Startup and small business grants in the UK: your complete guide

Half of all startups fail within three years. This shocking statistic benefits no one, but help is at hand in the form of small business grants.

This guide explains what small business grants are and how you can access them.

What is a business grant?

A business grant is a payment or series of payments to help firms get off the ground in the belief that a thriving business boosts the wider economy by creating jobs and paying taxes. Some grants are supplied by the government, while others come from charities, companies and non-profit organisations. 

All grants share the following attributes:

• They’re gifts, meaning the recipient doesn’t pay them back

• They serve specific purposes, such as to pay towards staff training, for equipment or to provide a financial boost that can help take the firm to the next level

• They may be available on a local, regional or national basis. They can be sector-specific or intended for diverse companies in different sectors

• Securing one can involve a lot of preparation, as recipients must prove they are worthy of the reward

What grants are available for startups and small businesses?

Grants for small businesses and startups come in all shapes and sizes, although there are three main categories:

• Cash grants: a non-repayable sum of money awarded to a business to help with a specific requirement, such as start-up costs, recruitment or tools. Cash grants are usually taxable as they are considered a form of income

• Grants in kind: rather than a cash award, this type of grant could be computer equipment or software, or resources, such as IT training or the use of a council meeting room

• Discounts and voucher schemes: the government, as well as private organisations and other bodies, can offer vouchers that businesses can put towards buying specific products or services  

Where to find business grants

A huge number of business grants are available at any one time, but sometimes it can seem like you can’t see the wood for the trees. Searching for ‘small business grants’ or ‘startup grants’ isn’t necessarily going to help you find the right one.

You need to know where to look to uncover the best grant for your business needs. Here are four pointers:

1. Focus on your location 

Many grants are for businesses in particular areas, so narrow your search to your location. For instance, start with your region and drill down from there to your county, local authority and even city or town. Organisations such as the Federation of Small Businesses list grant providers and schemes by region, making it invaluable for this type of search.

2. Consider different grant providers

National and regional governments, local authorities, businesses, and other organisations offer grants. In many cases, authorities and businesses team up to provide funding and support to small businesses and boost the economy.

3. Search by your sector or background 

Many grants serve companies working in specific sectors, industries or communities, such as those supporting military veterans.

4. Your company profile

Some grants are available to companies that haven’t started trading or have been up and running for only a year or two. Other eligibility criteria, such as the number of staff and the age of the company owner, can apply to these and other grants.

What types of government business grants are available?

Business grants help companies on their path to success, and as you’d expect, the range of sectors covered by the various schemes available is vast. 

The Department for Business and Trade, which is the largest provider of grants to small businesses and startups, lists all currently available grants on its website. At the last count, this comprised 128 schemes across 17 umbrella categories from agriculture, food, construction, hospitality and real estate to wholesale and retail.

Here’s a look at some of the current crop of government-backed business grants:

• Access to finance. A grant-in-kind scheme offering support and financial coaching for businesses in Greater Manchester and Lancashire that need help raising finance for growth 

• Business Enterprise Fund. Grants of between £500 and £250,000 to small businesses in the North East that can’t secure loans from high-street banks  

• E-Business Support Programme. Offers help to businesses in Bexley and Greenwich, including building digital marketing plans, website development and cybersecurity

• GetSet for Growth.Tailored support for small and medium-sized enterprises (SMEs) in England to help develop business and marketing strategies

• Gigabit Broadband Voucher Scheme. Pays up to £3,500 to cover the costs of getting a gigabit-capable connection in UK rural areas

Business Board Network Growth Hubs, InvestNI, mygov.scot and Business Wales’ finance locator highlight more schemes for small businesses and startups.

What other business grants are available?

Business grants are also available from forward-looking businesses and groups. Many of these are found on local business forums, at the Job Centre, through charities, trade associations and unions. 

The British Plumbing Employers Council’s BPEC Support Fund is a sector-specific grant provider. Among other business development benefits, it gifts people working in the UK plumbing and heating industry up to £2,500 to pay for apprenticeship and skills training.  

The King’s Trust (formerly The Prince’s Trust), is a high-profile national grant provider for startups and small businesses. Its Enterprise Programme provides one-to-one support, with expert-led workshops, for 18 to 30-year-olds with a business idea they want to develop. 

The King’s Trust Test My Business Idea gives £500 to young would-be entrepreneurs with a plan they’d like to take forward, while its Start Up funding offers grants of up to £5,000, as well as loans of between £500 and £25,000 to businesses that are less than three years old.

Tips for applying for a business grant

The benefits to your business of getting a grant are considerable and competition for the often-limited pool of money or resources is fierce. This explains the rigorous application process and why it takes so long to complete the necessary forms.

The last thing you want after such a drawn-out process is a rejected application. Thankfully, the following tips should help you avoid many of the potential problems applicants can encounter:

• Read the eligibility criteria. Check you tick all the boxes – there’s no point in applying for a scheme for under 30s if you’re in your 40s, for example

• Have a clear business plan. Be able to explain why you need the grant with supporting evidence from your business plan

• Know how much money you need. Some grants offer a fixed sum, while others offer a range based on details in your application form. Be clear about how much you need, and be able to justify the amount you’ve stated

• Be honest about your finances. Some grants are only gifted if you can put up a certain sum, or if you have no money at all. Don’t make out you’re skint or have enough capital to apply for a grant if it isn’t true

• Keep a record of your project. You may need to justify what you’ve done with the grant you receive

• Treat the application like a job. Be prepared to invest time crafting your application. Write a business plan with full costings and give yourself time to read through your application. If you can, get someone you trust to run their eyes over it as well.  

Be patient after you apply 

Having sent off your application make a note in your diary of when you should hear back from the provider. If your reason for getting the grant is to fund a specific project, don’t start spending what you expect to get before you’ve been given the green light and have the cash in your account.

What are the alternatives to business grants?

There may be hundreds of grants for start-ups and small businesses, but that doesn’t mean everyone can find the right one to apply for or are successful when they do. Many grants run until the money or resources run out, while other schemes operate in specific sectors or regions, meaning you might not be eligible to apply. 

While this can be frustrating, business grants aren’t the only way to help get your firm going or to help it grow. Here are some other ways to get funding:  

• Business loans are specifically for companies, meaning you must state the purpose of the loan. Loans start from £1,000, with repayment periods of one month to 25 years

• Start Up Loans are a government-backed option for companies trading for less than three years. Loans of between £500 and £25,000 are available at a fixed interest rate of 6%. The repayment period is one to five years. 

• Business credit cards typically come with higher credit limits than personal credit cards and can offer business-related benefits, such as air miles, trade discounts and cashback. 

• Crowdfunding is an alternative to business lending that sees projects funded by a large number of people who each invest a small sum in return for a stake in your firm. The risk is that you only get the cash if you reach your stated investment target.