What Funding Can I Get for My UK Small Business?

Anyone who is a self-employed small business owner will tell you that their biggest challenge is to keep the money rolling in. When starting a business, every penny counts and the majority of startups need the capital to get off the ground. There’s equipment, stock and countless bills to be paid on a monthly basis, not to mention unexpected expenses. If you’re looking for a boost to business cashflow, then have you considered applying for grants, or even a business loan? Here, I’ve written a short guide to extra funding for UK small businesses which can help you turn your idea into a reality, stay afloat or get you that extra outdated equipment you’ve been after.

How Much Will I Need?

There are many considerations to take into account when applying for a startup grant. Most of which will depend on the size of your business, whether you work from home, have employees, and so on. With grants available from £1,000 to £500,000, you will need to decide how much you actually need in relation to the criteria of the grant. However, you should know that the more capital you apply for, the more complicated and in depth the application process will be.

What’s the Difference Between a Small Business Grant and Loan?

Essentially, when you apply for a small business grant, you won’t have to pay it back. That said, there could be specific criteria that you have to agree to. For example, what and where you can spend the money.

A small business loan, on the other hand, has to be repaid in full, usually in the form of monthly installments. Plus, this will include interest and charges. So, before signing up, ensure you fully understand the repayment conditions.

How to Apply for a Small Business Grant

The best part about a small business grant is that you never have to pay fees or interest, and this is because you won’t have to pay it back! Rather, they’re given by governments, non-profits and other organisations to help you build or grow your startup. Therefore, it’s important that you do your research first to ensure you qualify for a grant’s requirements. There may be a list of conditions and extensive form filling to do before being chosen. You should also be aware that when applying for funding for your UK small business, giving untruthful information could result in repaying the grant back. Also, most grants will ask for you to put up some of the funding yourself.

Broadly speaking, in order to show your startup is worth qualifying for a grant, you should be able to produce a detailed business plan. This includes extensive records of your financials and forecasts. 

Where Can I Get a Small Business Grant?

Government Grants

The British economy relies on small businesses generating money to local communities as well as aiding employment rates. As a result, governments provide funding to support the costs of running a startup. Applications are available for national, regional and local governments so you would need to check which ones are applicable to you. Bear in mind that researching for the right grant will take time and dedication so prepare to put the hours in. 

Generally speaking, the most common government grant comes in the form of a direct grant. Most of these types of grants will expect you to front 50% of the total value of the awarded grant. For an extensive list of grants available, start your research on HMRC’s Finance and Support.

What can a Government Grant be Used For?

  • Resource and training grants: for example, advice and support, innovation vouchers.
  • Tax relief: for example, business rates relief, employment relief or National Insurance relief.
  • Apprenticeship training: this is where you pay 10% towards the costs of an apprentice’s training, and the government pays 90%.
  • Specific business sectors: for example, climate, tech, manufacturing, food, and many more.

Tips for applying for grants:

  • Determine how you will use the grant and how this will benefit the growth of your business.
  • If you’re not sure of anything, get in touch with the awarding body for clarification and/or tips for a successful application.
  • It’s common that many grants have limited funding so getting your application in early to secure funding is advised.
  • The more detailed your business plan is, the better chance of success you’ll have.
  • Give yourself ample time to write your application.
  • Your application should reflect the purpose of the grant so make sure your aims directly relate to the grant.
  • Back up your application with detailed financials and cashflow forecasts.

Getting funding for you UK small businesses isn’t an easy feat, but the rewards are worth your effort.

Have a read of my article, 5 Ways to Fund a Startup Business, for more ideas how to get extra funding.

Alternatives to Grant Funding

Business Loans

In addition to applying for a bank or building society business loan, there are also opportunities for applying for soft loans. Although these are still loans that need to be paid back, they’re more likely to be more generous than the conditions from a bank loan. For example, they’ll offer lower interest rates or repayment terms are longer. Generally, the amount you can borrow is levered against your annual turnover. However, it is a better alternative to using a credit card to start a business.

Equity Finance

This is a way of raising money through selling shares of your company in return for a share of the profits. It doesn’t necessarily equate to giving control to an investor, but can be a good alternative if you cannot get a loan.



About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.