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15 Min. Read

UK Small Business Grants: What are They and How Do I Apply?

April 25, 2024
UK Small Business Grants: What are They and How Do I Apply?

Getting a grant application accepted is an exciting prospect for small businesses. Moreover, unlike other forms of funding such a bank loan, the money from a small business grant does not need to be paid back.

Small business grants are generally funded by the government or the private sector. They are usually set up to tackle a particular issue, such as revitalising a neglected area or promoting British innovation. For start-ups and small businesses alike it’s important to understand the reasons why grants are being offered in order to write a convincing application.

You’ll need to invest some time to find a grant that’s right for your start-up or small business. Start with our guide and save yourself a few hours.

We’ll define what a small business grant is, show you a range of available grants as well as offer you advice on how to apply.

Here’s What We’ll Cover:

What’s the Difference Between a Small Business Grant and Loan?

COVID-19 Government Support Grants

What Small Business Grants Are There for Young People?

Apprenticeship Grants

New Enterprise Allowance

Grants for Start-ups

Government Grants

Country Specific Grants

How Do I Apply for Small Business Grants in the UK?

Are There Any Potential Disadvantages to Applying for a Small Business Grant in the UK?

How To Use the UK Government Search Tool to Find Your Small Business Grant

What’s the Difference Between a Small Business Grant and Loan?

A small business grant does not have to be repaid, which is why they’re so popular with businesses. However some grants do have certain criteria you’ll have to adhere to such as agreeing to invest an equivalent amount yourself or designating what you can spend the money on, for example.

A small business loan on the other hand must be repaid in full. Your lender gives you an up-front lump sum which you then agree to repay in instalments. This is usually a monthly payment including interest, with potential penalties being imposed should you default on the pre-arranged repayment schedule.

COVID-19 Government Support Grants

HMRC has put a range of different support packages in place to financially support businesses during their COVID-19 recovery. It can be tricky to work out which option applies to your business because of the sheer volume of different schemes and the fact that they’re regularly changing. HMRC’s free online tool ‘Find Coronavirus Support’ is a good place to start.

HMRC organise their support by what you need help with. These support options apply to every UK country, unless otherwise specified.

What Do You Need Help With?

Paying your employees: Coronavirus Job Retention Scheme

Paying sick pay: Check if you can claim back Statutory Sick Pay paid to employees due to coronavirus (COVID-19)

Paying tax:

Business rates relief:

Support for businesses of any size: Recovery Loan Scheme

Support for businesses affected by coronavirus restrictions:

Self employed: Self Employed Income Support Scheme grants

The above information represents the current availability of the UK government’s financial support for businesses in June 2021. However, it’s worth checking HMRC’s Business Support page regularly for updated and new information.

What Small Business Grants Are There for Young People?

Some grants are specifically designed with young people in mind. For example, the Prince’s Trust Enterprise scheme helps 18-30 year olds take their great idea and turn it into a business.

There is a whole programme of business mentorship, and the opportunity to apply for a cash grant to help with start-up costs. The amount of grant funding has been set to a maximum of £5,000. The Prince’s Trust has a proven track record with 86,000 young people having been helped by their Enterprise scheme so far.

This is just one example of the sort of financial support you can apply for as a young person with an idea for a small business. There are so many others, for example:

  • UnLtd: “finds, funds and supports social entrepreneurs”. Their Start-up awards will be most interesting to younger people, as you’re eligible from the age of 16.
  • Spaces 4 Change: Helps young people repurpose under-used or empty spaces into new, valuable social ventures.
  • Shell LiveWIRE: “strengthens local economies across the globe by promoting entrepreneurship and developing entrepreneurs”. And if you’re aged between 16 and 30 years old, you’re eligible for up to £5,000.

The size of the grant awarded by the Prince’s Trust is typical of other grants in the same category. Secondary schools, colleges and universities across the UK are all good sources of information about what’s available in your area.

Apprenticeship Grants

The government incentivises businesses to take on apprentices by offering £1,000 to employers who recruit apprentices who are either 16-18 years old, or under 25 and have been in local authority care or who have an education, health and care plan.

