Applying for a Business Grant
Introduction
Business support in the form of grants is available to help people start up in business or to help existing firms fund specific projects. Grants can provide much-needed finance, and sometimes expertise, to help a business or project develop.
Grants are available for a number of business activities or projects around the UK and cover many business sectors. Grant funding is intended to support and develop enterprise in the hope that it will also boost employment and the local economy. A variety of organisations and government departments offer grants.
This factsheet describes how grants operate and the types of grants that are available. It also provides information about where to find grants and how to apply for them.
What is a grant? A grant is financial assistance that is given to a business by a funding body. Grants provide finance to allow a business to undertake a specific project that, without financial assistance, would not be able to proceed. Such a project might involve the initial start up of a business, developing a new product, investigating a market or buying capital equipment.
A grant is usually a one-off payment and provides funding that covers a percentage of the costs of the project. Normally, the business will have to meet some of the costs too. Unlike a loan, a grant does not usually have to be repaid, unless there is a failure to comply with the specific terms and conditions of the funding or support scheme.
Who offers grants?
Many publicly funded groups provide financial assistance, such as grants, to business. The awarding bodies for grants may be European, national or local organisations.
At a local and regional level grants may be available from organisations such as:
Local authorities.
Local enterprise agencies.
Growth Hubs, in England.
Business grants are also available in specific sectors from organisations such the UK's Arts Councils.
Eligibility criteria for grants Most grants in the UK have strict eligibility criteria or specific exclusions, for example in certain locations or industry sectors.
Although individual schemes vary, there are some common themes across most grants. For example, some areas of the UK have their own grants or specific schemes targeting social deprivation or high levels of unemployment. Other grants are only available to firms of a certain size, measured by turnover and/or the number of employees.
Certain sectors, including shipbuilding, coal, steel, agriculture and transport, are subject to special restrictions in terms of what grant support they can receive. Manufacturing firms are more likely than others to be eligible for grant support, while retailers are least likely to be eligible.
Most grants are not available retrospectively. For instance, if someone is planning to start a new business, they should apply for any appropriate grants well in advance of the date they intend to start trading. If a business has already started to trade, or has already purchased the equipment it is seeking a grant for, it is unlikely that the grant application will be considered.
What are grants available for? Grants are available for a variety of business projects, but each individual scheme will offer funding for a specific purpose.
Grants may be available to cover one or more of the following activities:
Marketing and promotion.
Business expansion and relocation.
Business start up and market testing.
Setting up co-operatives and community enterprises.
Environmental improvements.
Exporting.
Improving business premises.
Information technology and e-commerce.
Investment in capital equipment.
New technology and innovation.
Product design.
Recruitment and training.
Research and development.
Security.
It is worth noting that grants cannot usually be used for working capital or simply to support the organic growth of a business.
The grant application process
The grant application process will differ from scheme to scheme. However, these are some of the general stages that will apply to most situations.
Before applying for a grant:
Contact the awarding body and check that the project meets the specific eligibility criteria of the scheme to determine whether it is actually worth applying. Grant application forms can be lengthy and may take a lot of time and effort to complete. It is important to find out whether it is worth pursuing the application in the first place before proceeding. Ask the awarding body to send an application form and more detailed information about the grant.
Remember that proof is usually required to show that the business has a genuine need for grant assistance.
Most schemes will require a project plan or proposal, or in many cases a business plan, providing:
A project description detailing the aim of the project and how it will benefit the business.
Who will run the project, and what experience, knowledge and skills they have.
The total cost of the project and how much money is required.
The length of the project and key deadlines.
The location of the project.
Why the project needs grant funding and what would happen if the support wasn't provided.
How the business will fund its share of the project's costs.
How the project complies with the criteria set by the grant provider.
Details about the business, when it was set up, its legal status, its activities and so on.
Financial information about the business. This might require the submission of management accounts and financial forecasts.
When making the application:
Any guidance notes that are supplied with the application forms should be read carefully. These will provide information about how to complete the form and could save a lot of time and effort in the long run.
Application forms differ widely. Always follow the format required, be clear and concise, and include all the information relevant to the grant that is being applied for.
For national and European grants, two forms may have to be submitted; a short initial form used to assess eligibility for the grant, and a second, much longer, form providing detailed information about the business and the project to be undertaken.
Speak to someone involved with administering the grant who can help with completing the form. Alternatively, ask a business adviser or accountant to help with the application.
The business plan should provide a lot of the detail for the grant application. The business plan must be up to date, and include information about the level of experience of key people in the business, future plans and financial requirements. (See BIF004 Writing a Business Plan for further information.)
When the application has been completed, check it thoroughly and ensure that all the information required has been supplied. If the application is incomplete, it will take longer to process and is more likely to be rejected. If any misleading information is provided, any grant money the business receives may be reclaimed.
After the application has been submitted It often takes some time before a decision is made about a grant application. The timescales can range from a few weeks for local grants to several months for national or European grants. This is something that should be considered when applying for grant funding. If a business needs immediate funding for a project, a grant is probably not going to be the best option.
Hints and tips A business will usually be required to meet some of the costs of the project (usually at least 50%), so it must be able to provide the extra finance.
Wait for written confirmation that an application for a grant has been successful before committing any finance to a project.
If a grant application is declined, ask for feedback about why it failed. This should provide ideas on how to structure future applications.
Write the application proposal to match the awarding body's goals. Awarding bodies expect to see specific targets and results that are compatible with their own objectives.
Too many businesses put all their efforts into chasing grant aid, neglecting their core business purpose in the process. This is a mistake. The first step is to decide what the business needs, then look at what it might cost to implement. Finally, explore whether grant aid might contribute towards the cost.
Contact Ashored for more information and support of Grant Funding.
