Government grants for small businesses: what you need to know

Starting up

9 November 2017

Securing funding to grow your small business can be challenging – especially if your business is in its infancy and has little to show in terms of its financial history. However, there are plenty of government grants available that could help your small business go from strength to strength if you’re successful.

But knowing where to begin can be tricky to get to grips with. Here, we place the spotlight on a few of the government-backed small business grants that could be available to you to help your business grow and develop.

What is a grant?

From cash awards to tax reliefs, government grants come in all shapes and sizes. In general, they can be split into the following categories:

Equity finance – These can offer start-ups and young businesses reductions on income tax and investments if they’re less than two years old have fewer than 25 employees.

Direct grants – This is when money is granted directly to a new business to cover start-up essentials, including equipment and staff training. Many grants will expect your businesses to provide 50% of the value of the grant.

Soft loan – These tend to be government-backed and can offer repayment terms and conditions that may be more generous than those on offer through traditional financial bodies such as banks and building societies. This could mean that your business pays lower interest rates or enjoy longer repayment periods.

Where to look for small business grants

Depending on where you’re located in the country, there are many funding and grant options available to your business. If you’re looking for a comprehensive list of grants available, visit the government’s business finance support finder to search for grants and funding options relevant to your business size, locality and industry.

1. Business grants in England

From the North East to the South West, there are 38 Local Enterprise Partnerships (LEPs) spanning the length and breadth of England that can provide funding and advice to help boost your business in your local economy. They are business-led partnerships between local authorities and local private sector businesses designed to drive economic growth and job creation, improve infrastructure, and better workforce skillset within the local area.

2. Business grants in Scotland

Depending on where you’re based in the country, your business could be eligible to apply for grants on offer by the Highlands and Islands Enterprise and Scottish Enterprise as well as local councils. For a detailed list of funding options that could be available to your business in Scotland, visit the Scottish Government’s Funding Opportunities.

3. Business grants in Northern Ireland

For Northern Irish businesses, grants on offer include NISPO II’s Proof of Concept grant (which is designed for pre-launch start-ups), and Invest NI grants for more established companies. Visit Enterprise Ireland for additional support and information on where you can find grants for your business.

4. Business grants in Wales

Keep your eyes peeled on Business Wales’ finance locator to find grants that your business could be eligible to apply for as well as detailed information on the application process and how to best manage business’ finances.

What business grants are available to small businesses?

If you’re looking for new resources but are struggling to locate the funds, below are a few of the small business grants that you could apply for.

Regional Growth Fund (RGF)

If your business is looking for funding of less than £1 million, you may be able to apply for the Regional Growth Fund. RGF programmes are run by national or local organisations and can offer grants or loans to eligible business that meet specific criteria.

Resource and training grants

  • Innovation Vouchers - Supplied by the government via Innovate UK, your business may be eligible for claims of up to £5,000 towards the cost of expert advice. Whether it’s seeking professional advice on your latest idea, tech advice or how to effectively utilise intellectual property, this funding encourages businesses to seek out knowledge that could help them develop
  • The National Apprenticeship Service – Funding amounts depend on your business industry, with funding for 16-18-year olds beginning at 100%. Your business may also have access to an Apprentice Grant of up to £1,500 (10 employees max) for businesses hiring apprentices aged 16-24. Visit the National Apprenticeship Service for more information.

Start-up loans

A type of soft loans, start-up loans can offer start-ups or young businesses lower interest rates or longer repayment periods. The government-backed Start Up Loans Company is among the most popular soft loans. It offers small businesses the option to borrow £25,000 at a fixed rate interest of 6% per year over a repayment term of up to five years as well as 12 months of free mentoring. Try to ensure you have a healthy contingency budget so that you can keep up with repayments when the unexpected happens.

Tax relief

Keeping on top of taxes can prove difficult when you’re already spinning the many plates that goes hand in hand with running a business. Although technically not business grants, the government offers schemes designed to help reduce the costs of paying taxes.

  • Business rates relief – If your business occupies one property with a rateable value of less than £15,000, your business could be eligible. Read our guide on small business rates relief to find out more.
  • Employment Allowance – This allowance could reduce your employers’ (secondary) Class 1 National Insurance each time you run your payroll until the £3000 has gone or the tax year ends (whatever is sooner). Visit here for terms and conditions.
  • Research and Development Tax Credit – This tax relief scheme is designed to encourage small businesses to spend more money and time on researching and creating new products and services or honing existing ones by reimbursing them via a cash payment or corporation tax reduction. Read our guide on this tax scheme for terms and conditions.

Grants for young people

There are grants available to help nurture the young future of the UK business world. The Princes Trust’s Enterprise programme is set up to equip 18-30-year-old business owners with access to low-interest start-up loans, mentoring and advice.

Start-up grants for unemployed entrepreneurs

The New Enterprise Allowance is designed to support potential entrepreneurs aged 18 or over in receipt of Jobseeker’s Allowance, Universal Credit, Employment or Support Allowance, and lone parents, long-term sick, and disabled individuals. If you’re successful in receiving the grant you’ll receive a mentor to provide you advice and once your business plan has been approved, you may get a weekly allowance worth up to £1,274 over 26 weeks.

All businesses start with a story. Protect yours.

Starting a business isn’t easy, but protecting it is. 47% of the small businesses we protect are start-ups*. Protect your business’ first steps and beyond with AXA Business Insurance.

 

*Based on AXA business and shop insurance policies as of June 2017. 'Start up business' defined as being less than three years old.