As a small business in the UK, your business, be it an existing business or a brand new startup, requires capital to succeed.
Most business owners utilize their personal savings, bank loans, and borrow money to get into business – and while this is the standard practice that has been the most common way to get started with a business, it is not the only option.
The British government has hundreds of government funding programmes that are available to small business owners across the UK to apply to. These funding programmes come in the form of government grants, government loans, tax breaks, and tax credits.
As a small business startup, you may be able to benefit from the government funding to cover the startup costs as well as various operational costs via the government monies.
In this article, we will be discussing the top 3 government grant types that your small business may be eligible for and able to obtain via government sources.
3 Types Of Government Grants To Apply For
Government grants traditionally are considered free money options that the UK government provides to small business owners in order to boost the economy, create jobs and help small business owners thrive.
The grants come from various levels of the British government including the local governments, regional governments as well as national government.
Grants are some of the most sought-after types of funding as it in most cases means the money does not need to be paid back.
The 3 top government grant types to apply for include:
- Non repayable government grants
- The one time and renewable government grants
- Partial contributions
Each government grant type is unique in its own way. All grant options come with their advantages and disadvantages.
As a small business owner, it is a good idea to apply with a solid business plan, one that clearly explains your business model, your funding needs and explains how the funds will benefit you as well as the community you are in.
The Non-Repayable Government Grants
The UK government provides the non-repayable government grants to small business owners looking to startup or expand their business and those who can use the funds to better their business as well as the community they are in.
The non-repayable government grants are free money – the money you obtain does not need to be paid back. This is a major advantage for any business owner as it means you are free to use the funds to improve your business without concern for repayment.
On the downside, the non repayable grants are some of the most competitive grant options available via the UK government. This means that you are amongst many applying for these funding options.
While the government does not have an unlimited supply of money, your plan, financials, and overall ask should be carefully planned to ensure your success with your grant applications.
The One Time and Renewable Government Grants
The next option on the list includes the grants that are considered one-time; or renewable grants.
These are two types of grants grouped into one.
The one-time grant options are in place to help individuals obtain a lump sum payment to help with their business startup costs and expenses. In most cases the one time payments help with certain expenses that are usually considered “one time”; often expenses such as the initial purchase of the required tools and equipment; or costs of one time training courses, or money towards renovations to get a place set up.
The renewable grants on the other hand are the exact same, non-repayable options that most businesses can keep coming back to and applying over and over again.
These renewable grants are helpful for repetitive payments such as those including wage support (paying your employee), training programs that are on-going..etc
The downside of these grants are very limited, and the only negative is that they are competitive and often take longer to be approved. In case you need the funds quicker, there are other options to consider.
The partial contributions are government grant options that are extremely helpful to small business owners, however, they require a contribution from the business owner as well.
A way to share the risk with the government agency.
Generally speaking, these grant options are helpful as they will give you the funds you need, however as long as you have a percentage of your own funds to put down towards your business – the money however has to come from your pocket and not from a borrowed loan.
Often the government has strict terms and may ask for 50/50 split, or a more generous 80/20 – however, the terms may depend on your specific business or industry, so knowing the grant options which you are applying to and reading the criteria will help determine the specifics.
If you don’t have the partial contribution, chances are you will be denied the funds.
A government grant tip:
Not all government grants are the same.
Each government grant programme may come from a different funding agency and may have its own rules and criteria that you must follow.
To ensure your success, have your business plan ready; and ensure that you have a clear breakdown of your funding needs (what you need the funds for and how much).
To avoid any issues, when you are approved for the funding, ensure that you use the funds for only that specific purpose that it was approved for; otherwise, the non-repayable government grants may be asked back, with a penalty.
Keep in mind that government grants are not the only funding options that the UK government has to offer; and while grants are the best forms of funding your small business may obtain, government loans and government tax breaks and credits are not to be forgotten.
No matter the type of funding you want to apply for, your business plan is always the key document you will have to have in order to complete any funding application successfully.