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Guide to grants for small businesses

If you want to grow your business, chances are you're going to need to raise finance to help you achieve your goals. One way of doing this is by applying for a grant.

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What is a business grant?

A grant is a sum of money awarded by an organisation or authority to help a business succeed in a particular project, for example starting a business or developing a new product.

Unlike a loan, they are generally not repayable and you pay no interest on the amount given, making them an attractive option for small businesses. However, grants are not quick and easy money. The number of grants available is limited, so there is a lot of competition for them and the application process can be arduous, often taking several months. Your business may also be expected to match the funding given.

Plus, you will need to prove that you have a genuine reason for needing a grant. Grants cannot be used for working capital or an alternative use than that which the money was awarded for.

Grants are awarded to businesses by local, national and European government, as well as by other smaller bodies, such as charities.

Types of business grants

Research and development (R&D)

Grants for research and development are awarded for the purpose of fostering technological innovation in business. Grants are available for projects worth between £5,000 and £500,000 and will cover a percentage of the total cost of project (usually between 35 to 65%).

Local or regional

Very few funding sources are provided nationally; the bulk of funding is undertaken at a regional or local level so it is worth checking whether your business is based in an area where funding is available for the purpose of economic regeneration. One possible source of funding may be Community Development Finance Initiatives (CDFIs).

There are more than 60 of these in the UK, providing loans and support to businesses in deprived communities. Visit the Community Development Finance Association website for more information.

Industry sector

Some industry sectors are more likely to receive support through grants for small business than others. These include specialist areas of the food, technology and manufacturing industries. Also, business types that are under-represented, such as those owned by ethnic minorities or women, or businesses that involve traditional crafts, may be more likely to be eligible for grants.

Purpose of funding

Funding options vary according to the purpose of the funding. Upgrading assets can make smaller businesses eligible for grants from organisations involved in promoting energy efficiency, such as the Carbon Trust and the Energy Savings Trust.

There are also grants available through UK Trade & Investment (UKTI), for those who are looking to export for the first time.

Size of business

You may be eligible for some grants if your business is of a particular size, measured either by turnover or the number of people employed in your business.

How to access grants

You can find grants based on your location by using a free resource such as the government's support finder. However, unless you're familiar with the grant application process, you may require some help and support in choosing and applying for a grant. The Forum of Private Business can offer a grant application service to make accessing grant finance easier for your business.

Following a free initial consultation and comprehensive funding search, we'll match your business to the most appropriate grants available and support you through the application process. If there are no grants applicable to your business, we can also help you to explore the other funding options available. Call us on 0845 130 1722 to find out more.

PLEASE NOTE: The Forum does not provide grants, but we can provide members with advice on finding grants