When it comes to start up business financing it’s always worth considering applying for a government grant.
After all there are 2,500 grants and financial programmes available to UK organisations worth around £50bn.
So, where to start?
Firstly, it is worth noting that start-up business grants given out by the government tend to be for a specific project by new or existing businesses. Industrial improvement grants, shop front grants and grants to reintroduce dwellings to floors above shops are just three examples of the kinds of projects grants are given for.
They’re generally geared towards part funding a project so bear in mind that you will probably have to put up some of the money too.
“Businesses should not rely on grant funding to get the business going,” says Benjamin Smart, Senior Account Manager in Client Management at Business Link for London.
“Ideally, they should use grant aid, in areas where it is in vogue, to pay for specific stuff like environmental or security improvements to business property.”
Grants are a valuable source of cash that you won’t have to repay or give up a share of your business for. But finding a scheme to suit your business may be tricky, and the application process can be slow as well as highly competitive.
Criteria
The type of grant you can apply for is based on a range of criteria. Firstly, the location of your business is crucial – the type of grant is often dependent on it. For example, there may be funding available to you that is geared toward improving areas of social deprivation, such as ex-coalfield and rural development areas, which are often characterised by high unemployment.
The status of your start-up business will affect the type of funding available as most grants are aimed at limited companies, partnerships and sole traders.
If you intend to start a business that contributes to the wider public good – a social/community enterprise – then you have a very good chance of getting a grant. This is especially true if you are locating your business in an area with high unemployment and deprivation. The Fast Forward grants offered in London and Sure Start grants offered to nurseries are two examples of social enterprise programmes.
Start-ups that contribute to the protection of the environment are also likely beneficiaries of government grants.
Entrepreneurs disadvantaged in some way can benefit from grants provided through various charity organisations. For example, the Royal British Legion can provide help to former servicemen looking to start in business.
The majority of grants are designed to help small and medium sized businesses (SMEs) and generally cover between 15% and 50% of the total costs of a project. An SME is defined as a firm with a staff roster of between 50 and 250 and a turnover of between £1.4m and £5.6m.
To find out which grants are suitable for your project, Business Link provides a useful free service where users can search a database. By inputting where you are, the industry you are operating in and the size of your start-up, a list of relevant schemes will appear.
As a government agency, Business Link has a network of offices around the country where applicants can get help with putting together their initial application. After deciding which grant you want to apply for, there are a number of things to consider before actually starting the application.
First of all, organise a meeting or a phone call with a start-up business grant provider and discuss the realistic chances of your success. After all, the process can be lengthy and time consuming. Ensure you can commit enough time to the application and that it’s worth this investment, bearing in mind that it can take months to come to fruition.
All applications need to be accompanied by a comprehensive business plan. This will have to include details of the project and its foreseen benefits, a plan of work with full costing, and your relevant experience.
It’s best to keep your plan short and to the point as an investor will be put off by page after page of rambling prose. Most applications fail if the plan is unrealistic, if the applicant cannot provide the rest of the funding, or it is not demonstrated how important the funds are to the success of the project.
Finally, get someone to check through your completed application before you submit it, looking out for mistakes and ensuring the clarity of your proposal.
Grant consultants
Researching grant providers and going through the application process is a time-consuming process. Grant consultants relieve you of much of this burden; they find appropriate grant providers and help you with your application.
The expertise they bring to the table is particularly useful for competitive grants, where getting a grant is not contingent on satisfying minimum criteria, but on satisfying that criteria more stringently than fellow applicants.
If you think might qualify for a grant then check out our directory of grant providers and grant consultants by clicking here.
