In UK, availability of government small business grants usually depends on three main criteria: location, size and industry.
- Location: Grants might be given to encourage economic development and employment in certain parts of a district or region and in such cases, the business has to be located in these parts.
- Size: Government small business grants are for small businesses, often very small businesses. Smallness is measured usually in number of employees – 10, 25, 50, 100, 250.
- Industry: Even businesses meeting location and size standards might not qualify, if the government small business grant objective is to encourage certain types of businesses. Retail businesses do not usually qualify for grants, whereas manufacturing and service businesses do.
Check the availability of government small business grants and eligibility conditions with your local business link office. If your business qualifies, it could be one free source of funds for your small business start.
What Is A Grant?
Governments and other awarding bodies might wish to encourage certain projects. With this objective, they provide financial assistance to those who undertake the projects. Grants differ from loans in that they are not repayable.
However, whereas you can use loan funds for any business activity, grants must be used only for specific projects. And these projects must be undertaken only after the grant is approved.
Government small business grants seek to assist small businesses to take up projects beneficial to business. Without such assistance, the businesses might not find it feasible to undertake these beneficial projects.
Government small business grants are also subject to different conditions. They might be available only to businesses in certain parts of the country, or to those employing less than a specified number of employees, or to specific kinds of businesses.
What Kinds of Projects Are Assisted?
A variety of activities like technology innovation, marketing, expansion, capital equipment acquisition, relocation and new business startup might be supported through government small business grants. Specific sectors like crafts, cooperatives, speciality foods and exports might also be similarly assisted. Each grant is designed to support only one or a few of these activities or sectors.
Generally you cannot hope to get a government small business grant for meeting your working capital needs. You might also have to show that without the grant, you would not be able to undertake the project.
Each grant would be subject to different conditions, generally designed to ensure that the objective of the grant is met. As we already saw, government small business grants are usually subject to location, size and industry conditions.
One of the conditions might be that you should bring in an amount equal to (or a certain percent of) the grant amount to finance the project. Another condition might be that you should not embark on the particular project until the grant has been approved.
Non-compliance with the grant conditions might make you liable to repay the grant funding.
A Good Approach for Getting Grants
Government small business grants is one of the first sources of funding you should investigate. Here is a good approach to this process:
- Contact your local businesslink office to find out whether any government small business grants are available for your proposed business. You might even find that by making a few changes to your plan, you might become eligible.
- Go through the list of projects for which grants are available. Check if you could take up any of these projects to benefit your small business.
- Review your financial requirements and sources. Could you use the available funds beneficially elsewhere in the business if the above project is financed by a grant?
- Check the grant conditions. Do you meet all the criteria? In particular, would you need to bring in matching funds of your own? Could you do so?
- If the result of your investigation is positive, develop a detailed business plan showing how the grant-supported project could benefit your business. Show clearly that without the grant assistance, you would not be able to take up the project.
- Now submit your application for the government small business (or other) grant. You might have to do this in a specified format. Don’t start work on the project until you have received confirmation (in writing) that your grant application has been approved.
Who Gives the Grants?
There are a number of agencies that extend government small business grants, at local, national and even European levels. Log on to Business Link Home and go to Finance and grants page. In the right hand column, you would an interactive tool, Find grants and support schemes, to check whether you qualify for any such assistance.