How a grant could help your business
With more than 6,000 schemes now on offer to UK companies, it's
no surprise many business owners feel overwhelmed navigating the
grant world. It's not just the quantity that's baffling.
What is a business grant?
- A sum of money given for a specific project or purpose that a
business doesn't need to pay back (unless it breaks
the conditions of receiving it).
- The main organisations offering grants are the
European Union (mainly through the European Commission), the
government, Regional Development Agencies in England, the Welsh
Development Agency, Scottish Enterprise, Invest Northern Ireland,
local authorities and certain charitable organisations.
- There are around 6,000 grants available to UK
businesses. Each has its own criteria and purpose, depending
on the awarding body's aims.
The benefits of a business grant
- Money. A non-repayable sum of anything from
several hundred pounds to hundreds of thousands to help with a
specific project of aspect of growth.
- You don't have to give up any equity or compromise
your plans with shareholders.
- Winning a grant gives confidence to investors and
banks.
- Validation. A large organisation has thoroughly
examined your project and ideas and has decided they are sound
enough to warrant much-coveted funding.
- Certain organisations offering R&D grants will do your
patent search for you, saving you loads of time and
money.
- Structure to your work. You have to have detailed
plans, deliver punctually and report on progress regularly.
- Once you have one grant, it becomes much easier to get
another one. You have contacts at a funding organisation and
you're familiar with the process. Your relationship with the
provider means they'll be more likely to recommend other schemes to
you when you ask.
The disadvantages of a business grant
- Most government grants expect you to come up with some of
the money for the project yourself. That percentage will
depend on the grant, but 50% is a fairly reasonable rule of
thumb.
- You often only get the money once work is
completed (or a segment of work) so you also need enough in
the bank to cover costs until then.
- The money has to be used for a specific project
rather than spread around different parts of your business.
- Researching which grant you are eligible for is likely to
take a good few working days (although you can ask
your local Business Link advisor for free help, or pay a
consultant).
- The application can take anything from hours to
months to complete (ask the provider for an estimate). You
can pay for a consultant's help. Application forms are anything
from a couple of pages long to hundreds of pages.
- It can be very difficult to know how to phrase
things and how much to quantify and describe in the
application form, although the Resources listed below should help
with that.
- Competition can be fierce and criteria very
exacting.
- You often to have to demonstrate a benefit to the wider
geographical or business community in your application,
whether economical, social, environmental or otherwise. This can be
a challenge, although things such as providing employment
opportunity through growth often qualify.
- Failure to stick to the plans you laid out once you've been
awarded a grant can mean it gets revoked and you pay
back anything you've been given so far.
- You have less flexibility as you have to stick to
your original plans.
- You have to stick to deadlines.
- You don't get the hands-on advice you would from a
private investor.
- Government grants are also usually only for projects that
haven't yet started.
Resources
Manage your finances, as well as all the other parts of your
business with the Smarta
Business Builder software package. You can create personalised
legal documents, manage and analyse your accounts and set up a
professional website from your Business Builder dashboard. Download
a 14 day free trial to try it out for yourself. Other resources
include: