Introduction

A grant is a sum of money given to an individual or business for a specific project or purpose.

A grant usually covers only part of the total costs involved. However, as long as you keep to any conditions attached to the grant, you will not have to repay it or give up shares in your business.

Grants to help with business development are available from a variety of sources, such as the government, European Union, Regional Development Agencies, Business Link, local authorities and some charitable organisations.

These grants may be linked to business activity or a specific industry sector. Some grants are linked to specific geographical areas, eg those in need of economic regeneration.

This guide introduces you to some of the grants available to businesses in the UK, and outlines the kinds of projects and organisations they are available to. It also provides hints on improving your chances of being awarded a grant.

Government grants and support

The government provides support to businesses both financially, in the form of grants, and through access to networks of expert advice and information.

However, getting financial support can be tough. There will be strong competition, and the criteria for awards are stringent. These vary but are likely to include the location, size and industry sector of the business.

Government grants are almost always awarded for a specific purpose or project and are usually for proposed projects only - not for those that have already started.

There are also strict terms and conditions that apply to all grants. If these aren't followed, immediate repayment of the grant can be required. However, generally you do not have to repay grants or interest on them unless you break the conditions.

Matching grant funds
Most government grants require you to match the funds you are being awarded. In other words, the grant covers a proportion of the money needed, while you supply the rest. You must also demonstrate that your business can provide its share of the total costs.

The amount of matching funds asked for varies from grant to grant. A research grant may require a business to find only 40 per cent of the total cost with 60 per cent provided by the grant. However, a grant to refurbish a factory may provide considerably less.

The matching funds may be found from the owners of the business, retained profits, a loan, or from a new investor.

What kind of grants are available?

The main groups who award grants are:

• the government
• the European Union
• Regional Development Agencies in England, Scottish Enterprise, the Welsh Development Agency and Invest Northern Ireland 
• local authorities or local councils and local development agencies
• Business Links
• Chambers of Commerce
• County Enterprise Boards

Some funding is also distributed through colleges and the Learning and Skills Council (LSC).

Innovation, research and development
There are numerous grants available to encourage investment in innovation, research and development.

Access to knowledge
Some businesses partner with a research or academic organisation in a project of mutual interest.

Training
The Learning and Skills Council and some Business Links provide grants for training and skills development.

New Deal
Subsidies are available for employing New Deal candidates, as well as grants towards the training of young people.

Young entrepreneurs
If you are unemployed, or employed in a part-time or low-paid job, are aged 18-30 and have a business idea, you can apply for funds to the Prince's Trust.

Economic regeneration
Businesses based in areas classified as assisted areas may benefit from a grant if they stimulate regional development, urban regeneration or an improvement in employment prospects.

Other types of business grants available

The grants available to your business can be difficult to find, but there are some useful websites that gather information about grants from the government as well as from private bodies. Most are free - particularly for basic information - although some are only available for a subscription.

The Grants and Support Directory is a free service that allows you to search a database of national, regional and local programmes to help your business develop.

There are private sector agencies that provide information on available grants, and assistance in applying for them. It is worthwhile searching the Internet and comparing a few different agencies. Many of them charge a fee or subscription for some or all of their services but remember, none of them can guarantee success in getting funding for you.

Before registering with an agency you should consider:

• the information/services they offer
• the amount of any fee or subscription charged
• the amount of funding you require
• the type of project you need funding for

Grant eligibility

There are a number of factors which could affect your eligibility for grants.

Location of your business
Each of the countries of the UK has its own range of grants available. Some areas get extra grants, for example because of social deprivation or high unemployment.

Some grants are also given by local authorities to help local businesses.

Size of your business
You may only be eligible for some grants if your business is of a particular size, measured either by turnover or the number of employees.

Many grants are limited to small or medium-sized enterprises - typically those with fewer than 250 employees.

Your industry sector
Funding can be limited and subject to restrictions in certain sectors defined by the European Commission. Any applications that are made for grants will be closely inspected by the Commission.

The purpose of the grant
Grants are often awarded for a specific purpose such as purchasing machinery, improving offices or developing export markets.

Grant bodies prefer to see specific targets and results - often compatible with their own objectives.

As well as making an assessment of the benefits of your project, the awarding body will expect a high level of commitment from you and your business, and for the project to be commercially viable.

Whether you are eligible for a grant will depend on the terms and conditions of the specific grant applied for.

How to apply for a government grant

Before you apply for a grant you should make sure that you meet the conditions of the scheme. Additionally, you should ensure that you:

• are ready to put up some of your own money 
• need the money for a specific purpose
• don't start the project before you get an agreement in principle of funding

Once you are ready to apply for a grant, you can give yourself a better chance of applying for and being awarded the right grant by talking to an adviser at your local Business Link. They will help you to identify appropriate European, national and local grants, including contacting the person who administers the grant to check your suitability and to make sure that the grant scheme is still running.

Making your proposal
When you have identified the right grant scheme for your needs, you will have to provide:

• a detailed project description
• an explanation of the potential benefits of the project
• a detailed work plan with full costings
• details of your own relevant experience and that of other key managers
• completed application forms where stipulated
• possibly a business plan 

Some businesses get advice from their accountant, who can also help in drawing up an effective business plan. Remember to submit your application before the deadline where relevant - late applications are rarely considered.

Most reviewers will assess your proposal by using the following criteria:

• significance
• approach
• innovation
• their assessment of your expertise
• need for the grant 

Be prepared to wait for anything from a few weeks to a year for a decision. Local applications are typically processed much more quickly than others.

Why a grant application might be turned down

The most common reasons why applications are turned down include:

• the area of research/work is not relevant to the body awarding the grant
• the explanation of how research ideas will be translated into an achievable plan of action is unsatisfactory
• the proposal or application makes statements that are not backed up with supporting facts
• the research plan is unfocused and lacks clarity
• the impact of the work on the wider community/industry has not been communicated effectively
• the information provided in the application is not up to date
• the importance of the funds to the project's success or failure has not been made clear
• the applicant is unable to prove they have matched funds
• the need for grant support is not proven 

Ask for feedback if your application is declined. While you may not agree with the reasons given, it may provide ideas to help you structure future applications more effectively.

If you cannot get a grant, it may be worth looking at other forms of finance including equity finance.

Find an investor for your project