Training and Assessment Funding

If your annual wage bill is under £3million, then you don’t pay the Apprenticeship Levy and can apply for training and assessment funding for your apprentices. This means that the government pays 95% of these costs and you pay 5%. Access to these funds is different depending on where you live in the UK:

New Apprentice Bonus

You can also claim an additional £3,000 for new apprentices that start between 1st April 2021 and 30th September 2021.

New Enterprise Allowance

The government’s new enterprise allowance is a weekly allowance of up to £1,274 over 26 weeks, for people aged over 18 years old and on benefits. The allowance is designed to help benefit claimants start their own business as well as supporting those on Universal Credit who may already be self-employed to further develop their business.

You must meet one of two criteria:

  • You receive income support and are disabled, sick or a single parent
  • You (or your partner) receive employment and support allowance, jobseekers’ allowance or Universal Credit

Along with this government grant, you also get a business mentor to help you get back into work by developing your own small business.

You can talk through your business concept with your Job Centre Plus work coach and check your eligibility for the New Enterprise Allowance through your Universal Credit account.

Grants for Start-ups

Most of the grants for small businesses are aimed at new businesses.

In many ways, this can make for quite an overwhelming process for a new business owner. You can narrow it down a bit by the industry you’re in.

For example, the National Lottery provides grants through the National Lottery Heritage Fund. These fund different types of projects connected to the UK landscape and natural heritage.

One such programme is the Local Places for Nature grant which is “for capital projects in Wales that will acquire, restore and enhance nature”. This is location-specific, as grants are only for projects in Wales. And they are worth between £10,000 and £50,000. As a small start-up business, that’s a considerable amount of funding to support your launch.

Government Grants

UK small business grants and funding can be found by looking geographically. You can search UK-wide using GOV.UK’s ‘Finance and support for your business‘ page. This lists all the different local financial support available across the UK for new businesses, as well as small- and medium-sized businesses. This includes business start-up grants, government grants, and other financial support to help you to grow your business.

It’s such a great time-saver, definitely worth being your first port of call when you go on your hunt for the best grants available to your business.

More on how this works, with an example search, in the final section.

Country Specific Grants

Small Business Grants in England

Local Enterprise Partnerships (LEPs) are business “growth hubs” in England. There are 38 in total, and they’re designed to provide business support and help on a local scale. They are a partnership between your local authority and the private sector. If you live in England, find your local LEP and ask them to help you find local grants available to your small business.

Small Business Grants in Northern Ireland

Enterprise Ireland explains what grants are available for start-ups and established businesses in Northern Ireland.

Small and medium sized businesses in Northern Ireland can apply for grants that match Enterprise Ireland’s main funding requirements.

They look at:

  • Whether the company has received business support from them before
  • What region the business is based in
  • To what extent the project needs the grants available
  • The potential of the project to encourage job creation and sales growth

Start-ups in Northern Ireland might also be eligible for its High Potential Start-Up (HPSU) Companies support. This is funding for new businesses that have “the potential to develop an innovative product or service for sale on international markets and the potential to create 10 jobs and €1m in sales within three years of starting up”.

Small Business Grants in Scotland

The Scottish Government has a very well organised list of the grants available exclusively in Scotland. The range of government grants available for small businesses is quite extensive.

Scottish government grants are available in a variety of industries, but they are all usually determined by three main drivers.

You have a small business that:

  • Will bring social or economic benefits, for example creating jobs
  • Works on collaborative projects leading to new technology or ideas
  • Focuses on research and development

You need to keep these overarching aims in mind when you apply for grants in Scotland.

Small Business Grants in Wales

The Welsh Government has a free tool called a Finance Locator which helps people find business start-up grants, small business grants and other financial support. It asks you to enter:

  • Business structure
  • Business type
  • How many employees you have
  • How established your business is
  • Business location (region of Wales)
  • What you plan to use the money for

All are drop-down, multi-choice menus to make it easier. You are then presented with a list of finance options at a local, regional and national level. This isn’t just grants though – loans and other options are included.

How Do I Apply for Small Business Grants in the UK?

