Starting a new small business is an exciting venture. But you may need a helping hand to get up and running – which is where small business start-up grants come in.
As of 2021, more than 5.5 million small businesses operate in the UK[1]. Many new entrepreneurs are eager to join the competition. But how exactly can government grants for small businesses help you achieve your goals?
What is a small business grant?
A grant is a financial award – often an amount of money – given to a business by the government or local authority. You do not have to pay this money back. It can be used to fund your small business operations. These start-up grants specifically help small companies and often work to boost the jobs market and local economy.
How do I apply for a small business grant?
You will need to apply for a small business grant directly through the institution providing the funding – for example, the government or your local authority.
You will need to create a:
- Business plan – who are you and what does your business do?
- Funding proposal – what will you use the money for and how will it help your business grow?
- Cashflow forecast – what do your finances look like and how will the grant affect this?
Will I have to pay back a small business grant?
No. A grant is a sum of money that does not have to be repaid[2]. Grants differ from loans, which are lent to you by authorities, rather than given. However, some loans may be taxable.
Where can I find small business grants in the UK?
There are many options for small business start-up grants. You can source funding from government departments, local authorities, and even charities.
There are also independent organisations that offer grants. In some cases, funding can be won via competitions.
Search GOV.UK business finance support (external link) for information about grants and funding, which can then direct you to the relevant authorities and sites where you can start your application. The following section will talk about specific examples of funding.
Government grants for small business
Seed Enterprise Investment Scheme
The Seed Enterprise Investment Scheme (SEIS) (external link) is a venture capital scheme that helps trading businesses raise money. It works by offering tax relief to individual investors who have invested in your company shares.
The scheme is available in England, Northern Ireland, Scotland, and Wales.
Who is it for?
SEIS funding is available for businesses that:
- Are established in the UK
- Are not trading on, currently quoted on, or planning to be quoted on any stock exchange markets
- Are not controlled by another company
- Do not control another company – unless that company is a ‘qualifying subsidiary (external link)’
- Carry out a ‘qualifying trade (external link)’ – meaning your business must be trading commercially with the intent to make a profit.
What do I need to apply?
To apply for SEIS funding, you need to have issued, or be ready to issue, shares in your company. Once your shares are issued, the next step is to send your compliance statement (external link) to HMRC.
You can then apply for SEIS funding via email or through the post. Seeking advance assurance (external link) from HMRC reduces the documentation you need to send with your application.
Applying without HMRC advance assurance
If you do not have advance assurance, you will need to provide documents when you apply. These include:
- Your business plan
- Copies of your accounts and finances
- Your business memorandum and articles of association
You can visit the GOV.UK website to find out more on what documents you will need (external link) to apply.
Innovate UK
Innovate UK (external link) is part of the wider UK Research and Innovation (UKRI) funding agency. It offers a variety of small business start-up grants and loans for businesses of all sizes, which aim to encourage UK business growth and enterprise.
This funding is available across the UK.
Who is it for?
Innovate UK funding is available for:
- Businesses – specifically micro, small, and medium-sized enterprises (SMEs)
- Research organisations – including non-profit organisations and charities, public sector companies, and universities.
Read the full list of companies accepted by Innovate UK funding here (external link).
What do I need to apply?
- Online – you’ll need an account with The Innovation Funding Service (external link). Follow the application steps, which will ask for different members of your company to provide various information and answer questions
- Document-based – This file transfer protocol (FTP) process requires you to register to a specific FTP site depending on the funding you’re applying for. You will need to submit a unique application form and all the relevant downloadable documents.
Gigabit Voucher Scheme
The Gigabit voucher scheme (external link) is a programme paid for by the government that provides both businesses and individuals with funding for gigabit-capable broadband.
You can apply for Gigabit vouchers if your business is based in England, Northern Ireland, Scotland, or Wales.
Who is it for?
The project is targeted at rural businesses and enables you to pay for higher quality, faster Wi-Fi so you can stay connected. It means you’re not at a disadvantage compared with city-dwelling competitors, who may have access to faster broadband.
What do I need to apply?
You first need to check your postcode (external link) to see whether you’re eligible for a gigabit voucher. Once you’ve done that, speak to your broadband supplier, who will sign you up for a gigabit-capable connection.
Small business grants available only in Northern Ireland, Scotland, and Wales
Some government grants for small businesses are only available in England, however, there are more specific funding options available to businesses in Northern Ireland, Scotland, and Wales.
Northern Ireland
There are many funding and support schemes available to businesses in Northern Ireland, which you can apply for through local authorities. These range from grants to funding support that promotes international trade.
Search for local business financing options (external link) to discover which would best suit you.
You can also apply for small business grants via independent companies, for example:
- Catalyst (external link) – focuses on supporting entrepreneurs in the technology industry. They source funding via their Inbound Investors (external link) scheme and personally match investors to independent businesses
- Enterprise NI (external link) – offers start-up loans and funding via the NI Small Business Loan Fund. Remember, loans have to be repaid, unlike business grants.
Scotland
The Scottish Government (external link) provides multiple funding options and grants for small businesses, including through their departments, your local council, or EU funding.
The government also backs grant-providing organisations such as:
- Skills Development Scotland (Our Skillsforce) (external link) – specialises in funding for businesses looking to hire apprentices and embrace development and training opportunities
- Scottish Enterprise (external link) – offers workplace innovation, energy investment, and new business support funds, among others
- Highland and Islands Enterprise (external link) – provides the same funding as SE to businesses in the Highlands and Islands.
Wales
As a small business, you can apply for grants in Wales via:
- UK and Welsh government schemes
- Your local authority
- Charities and not for profits
Each provides grants and loans for all business and start-up sizes. You will need to apply to these authorities directly and with a detailed description of your project and intended use of the funds.
You can search for business grants and funding options on the Welsh government website (external link).
Other options for small business grants
Some charities across the UK also provide small business grants to SMEs and start-ups.
The Prince’s Trust Enterprise Programme
The Prince’s Trust (external link) provides funding and support for 18 to 30-year-olds looking to start their own business. This scheme targets people who are currently unemployed or working fewer than 16 hours a week. Along with funds, they offer step-by-step support right up until the launch of your enterprise.
What do I need to apply?
Contact the Prince’s Trust online (external link). They’ll assess your business pitch and guide you through the application process.
The National Lottery Heritage Fund
The National Lottery (external link) funds heritage projects and programmes across the world. Their grants range from £3,000 into the millions depending on your organisation’s size and purpose. You can read the full list of project types (external link) they fund on their website.
What do I need to apply?
Visit their website and explore the different types of grants available. Once you’ve found the right fit for you, you can contact the National Lottery directly to begin your application.
Insuring your small business
Wherever you are in your business journey, insurance can help you to operate with confidence and reassurance. Explore Hiscox business insurance options to work out the best fit for your circumstances.
[1] https://www.fsb.org.uk/uk-small-business-statistics.html (external link)
[2] https://www.gov.uk/guidance/check-if-youre-eligible-for-the-coronavirus-small-business-grant-fund (external link)
Disclaimer:
At Hiscox, we want to help your small business thrive. Our blog has many articles you may find relevant and useful as your business grows. But these articles aren’t professional advice. So, to find out more on a subject we cover here, please seek professional assistance.
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