For a lot of SMEs, getting funding can be a real challenge – no matter what you need it for. But did you know that you may be able to get grant funding? In the UK, there are hundreds of small business grant funding opportunities available. And these can make all the difference if you’re looking to take on more staff, upgrade your equipment, or grow to new heights.

What is grant funding?

Grant funding is financial support for your business that you don’t have to pay back, nor give up a stake in your company for. Most grants for small businesses are government-backed. But you can still find private sources of grant funding too. 

In almost all cases, you’ll need to meet certain conditions to obtain small business grant funding from the government or other sources. These can be related to the size of your business, where you’re at on your business journey, or the sector in which you operate. 

When it comes to UK grant funding, most people are likely to think of cash lump sums; financial support that is provided without the expectation of being paid back. But it could also include tax relief on things such as business rates or large purchases such as plant and machinery.

What can I use small business grant funding for?

With so many different grant funding resources available, there are just as many ways in which you can use this support. Some of the schemes and initiatives are designed for specific reasons, which is something to bear in mind. But some general grants can go towards a wide range of business reasons.

H4: Managing cash flow concerns

It’s not unusual for some businesses to go through tough times. A clear example of this was the unique pressures caused by the Covid-19 pandemic. If your business is struggling with cash flow for whatever reason, you may be eligible for help. The Small Business Grant Fund is an example of the government support available during Covid-19, for example – although it’s now closed.

Employment and apprentices

A lot of grants are available with the aim of creating new jobs. Apprenticeship grant funding can support your business in training up young people. You can even receive funding if you’re either a young business owner or entrepreneur and need help getting off the ground.

New and upgraded equipment

For your business to be at its best, it needs to have the equipment to match your ambition. UK grant funding is available to help with this. It could be a simple infrastructure initiative such as getting gigabit broadband or it could be specific to your sector.

Research and development

Got a big idea but not sure how to make it happen? You can find a small business grant funding option that supports your research and development activities. The government has a dedicated innovation funding service for that reason. And it could be what you’re looking for.

Even if grant funding isn’t an option that you can take for your business needs, help is still there for you. Why not talk to the team at Nucleus today about our funding products? Our expertise is second to none and we can take you through all the options that could be the perfect fit.

How does grant funding work?

As small business grant funding can come in different forms, how they all work understandably varies. To start, you will have to make sure you’re eligible for the specific scheme you want to apply to. The provider will then review your application to decide if you qualify. It then comes down to the type of grant funding it is.

H4: Direct grants

This is perhaps the most familiar example of small business grant funding. If your application is approved, you’ll receive the cash direct to your business. It depends on the terms of your grant, but there can sometimes be a need for you to invest a percentage of the grant total e.g., 50%.

Equity finance

Equity finance is when you sell a share of your business in exchange for funding support. In the UK, there are initiatives such as the Seed Enterprise Investment Scheme (SEIS) to help make it easier for this to happen. It offers significant tax relief on the income tax due on all investments made into new businesses.

Soft loans

In reality, soft loans are much more like traditional commercial loans. The difference, however, is they can offer more attractive terms than regular loans – e.g., lower interest rates. With the government-backed Start Up Loan, for example, you could borrow up to £25,000 at a fixed 6% rate of interest. CBILS is another example of a soft loan if you were affected by Covid-19.

Where can I apply for small business grant funding?

There are numerous grant funding resources out there. But knowing the right place to look can, of course, be a challenge. A lot of schemes are government-backed but are actually available from local authorities up and down the land.

The UK government has a dedicated online resource where you can find finance and support for your business. There are resources specifically for companies that are based in Wales, Scotland, or Ireland too. Each resource is an excellent starting point if you want to apply for support.

Is grant funding right for me?

The idea of receiving funding that doesn’t need to be paid back is an attractive one. And that’s a major reason why you might think grant funding is the right option for you.

Ultimately, small business grant funding is designed to make it simpler to get the cash you need to take things to the next level. The main thing to consider is your eligibility. It’s not going to be the perfect fit if your business doesn’t qualify.

You must also check the terms or restrictions linked to a specific grant. You won’t want to apply for a grant that doesn’t work for your exact situation. If nothing else, it’ll waste your time.

The important thing to remember is that, even if grant funding isn’t the right fit, there are always other options. Nucleus is here to help businesses just like yours. Feel free to get in touch with our team. We’ll help you find the most suitable route to the support you need.

Grant funding: Am I eligible?

Each grant funding scheme will have its own criteria and restrictions. So, it’s essential you know these before applying. As there are so many options, the criteria can vary quite a lot. Usually, it will relate to factors including the size of your business, the amount you need, or your turnover.

The criteria for some apprenticeship and entrepreneurial schemes might include personal details such as age and income.

Grant funding FAQs

What are the pros and cons of grant funding?

Any cash you don’t have to repay sounds like a pretty good deal, right? It’s no surprise that it’s one of the biggest upsides to grant funding. And that’s also why grants can often be a lifeline to applicants who can’t get the support they need elsewhere.

In some examples, a specific grant could get you thinking in bigger and better ways about your business. Faster internet, improved environmental impact, and creative research projects are a trio of ideas that might not have come to mind previously.

But it’s not all good news.

Small business grant funding resources are often competitive. As such, you’ll need to make sure your application is the best it can be. That can include preparing a detailed business plan, which will be the key to unlocking that support.

The terms of grant funding can also be restrictive. Can you afford to invest as much as 50% of the amount you’re applying for? Are you able to meet any wage requirements? Will you be able to cut carbon emissions? Do you have the resources to train an apprentice for four years?

Like any funding source, it’s essential to weigh up the potential disadvantages of grant funding.

How much can I receive?

The amount of grant funding you can receive depends on the programme and its intended use. It can range from a few thousand pounds up to as much as £500,000 in some cases. So, that’s worth bearing in mind if you need a larger amount. Sometimes, you might need an alternative option. With Nucleus, for example, you may be eligible for funding worth up to £50m.

Do I need to pay tax on grant funding?

Sometimes. In the UK, grant funding is usually taxable if it’s not for specific reasons – such as the purchase of capital assets like new equipment. This is because it will be treated as income. But if the terms of a grant specify that it must go towards something in particular, it won’t be taxed as you have to defer it until it’s used for its purpose.

Or you’ll spend it in one go, so it doesn’t impact taxable profits.

What’s the difference between a grant and a loan?

The main difference between loans and grant funding is that a loan must be repaid. This needs to be done within a specific (and agreed) amount of time. With grant funding, there won’t be a need to pay anything back.

Of course, the terms of a loan won’t include a need to invest in your own business at the same time. Some grants do have this requirement. So, it can be a real issue if you aren’t going to be able to match that required amount.

Not sure about which options are best for your business. Talk to the experts – get in touch with Nucleus today. If you need financial support for your business, we’re here to help you get it.