Whether you’re a new business or have been up and running for a decade, you need to treat each business grant application with care. The application process will vary, depending on the details of each grant.

Here we’ve got four helpful tips for you, which apply across the board.

Grant application Dos and Don’ts:

  1. Do Pay Attention to the Objectives of the Grant

Really consider the aim of the grant. Maybe even phone the providers and have a chat to gain more understanding. This money is being given to you for free, but the providers aren’t just there to kindly help UK businesses. They want to see action.

That might mean new products, or research and development in a particular area. Whatever the grant’s objectives are must become the focus for your grant application. Demonstrate you understand them by how you word your pitch. Highlight that you share their values.

  1. Do Show How the Money Will Be Used

Explain exactly what you’re going to do with the money you’ve been awarded and answer the question ‘So what?’.

For example, you own a bakery that mainly uses local produce. You’re going to open additional premises in a neighbouring village with the grant money. So what?

You’ll grow your business, support other local businesses further and employ local villagers. And that’s just the start. Really spell it out. Show that you’ve thought about your own business, but also about how it’s benefiting others—either in a business or community sense. Refer back to the original aims of the grant fund itself.

  1. Do Connect Your Business Plan to the Funding

You’ll be expected to include a top-notch business plan with your application. That includes start-up costs, cash flow, and any funding requirements connected to the grant’s eligibility criteria. At least this bit won’t be tricky with FreshBooks’ financial reports and balance sheet ready and waiting for you.

  1. Don’t Wait Until the Deadline

The earlier you get your small business grant application in, the more likely you are to be successful. Although they may have a deadline, they don’t wait until then to start allocating the money. Most close applications early if the pot is empty.

Also, the longer grant funding is available, the more other businesses will hear about it and become your competition. So if you find a grant that perfectly matches your business, prioritise the application.

Are There Any Potential Disadvantages to Applying for a Small Business Grant in the UK?

This is a very important question to ask before you start looking for a small business grant. You need to weigh up all the pros and cons.

These are the main disadvantages to UK small business grant funding:

  • Time: Finding the right grant and filling in the application both need a substantial amount of your time. If you feel that the potential for free investment is worth it, you need to schedule the grant search and paperwork into your existing diary.
  • Clashes with other areas of finance: As an established small business enterprise, you’ll need to think about your financial position holistically and make sure that grant funding wouldn’t have a negative impact. For example, how it interacts with R&D tax relief or other sources of investment. It’s wise to discuss this with your accountant before making a final decision.
  • Competition: Any business grants and funding opportunities are extremely competitive, especially if they’re well publicised. Whatever you apply for, despite the hassle of the application procedure, you will be up against a number of other businesses competing over the same business grant.

Unfortunately, lots of businesses miss out on grant money they could have applied for. It’s a great cash boost that you never have to give back so, despite these disadvantages, it’s really worth considering.

How To Use the UK Government Search Tool to Find Your Small Business Grant

The UK government makes the search for your perfect grant a lot easier by collecting all the government funding together into one list called ‘Finance and support for your business’.

This is updated constantly and, at the time of writing, shows 166 schemes that you might be eligible for.

You can narrow your search in five different ways:

  1. Type of Support:
  • Finance
  • Equity
  • Grant
  • Loan
  • Expertise and advice
  • Recognition awards
  1. Business Stage
  • Not yet trading
  • Start-up, 1-2 years
  • Established
  1. Industry: Choose which sector your business belongs to
  2. Number of Employees
  • 0 – 9
  • 10 – 249
  • 250 – 500
  • 500+
  1. Region: choose one of the 10 English regions or Northern Ireland, Scotland or Wales

For example, this is the search result for grant funding, for start-up businesses, with between 0 and 9 employees, in the whole of the UK. There are 55 opportunities in all – are you eligible?

Each listing on the main search page comes with a sentence description that eliminates common confusions. For example, sometimes the identification of a particular place means that it’s only for people with businesses already in that area. And sometimes it indicates that it’s for anybody who’s investing in that area.

Of course, you can use the other search tabs to tailor your research to best suit you. Good luck!

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