Understanding start-up business grants
Getting a start-up off the ground not only requires time and effort, it also requires funding. Whether you’re buying laptops and software or plant machinery and equipment, there are invariably expenses that can add up to tens of thousands.
Start-up business grants can provide a valuable cash injection into a business as it grows and develops innovative products. It offers some financial stability as expansion takes place, easing the pressure on cash flow. Indeed, without the helping hand of a grant, some start-ups may be unable to achieve their full potential. Here, we take a more in-depth look at start-up business grants.
What grants are available?
A wealth of grants are available for small businesses and start-ups. These include a range provided by the government, certain grants provided by the EU and some, such as the Regional Growth Fund, which are provided by local authorities.
Government grants come in several forms:
- Direct grant – Money given to a start-up to cover training, equipment and the outreach to new markets. The value can be up to £0.5m and you’ll normally have to provide up to 50% of the grant’s value too.
- Equity finance – Although not a grant per se, these offer up to a 50% reduction in income tax on investments made in new businesses. Your business must be under two years old and have fewer than 25 employees.
- Soft loan – Again, while not a grant, soft loans are government-backed and offer attractive interest rates and more generous terms than you can find through other lending routes.
What’s the eligibility criteria?
Grants are typically awarded for a specific project rather than for general business operations. Often, the award is dependent upon your business matching the amount given too. The specific criteria tends to be set by the organisation providing the grant, and might include things like geographical location, industry sector, the specific project being undertaken, or training.
Those businesses engaging in environmental projects or technological developments may find access to grants slightly easier, although the competition is still fierce and applications must be of a high standard.
How can I apply for a government start-up grant?
As each scheme is different, you should check the specific eligibility criteria before beginning your application. Success relies on tailored applications (don’t just create one and send it out to every grant you’re trying for) that explain why your business should receive the grant and what it will be spent on. To increase your chances of success, you can:
- Talk to the grant body to find out what they’re looking for
- Familiarise yourself with the grant objectives
- Show in the application how the grant will help your business to grow and therefore benefit others
- Determine how much of your own funding you can commit to the project
Keep an eye on schemes as they first launch so you can apply early on – this means there’ll be plenty of money available and the competition won’t be as strong.