Celebrating the people behind British small businesses

Demystifying government grants for small business

Securing government funding for your small business might officially be the most confusing thing ever, with a million and one different places to go, and seemingly endless boxes to tick before you even start to compete with the other small businesses vying for their slice of the government funding pie. Whether it’s government-backed grants and awards or tax breaks, finding the information that you need can take a serious amount of online detective work. So we decided to put all the information here in one handy guide.

Small business owners can apply for grants from the UK government, the European Union and local councils to name a few, as well as charities and community schemes.

Government grants and awards: the pros and cons

  • A grant is non-repayable, so you don’t have to pay any of the money you’re awarded, or pay interest on it.
  • You’re not giving away equity in your business, or control over decision making in return for the cash.
  • Grants and awards are notoriously competitive and difficult to get your mitts on – there’s no such thing as free money, y’know!
  • The process of securing a grant or award can be extremely time-consuming
  • Grants are often awarded for projects that haven’t got off the ground yet.
  • Many grant-giving organisations have strict rules about who they’ll give out money to – finding one that matches your business can be hard work.
  • Often you’ll be expected to match any grant with some of your own funding
  • A grant probably won’t cover all of your costs.


What government grants are on offer for UK small business owners?

There are over one and a half thousand different grants and award schemes for small businesses in the UK from national Government, the EU, Regional Development Agencies, local authorities and Chambers of Commerce to name but a few.

Grant eligibility

While it’s great news that there are loads of people out there itching to help you out with your business venture, you’ll only be successful in applying for grants if you’ve put in the time and done your research.

Any application you make should be checked against the following criteria:

  • Location – does your business fall into the right geographical location to be eligible for the grant? Many grants and awards have strict regional boundaries.
  • Business classification – does your business fall into the right legal classification (sole trader, limited company, partnership etc.) to make you eligible for funding?
  • Industry type – does your business operate in the right industry to be able to apply for this particular grant? Many grants focus on specific industries and sectors.
  • Grant purpose – what are you going to use the grant for? A lot of grants will be given out for projects.
  • Business size – how many employees does your business have? Are you a small business? Sole trader? Medium sized enterprise? Make sure the grant is applicable to you.

You should also be prepared for any application with a solid business plan, a financial plan as to exactly how you will spend the money, and be able to demonstrate your expertise and experience in your chosen field.

Checked these all off? Great! Now it’s time to get applying.

Sources of government grants for small business

Most business grants are dished out by central government and administered by a local authority or government-backed organisation. If we were to list all of the grants and awards available, we’d be here until the cows came home – luckily for you there are two great tools out there for finding funding relevant to you: the government business finance support finder and a swish little finance finder from businessfinanceforyou.co.uk.

Here are some of the key sources of small business grants:

Local or regional
Regional growth funds 

Regional Growth Fund programmes offer grants and loans to small businesses, and are run by organisations that have been awarded Regional Growth Fund cash.

Different programmes have different criteria, but on the whole, small business owners applying for grants should:

  • be based in England
  • want to strengthen, consolidate or grow their business
  • be investing private capital
  • be unable to find funding elsewhere for the application
  • be State Aid Compliant

A full list of programmes, broken down by region, can be found here.

Local authority support

Local councils also often have grants, schemes and awards set up to help local small businesses. These differ from region to region, so check out your local council’s website for more information. Find yours quickly on this list of local authorities.

The EU

When you’re out looking for funding, it’s worth looking further than UK borders. The EU has distributed around €375bn of grant money for small businesses to a number of grant-awarding organisations. They’ve created a very useful interactive map that shows you all of the EU-funded grants that you can apply for in your country or region.

Moreover, The Enterprise Europe Network helps small business develop their European market and access EU finance and funding. It has a number of branches in major UK towns and cities, and you can find your nearest one on this list.

Specialised grants

There are a number of national organisations that award grants to small businesses operating in specific industries or that match certain criteria. Some key organisations are:

The Prince’s Trust – this scheme awards money (and mentoring too!) to entrepreneurial youngsters between the ages of 18 and 30.

The Manufacturing Advisory Service (MAS) – this organisation provides free reviews of manufacturing businesses and also offers grant funding to contribute towards improvement costs or projects.

The Technology Strategy Board (TSB) – this organisation supports the development of innovative technologies and products and offers advice and funding for small businesses who do this.

Tax allowances

The government also helps small businesses out by offering them and people who invest in them various tax breaks.

  • For advice about how you can pay less tax as a small business, this page on the HMRC website is pretty darn handy.
  • Research and development relief offers Corporation Tax relief to SMEs that work resolving scientific or technological uncertainty. Read information can be found on the GOV.uk website.
  • The Seed Enterprise Investment Scheme (SEIS) helps small business owners gain equity finance by offering tax reliefs to individuals investing in them. For more information about it can be found on the HMRC website.

First-hand experience

David Kelly is founder of Shareflow, a web-based collaboration network which improves project communication for creative teams.

He has so far secured over £10,000 in grant funding from Starter for 6 and Business Gateway in Scotland, as well as support for a trade mission to the SXSW interactive conference in Austin, Texas with UKTI and Scottish Development International.

David offers 2 tips on finding and securing grant funding:

1. Ask around – call up your local government agency, chamber of commerce and other local business networks, and ask them what’s available to you. Share whatever you learn with your own network of business founders and directors. It can be difficult to know what grants are available at any time – it’s much easier when you have a bunch of people who are keen to help each other out.

2. Get to know the people who manage the grants. Funding applications can feel like endless, repetitive, form-filling exercises, but if you already have the required information in a different format, then a quick chat with the manager could save you some time.

Check out the rest of our small business funding series!