Gaining funding for your venture is a big deal and new business grants are out there to help. But actually getting hold of one can prove tricky. This isn’t necessarily because they’re complicated to apply for – it can easily be because of the sheer number of schemes to choose from and understanding the different terms on offer.
Types of new business grants
As well as many different government-funded grants (link to government funding page) – from those available for research and development and for environmental initiatives through to those on offer for setting up in less affluent areas – there are a host of other new business grants available:
European New Business Grants
The EU has a large pot of money available to fund businesses of all sizes. This is usually distributed through the European Commission, who administers a number of schemes through structural funds. There are also grant schemes available for specific sectors.
Local Business Grants
As well as national government funding, organisations such as the Local Enterprise Partnerships (LEPs) have been created especially to support and encourage new business enterprise at a local level.
Types of business grants include:
Direct grants are cash awards, usually offered for activities such as recruitment and employment, training, export development and capital investment. If you’re applying for a direct grant, you may be required to raise around 50% of the cost yourself, and the other 50% will be awarded to you.
As the name suggests, soft loans are a type of grant that offers terms and conditions of repayment that are softer than you’d be able to secure from other lenders. You could find that interest rates are lower, or that there are no interest payments to make at all. Alternatively, the repayment period could be longer than you’d be offered elsewhere.
A well known soft loan organisation is the government-funded Start-Up Loans scheme. This scheme offers new businesses loans of up to £25,000 for 6% interest with a 12 month repayment break.
For young entrepreneurs aged from 18-30, The Prince’s Trust offers soft loans of up to £4,000. The Prince’s Trust also offers support for your business idea, with interest capped at 3% and repayments spread over a period of two to five years.
If you’re happy to offer a share in your business, equity finance offers a financial injection in return for equity for the investor. Equity finance investors differ from venture capitalists as their expectations and requirements are generally less demanding, and when the value of your business increases, you can then repay the investor.
Investor Tax Relief
The government also have schemes such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) which help new businesses raise finance by offering tax relief to investors.
Other help for new businesses
As well as offering cash injections for your business, there are services available to help with the set up of your company. These include offering access to free or subsidised advice and consultancy services to plug a skill deficiency into your new business. This also involves access to resources and facilities that may not otherwise be available to you.
Registering your business before applying for new business grants
As with any type of finance, showing your investors that you’re serious about business is crucial. Registering your new business with The Formations Company (link to page) can often cost less than registering directly with Companies House. Furthermore, some packages offer additional business support to help see you through the first stages of business.