Business Grants: The Basics
Business Grants: The Basics
Business grants are essentially sums of money awarded by the Government, The European Union, charities or other organisations for a specific purpose. They are particularly valuable to start-ups and small businesses as finding the right type of funding to get your business going can be incredibly difficult, especially if you are not in a position to give away equity. In general, grants do not need to be repaid provided the terms and conditions of the grant are met. The amount that can be received through a grant varies greatly depending on the organisation issuing the grant and the project, but typically can range from between £25,000 to £10 million. The availability of grants is of course limited, and, due to the generous benefit, applying for one becomes a highly competitive procedure. Not only that, but each grant will have its own rules, yet applying for one may impact your chances on applying for any others in the future (as well impact your opportunities to use R&D tax credits), and the rules are quite likely to change over time which further complicates the process. For these reasons, when you decide to apply for a grant, you should work with an expert to plan out your longer-term business goals to determine which grants would be most suitable for you.
How do I know if I’ll be able to get a grant?
If you’re seriously considering applying for a grant then one of the first things you’ll need to do is to check your eligibility. Whilst some grants are open to all, others will dictate certain conditions. Here are some of the most common criteria that can restrict your eligibility:
- Purpose – grants are awarded for a specific purpose to help meet the issuing grant body’s own objectives. Your project will need to align with their goals or fall within the given scope in order to be eligible.
- Geographical location – some schemes are aimed at improving or creating opportunities in certain areas only.
- Industry – certain schemes are aimed at tackling issues within their own industry so your business will also need to be in the same sector to apply
- Size of business – often grants are only offered to small or medium sized companies as they are the ones that struggle the most to find funding. You will need to ensure that you meet the size requirements which may be determined by either number of employees or turnover.
Other things to know before starting your grant application
Not only do you have to check your eligibility, but there are other preparations that you should make beforehand to ensure that you are in the best possible situation when applying for a grant.
- Have your own ‘match’ funding – grants should not be seen as ‘free money’. There are costs involved and usually grant bodies will expect you to match the funding they offer with funds of your own. It may be a 100% match where if they offer £100,000 you will also need to put in the same amount to the agreed project, or they may instead ask for a lesser percentage but this depends on the grant.
- Make sure that you actually require grant funding for the right reasons – firstly, you must actually need the money. If you are seen to be able to readily access funding elsewhere then it’s unlikely you’ll be accepted for the grant. Secondly, you must rely on the grant funding to be able to fulfil the project proposal and intend to use the funds for the purpose of the project only. So for example, if you are planning to use the grant money to expand your office so that you have more room, this is unlikely to be a persuasive reason for your application.
- Get a business plan ready – this will be vital to any grant application. Whether you’re a start-up that’s ready to form or a business that has been running for a while, the grant body will want to see evidence that the funding will not go to waste and that reasonable considerations have been taken to plan how to best use the money.
- Do not start work on the project before the grant has been issued – this may invalidate your eligibility or, in a worse scenario, the funding may fall through.
6 Top Tips from the Experts:
For those seeking out available grants we would recommend investigating this list.
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