Grants for starting a business: What small business grants are available?
Everything an entrepreneur needs to know about the types of free help available for small businesses
If you’re a small business owner or thinking of starting a business, money is probably your biggest concern. You may be wondering if there is any funding available for start-ups.
The simple answers is yes, but getting your hands on it is a complicated and rather stressful process. There are countless schemes, each with their own set of criteria, which you can apply for when you’re on the verge of starting.
Business money is out there to be claimed, yet every year we receive stories of piles of cash sitting in accounts and not being invested. It’s not because you don’t need the cash, but it’s because navigating through the grants jungle can have you wishing you still had your good job back.
Types of business support
All publicly funded schemes are designed to encourage new and growing businesses, to bring wealth and ultimately create jobs.
To help achieve this the government makes available a portion of taxpayers’ money to help and encourage enterprise.
This cash gets distributed through a variety of ministries, departments, agencies and quangos on a national and local basis. The good news is that most businesses are eligible at any one time to apply for a number of different business start-up grants and support schemes which are distributed in a wide variety of forms.
Business start-up grants available
Direct grantThis is a cash award, which is usually given out for activities such as training, employment, export development, recruitment or capital investment projects. With a direct grant most schemes usually require the company involved to put up around 50% of the cost.
Repayable grantUnder this type of scheme cash funding is offered for a project with the intention that the sums are paid out of future revenues. However, if the project fails, the grant is written off.
Soft loanA soft loan is a special type of grant where the terms and conditions of repayment are more generous (or softer) than they would be under normal financial circumstances. So, for example, the interest rates may be less, or there may be no interest to pay at all, and the repayment terms could also be for a longer period.
Equity financeWith equity finance a capital sum is injected into the business and the provider of the funds takes an equity share of the enterprise and (hopefully) when the value of the firm increases the stake can then be returned. However, unlike venture capitalists, the expectations and requirements of the providers of public funds are usually less demanding.
Free or subsidised consultancy Start-ups can often find themselves in the situation where they are lacking a particular set of skills and there are some specially run schemes which offer to provide these either for free or at subsidised rates.
Access to resources As with a lack of skills, it can be the case that small firms do not posses the physical resources or facilities they need in order to develop particular projects. In the same way there are a number of initiatives that can help overcome these concerns by providing access to publicly owned facilities.
Technology and Best Practice transfer The transfer of technological advances and new best practice initiatives can often take a long time filtering down to smaller businesses. The government has set up schemes, which aim to overcome this through business support networks.
Shared cost contract When it comes to research and development, the costs involved can prevent small firms from taking part. However, by sharing the costs with other businesses, and then sharing the expertise, this problem can be avoided.
There are countless business startup grants, each with their own set of criteria, to which small businesses can apply.