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 an 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.
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Smarta Business Builder
To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website Builder, Business Plans, Accounting Software, Legal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.