Even experts can find it difficult to keep track of the hundreds of different grant schemes which keep appearing and disappearing.
This briefing will give you a good idea of whether your start-up business is likely to be eligible for a grant - and whether such a grant is worth the effort involved in applying.
- Which business activities are most likely to qualify.
- Where additional aid is available in the UK.
- What criteria a project must meet.
- How to apply.
1 Before you start
Do not waste time trying to get a grant unless you are prepared to overcome four potential obstacles.
1.1 You must be ready to put up some of your own money.
- It is extremely rare for a grant to finance 100% of the costs of any project.
- Grants typically cover 15% to 60% of the total finance required for a project.
Even if a larger proportion of the project cost is available, you will still need to invest time and resources in researching and applying for the grant.
1.2 Grants are usually only available for specified projects.
For example, the development of a new product or process, job creation or training programmes.
- The gradual, organic process of company development does not normally qualify, although there may be support for small and medium-sized enterprises that will accelerate job creation or investment.
1.3 You must have a plan.
You may have already written a business plan which you used for another purpose, such as raising finance from the bank.
- The business plan will need altering to place the emphasis on the specific project involved.
1.4 Grant schemes are typically aimed at projects that are not already underway, and usually impose restrictions.
- The project must help towards achieving the objectives or strategic aims of the grant provider - usually a department or agency of local, national or European government.
- In most cases, you must be able to demonstrate that the project would not take place and achieve the same benefits without the grant.
2 What grants are available?
Most national and local grants focus on particular business activities or purposes. These themes are:
2.1 Investment - there are regional grants that support growth through capital investment and job creation.
2.2 Innovation - there is a wide range of grant schemes that encourage research and development (R&D) activities.
There are also tax incentives that support R&D activities.
2.3 Energy and the environment - these schemes recognise the additional cost for businesses that adopt or engage in investments that improve energy efficiency and reduce environmental impact.
- R&D programmes are available to companies working on developing energy and environmental products.
- Grant schemes may be available for new buildings or for refurbishing existing buildings that aim to improve energy use.
Capital allowances are also available to businesses that install energy saving equipment and processes.
- Assistance to develop the skills and capability of staff is provided through apprenticeships. The National Apprenticeship Service (08000 150 600 or www.apprenticeships.org.uk) gives advice to employers on how to start an apprenticeship scheme in their business.
- You may also qualify for a grant of £1,000 towards recruitment costs and a further £1,500 towards training if you take on a long-term unemployed person.
2.5 Exports - support is often available to businesses looking to export goods they manufacture.
- UK Trade & Investment offers funding to help exporters, as well as a range of charged-for, but subsidised, services. Contact UK Trade & Investment (020 7215 8000).
Other grants are available depending on your business sector and location.
3 Identifying possible grants
There are many different grant schemes in existence. You need to identify the few grants your business or project could be eligible for.
3.1 Contact your local business support organisation
Some providers also have access to a European Information Centre and other grants databases which will identify appropriate European, national, government and charitable grant schemes.
Basic information is usually free.
- Ask for a list of grant schemes (including contact details) for which your project might qualify.
- A business adviser will probably be available to help you narrow down the range of schemes.
3.2 Try other sources of free or subsidised information.
3.3 Get in touch with the administrators of any grant schemes which seem to fit your situation.
These might include:
3.4 Ask the administrator some basic questions.
You can often get help completing the application form.
4 The application process
4.1 Submit a proposal.
This usually involves filling in a form (either electronically or a paper version). Show your proposals in the best possible light by providing:
- A detailed project description.
- An explanation of the potential benefits the project offers, which must fit in with the aims of the grant scheme.
They might include specific benefits to the local community, to the region or to your industry - or a potential increase in UK exports.
- A detailed work plan, indicating who will do what, and by when. Include full costings.
- Details of your own relevant experience and track record. Show how your own background, experience and expertise make success probable.
If there seems to be a significant risk of the project failing, you are unlikely to be given a grant.
4.2 If necessary, get professional help.
4.3 Wait for the decision (see 5).
5 Application timescales
Do not expect an immediate decision on a grant application. You may have to wait some time for it to be considered.
5.1 Local grants, such as those given out by local councils, are usually processed fairly quickly.
- You may have to wait up to six weeks before you hear whether the grant will be awarded.
- Such grants generally involve simple application procedures.
5.2 National or European grants typically take two to six months to obtain, but can take up to a year.
- You are usually able to submit a relatively simple Stage 1 application in the first instance. This enables the grant-giving body to assess whether your project stands a serious chance of being funded.
A Stage 1 application form will only be two to five pages long, but it can take two or three days to prepare, because you must include costings.
- You can then decide whether or not to proceed with a full Stage 2 application.
A Stage 2 form is usually 15 to 25 pages.
If you are awarded a grant after a long delay, and the situation has changed since your initial application, it may be possible to adapt and refine your project idea.
6 Grant payments
6.1 Plan your cashflow.
- You may have to wait to be reimbursed, so you may need to make arrangements for a bridging loan.
6.2 Grant money is generally handed over according to an agreed schedule. Payments may be made:
6.3 Keep detailed records. The grant providers will want to monitor how the money is being used.
- This may involve visits to your premises, or you may have to visit them to present a report.
- There may be a final audit before you are given the last payment.