You need to identify relevant grant schemes and understand whether your business is likely to qualify. You also have to understand the application process and decide whether it is worth applying.
1. Grant funding - potential problems
Do not waste time trying to get a grant unless you are prepared to overcome four potential obstacles first.
You must be ready to put up some of your own money
- Grants typically cover 15-60% of the total finance required for a project. It is extremely rare for a grant to finance 100% of the costs of any project.
- Even if a larger proportion of the project cost is available, you will still need to invest time and resources in researching and applying for the grant.
Grants are usually only available for specified projects
- For example, investment in capital equipment, researching and developing a new product or process, or training programmes.
- The normal, organic process of company development does not usually qualify. However, there may be support to help your business invest and create jobs.
You must have a clear project plan
- You may already have a business plan. The plan will need altering to emphasise the specific project involved.
- You will probably need to show how the project ties in with your overall business strategy.
Grant schemes almost always impose restrictions
- Projects that are already under way are not eligible. In most cases, you must be able to show that the project would not take place and achieve the same benefits without the grant.
- The project must help towards achieving the objectives of the grant provider - usually a department or agency of local, national or European government.
2. Grant schemes
Grant schemes usually focus on particular purposes or activities.
- There are regional grants that support growth through capital investment and job creation.
- You may be eligible for grants and support if your business is in an economically disadvantaged area, especially one with high unemployment. These include areas in general industrial decline, where traditional industries such as steel, coal, textiles and fishing have collapsed, and some rural and inner-city areas.
- There is funding available that reflects the relative economic needs of different regions.
- A comprehensive range of funding and support is available through government innovation programmes. These can offer support from investigating an idea through to proof of concept and development.
- R&D grants that focus on specific industries are periodically launched (eg the Carbon Trust, DEFRA and WRAP have all launched such grants).
- There is EU funding support for innovative small and medium-sized businesses.
- R&D activities can be supported by grants that cover the cost of high-level researchers. Such schemes can be EU or UK sponsored and can encourage collaboration with academic institutions.
- There are tax incentives to support R&D activities.
Energy and the environment
- These grants recognise the additional cost for businesses that invest in energy efficiency and environmental improvements.
- Grants are also available to companies working on developing energy and environmental products.
- Grants may be available for new or refurbished buildings that aim to improve energy use.
- Enhanced capital allowances can reduce the taxable profits of businesses that install energy saving equipment.
- Help developing the skills and capability of staff is provided through apprenticeships. The National Apprenticeship Service (08000 150 600) gives advice to employers on how to start an apprenticeship scheme in their business.
- The Department for International Trade (020 7215 5000) offers export funding and subsidised services.
- Themes such as rural diversification, crafts, tourism and agriculture have been featured.
Local start-up business grants
- Local support (for example, subsidised rent and rates) is often available. This can include funding for business start-ups, and grants to encourage businesses to relocate to the area.
- Business and industrial parks may offer incentives. Science parks and incubators can offer benefits for hi-tech enterprises.
3. Identifying possible grants
There are many different grant schemes in existence. Schemes appear and disappear over time. You need to identify the few grants your business or project could be eligible for.
Contact your local business support organisation
- For example, your local enterprise agency or Growth Hub.
- Some support organisations have access to a Europe Direct Information Centre and to grants databases which will identify appropriate European, national, government and charitable grant schemes. Basic information is usually free.
- Ask for a list of grant schemes (including contact details) for which your project might qualify.
- A business adviser will probably be available to help you narrow down the range of schemes.
Try other sources of free or subsidised information
- These might include your bank, your trade association or local government.
- Search for government-backed support and finance online.
- There are websites that track what grants are available. Full details are generally only available to subscribers, but you may be able to find some useful information. Try GRANTfinder or Grants Online.
Get in touch with the administrators of any grant schemes which seem to fit
These might include:
- The European Commission. Avoid calling the commission's main switchboard. Instead, send an email or phone the section which deals with the scheme you are interested in.
- Government departments, such as the Department for Business, Energy & Industrial Strategy.
- Local councils or local enterprise agencies.
4. Applying for a business grant
Make personal contact with an individual involved in administering the scheme
- You will get advice on whether it is worth applying for.
- You can often get help to complete the application form.
Ask the administrator some basic questions
- Is the scheme still open, are funds still available and will funds be available by the time your application has been processed?
- When are grants handed out? Some schemes only pay out money to successful applicants once a year.
- What does the scheme aim to achieve? It will help to know the type of projects funded in the past.
- How long is the application process, and what does it involve?
If necessary, get professional help
- It is probably worth paying for help to apply for any grants worth £50,000 or more.
- Experts can help you to 'model' your project so that it is more likely to meet the qualifying criteria of the grant.
- Some accountants provide grant services and there are consultants dedicated to securing external funding. Check their experience of successfully obtaining grants for businesses similar to yours.
- Negotiate the fees. Flat-rate fees may seem less expensive in the first instance, but must be paid even if you do not get a grant. Success-based fees demonstrate that the consultants will share the risk based on their confidence in your project.
Submit a proposal and wait for the decision
- Do not expect an immediate decision. Application timescales can be lengthy.
- If you are awarded a grant after a long delay, and the situation has changed since your initial application, it may be possible to adapt and refine your project idea.
5. Writing your grant application
Your grant application should not be a work of fiction. But it should show your proposals in the best possible light. The application form will tell you what you need to provide.
A detailed project description
An explanation of the potential benefits the project offers
- These benefits must fit in with the aims of the grant scheme.
- They might include benefits to the local community, to the region or to your industry, or to the British economy.
A detailed work plan, indicating who will do what, and by when
- This should include full costings.
Details of your own relevant experience and performance
- Explain how your own background, experience and expertise make success probable.
- If there seems to be a significant risk of the project failing, you are unlikely to be given a grant.
Do not expect an immediate decision on a grant application. You may have to wait some time for it to be considered.
Local grants are usually processed fairly quickly
- Local grants, for example those given out by local councils, generally involve simple application procedures.
- You may have to wait up to six weeks for a decision.
National or European grants typically take two to six months to obtain
- Some application processes can take up to a year.
- You are usually able to submit a relatively simple Stage 1 application in the first instance. This enables the grant provider to assess whether your project stands a serious chance of being funded.
- A Stage 1 application form will only be two to five pages long, but it can take two or three days to prepare, because you must include costings.
- You can then decide whether or not to proceed with a full Stage 2 application. A Stage 2 form might be 15 to 25 pages.
6. Grant payments
Plan your cash flow
- You may have to wait to be reimbursed, so you may need to make arrangements for a bridging loan.
Grant money is generally handed over according to an agreed schedule
Payments may be made:
- In instalments, at fixed periods.
- In arrears, against proof of actual expenditure.
- With some payments up front, and the rest as you meet the stipulated requirements at each stage. For example, a payment might be conditional on the project employing a certain number of people.
Keep detailed records
- The grant providers will want to monitor how the money is being used.
- This may involve visits to your premises, or you may have to visit them to present a report.
- There may be a final audit before you are given the last payment.