. They will then determine if it’s an appropriate amount.
The Scottish Enterprise area generally includes:
- The central belt
How can I claim?
The green jobs funding does not offer up-front grant payment. If you are successful with this grant, you will need to pay for your costs upfront. Then you will need to claim them back from your grant. Often you can claim at intervals throughout your project. This means you don’t need to pay for all your costs at once.
Be aware that this grant cannot cover your entire costs. You will need to fund some of the costs yourself or other sources of funding.
You will need to provide detailed information about your project or business. This could include:
- Why it’s important
- What the commercial prospects are
- Who your competitors are likely to be
- A business plan
- Business costs
- Whether or not you have the capacity and resources to complete the project.
Business start-up grants for unemployed individuals
You may be eligible to receive a business start-up grant to start a new business if you are unemployed. Mentoring services and an allowance are available to start your own business through the New Enterprise Allowance from the government. The scheme is designed to help the long-term unemployed back to work by helping them set up their own business.
You may be eligible if you’re over 18 and either:
- Receive Income Support and you’re a lone parent, sick, or disabled
- Or your partner gets Universal Credit, Jobseeker’s Allowance or Employment and Support Allowance.
Through the New Enterprise Allowance, you’ll get a mentor who will give you advice and support. They will help you set up your business and start to trade. Once you’ve made a business plan that is approved by your mentor you:
- May get a weekly allowance worth up to £1,274 over 26 weeks
- Can apply for a loan to help with start-up costs.
How do I apply for start-up grants in the UK?
Find the right funding opportunity for your business
Finding the right start-up business grant in the UK can take time. You want to ensure that you find a grant that fits your business not the other way around. You shouldn’t be trying to make your business fit a grant funding opportunity. This is essential. You can use a SWOT analysis to decide if it’s the right funding opportunity for you. You should assess the:
Read the grant objectives
The grant objective documents contain important information. They will often detail eligibility criteria, qualifications and other important information. It’s vital that you read this thoroughly to see if it is a suitable opportunity for you. There’s no point in submitting an application if you don’t qualify for it or don’t possess a pre-requisite.
Take the time to learn and understand the funder and their objectives. Learning why the grant is being awarded can help you tailor your application accordingly. If you’re unsure, contact the grant awarding body and they will be more than happy to discuss it with you.
Have a full-proof business plan
Establishing a robust business plan is one of the most crucial starting steps in order to win grant funding. This will help you demonstrate that you have a thorough understanding of your business. It will also help you understand pricing and what’s required in order to break even or make a profit.
Depending on the business start-up grant, you may be entitled to assistance from a mentor. They may be able to help you develop your business plan. Funders want to see extensive plans showing how you’ll put their money to use if you’re successful. The more in-depth information you provide, the easier it is for funders to understand how they can help.
Focus on what the grant is going to be used for
Grants are usually awarded for something specific such as a project or a business with specific objectives. Focus and clearly explain what the money will be used for. When writing your bid for funding, it should show how this will help grow your business and benefit others.
Check your funding
The maths needs to check out. Most grants will look to match the amount you’re willing to invest. So, if you’re seeking a grant of around £15,000, then make sure you’re matching the amount.
You should be humble in your price evaluation and realistically evaluate the running costs. You shouldn’t be asking for money for, say, Apple Macs when a cheaper service provider will do. Demonstrate that you can manage cash flow as this will reassure a funder that their money is in good hands.
Start planning early
A successful grant proposal application is all about planning and time management. This is essential if you are to be successful. As mentioned above, some grants only open at specific times of the year. It’s best to be prepared as some grants have a limited amount of funds available. So, submitting early could raise your chances of securing additional funding for your business. Doing the groundwork early can help you get a better idea of what’s needed and where you have gaps. This will enable you to adequately see what needs more work.
Successfully gaining a start-up business grant can give your organisation the boost it needs. However, securing funding takes a lot of preparation. It can be hard to know where to start if you’ve never done it before.
Need help with writing your business start-up grant application?
Our Grant Writing Service is for businesses who want to start applying for grants, but don’t know where to begin. If you don’t have the resources or the time in-house to write a winning grant – we can help. Our Grant Writing Consultants have over 60 years of bidding experience. They can take care of the whole process for you – they’ll even submit the application on your behalf.
Get in touch to find out how we can help your business grow!
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