Grants can be a useful way of obtaining additional funding for your new business. They won’t solve a crisis in your business, nor are they an easy source of money, but they can give you a helping hand to realise a long-held dream, such as selling overseas or reducing your carbon footprint.
There are a bewildering variety of different grants available, from local and national government as well as charities and other bodies, some of which are offered for only a limited time. So you need to do your research. There are websites that can help you find out whether your business is eligible for support. But there are some things to consider first.
1. Grants have specific objectives. Few grants exist to help small businesses to simply grow. Their purpose, instead, is to achieve certain aims. In the UK, grants commonly promote innovation, training and job creation, foreign exports or greener business practices. So the number of grants available to your business is likely to depend on your sector, location and what you want to do. For example, you might have a better chance of obtaining a grant if you look to set up a business in an area of high unemployment, where regional enterprise grants exist to help economic regeneration.
2. You need a business plan. You would have to submit a detailed description of the proposed project, with full costings, as part of your grant application. You might already have a business plan that you produced for your bank, but you must customize it to emphasise how your project would meet the grant’s objective, such as doing R&D on a potentially lucrative new business idea.
The funding bodies are not an easy touch. You would have to prove that your project wouldn’t go ahead without the grant, and that it has a good chance of success. You should play up in your plan any relevant expertise or experience you have that would improve the prospect of a positive outcome.
Also, grants usually do not cover the full cost of a project, so you need to be willing to put up some of your own money.
3. You need to be patient. It can take weeks, or even months, to be told if your application has been approved, and often much longer before you receive any money. Even then, it’s unlikely the amount will be paid in a lump sum. It will usually be handed over in installments, or even after you’ve paid out the money yourself. So you need to be very careful about controlling your cash flow during that period.
4. Think hard about whether it’s worth applying. Applying for grants can be difficult and success is not guaranteed. You need to balance the time and effort it will take in applying against your likelihood of winning one. If it’s a big grant (say over £50,000) you might need to enlist professional help, from an accountant or a professional grant consultant, to prepare your application, whose fees you would still have to pay if your application is unsuccessful.
Once you have identified a grant you would like to apply for, it is worth calling the funding body to explain your project, before starting work on the application. They can give you an idea of whether you qualify, how much money is available and when it is given – it might be an annual grant and you could have already missed the deadline.