A Guide to Small Business Grants in the UK

Do you need extra funding to start or grow your business? Small business grants can be an excellent option for new and established companies.  

Here, we explain everything you need to know about small business grants. Read on to discover what they are, how they work, and how to find them.

What are small business grants?

A small business grant is a sum of money awarded to a new business to help it grow. Many small business grants are funded by the government, at both local and national levels. And some are supported by the private sector.

The money is usually only granted for specific business activities. That might be training new staff, purchasing equipment, or improving marketing (by investing in a new website, for example).

What’s the difference between grants for small businesses and small business loans?

Both grants and loans give you access to valuable funds to develop your growing business. But what’s the difference between the two? 

The main difference is that, in general, you won’t have to repay a small business grant. 

That said, there are certain grants where you’ll still need to part with some cash. For instance, you may be asked to invest the same amount in your business to qualify for funding. In other words, if you’re awarded £5,000, you’ll also need to invest £5,000. This is called “matched funding.”

In contrast, a small business loan is money for your business that you’ll need to pay back within an agreed timeframe. Depending on the terms and conditions, you may also be charged interest on the loan.

When are small business grants available?

The availability of small business grants will often depend on where in the UK you’re based, your industry, your age, and the size of your business. 

Some grants are only available to start-ups, while others are for growing businesses.Some grants are specifically designed to help young people get into business, meaning they’re not open to anyone over 30.And many grants will have opening and closing dates, so you’ll need to make sure you submit your application at the right time.   

Are small business grants taxable?

In most cases, yes. Cash grants are treated as a form of business income, which means they’re subject to tax. 

However, some grants (like R&D tax credits) offer tax relief to small businesses as an incentive. This means you won’t have to pay as much – or any –  tax on the money you receive. 

It’s a good idea to work with a professional accountant. They can help you ensure you have an accurate record for tax purposes of any small business grants you receive. 

How to find government grants for small businesses in the UK

The easiest way to find small business grants in the UK is to use the government’s business finance support tool on the gov.uk website. 

On this page, you can see the available schemes from the Department for Business, Energy and Industrial Strategy. Simply select “Grant” from the “Type of support” dropdown menu and filter by business stage, industry, number of employees, and region.

You can also go directly to your local enterprise body. Which organisation that is will depend on where in the UK your business is based.

Small business grants in England

There are several Local Enterprise Partnerships (LEPs) dotted across England providing funding to small businesses. These are typically partnerships between local authorities and local businesses to create jobs and drive economic growth. 

Small business grants in Scotland

The Scottish Government website provides links to various funding opportunities and grants across Scotland.

Small business grants in Wales

Visit the Business Wales website to find grants for your small business in Wales.

Small business grants in Northern Ireland

Check the Enterprise Ireland website for support and information related to small business grants in Northern Ireland.

How to apply for small business grants

There’s no one-size-fits-all approach to applying for business grants. Each grant will have its own application process and qualifying criteria. Always read the guidance carefully before applying.

That said, there are a few things you can do to make applying for a small business grant more straightforward: 

Start by writing a detailed business plan. Whether you’re pre-start-up or already trading, a business plan will help you answer many of the questions you’ll be asked by funders. (That will include your plans for future growth.) If you’ve never written a business plan before, the Business Gateway website has everything you need to know.
Talk to the organisation offering the grant. Ask them for more details if the application form is vague or you’re unsure about anything. You may need to tailor your application to explain how you’ll meet the grant’s objectives (for example, creating new jobs or researching new technologies).

Lean on your network for advice. Depending on the type of grant you’re applying for, you may have friends, associates, vendors, or members of your local business community who’ve benefitted from grant funding in the past. Don’t be afraid to ask for help when you need it.

Apply ASAP. Some small business grants have a limited pot of money to hand out. If you tick all the boxes, don’t leave your application until the last minute. You could miss out if you’re not quick off the mark.

Which business start-up grants should you choose?

If you’re in the early stages of launching a company, there are several small business grants specifically designed to help you. 

Depending on your age, type of business, and funding requirements, here are five start-up grants you need to know about: 

Seed Enterprise Investment Scheme (SEIS): The SEIS can provide grants of up to £150,000 for start-up businesses, but certain rules apply. To qualify, your business must have less than 25 full-time equivalent employees and not be a member of a partnership.
The Prince’s Trust: Supporting young people aged 18 to 30 who want to start and run their own businesses, the Prince’s Trust provides funding, resources, training, and mentoring.

Innovate UK: Start-ups can apply for funding to launch and develop new products, processes, and services through the UK’s innovation agency.

Are there any alternatives to business grants?

You may not always qualify for a small business grant when you need it. But don’t worry. There are always alternative funding options out there:

Start-up loans: These are loans with lower interest rates and more flexibility. You can even apply for a start-up loan from the UK government, borrowing anywhere from £500 to £25,000.

Equity finance: Another popular funding option is to sell shares in your company in return for finance. This can also be a great way to add more experience and contacts to your business by expanding your board of directors. Look at the Angel Investment Network to find possible UK investors for your business.

Quickfire Summary

To recap, small business grants provide valuable funds to help you grow your business. Many of these grants are offered by the UK government, while some are funded by the private sector.

The money is usually reserved for specific business activities, like training new staff or purchasing equipment. Eligibility for grants will depend on your age, business type, and where in the UK you’re located.

The fastest way to find a small business grant is to use the government’s business finance support tool on the gov.uk website. 

Also read:
8 ideas for starting your own small business
Private health insurance for a small business
Small Business Owners – Top 10 Insurance Tips (Part 1)