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A guide to small business grants in the UK and how to apply

5-minute read

A guide to small business grants in the UK and how to apply
Simply Business Editorial Team

Simply Business Editorial Team

15 February 2021

Finding small business grants in the UK can require investigation, with eligibility depending on a whole range of factors. That being said, it’s not impossible to find sources of small business funding you don’t have to pay back.

Here’s a list we put together to help take some of the initial research effort out of applying for a grant.

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

A small business loan is money for your business you’ll have to pay back within an agreed timescale. This is different to a small business grant, which you won’t be expected to pay back.

Some grants will be offered on the basis that you must also invest the equivalent amount in your business. For example, if you’re given a £10,000 grant, you’ll need to have £10,000 to invest too.

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Small business startup grants

A range of startup business grants are available depending on the sector you want to go into. For example:

The National Lottery Heritage Fund supports heritage projects ranging from designed landscapes to cultural traditions. The National Lottery Grants for Heritage 2021-22 will prioritise projects that boost the local economy, encourage skills development and job creation, and support wellbeing. Learn about the National Lottery business grant.

Innovate UK provides government grants to “develop and realise the potential of new ideas, including those from the UK’s world-class research base”. Read about the Innovate UK grant.

Research and Development tax reliefs support companies seeking to research or develop an advancement in their field (even if the project is unsuccessful). Find out about this type of business grant.

Plus, you can ask your local authority about grants available in your region and funding specific to your industry. Local authorities have also been administering government small business grants as part of the coronavirus support package, including the Local Restrictions Support Grants.

The government’s business finance finder and regional funding portals are a good place to start your search for this type of business grant.

Small business grants for young people

The Prince’s Trust supports young people aged 18 to 30 to start and run their own business. Besides funding and resources, they also provide training and mentoring.

Last year, in response to Covid-19, the Prince’s Trust set up a £5 million Enterprise Relief Fund, offering grants to self-employed people and business owners aged between 18 and 30 in the UK.

While this is now closed for applications, the Prince’s Trust runs an Enterprise Course, which involves info sessions and workshops to help you launch your business. You can apply for low-interest business loans between £500 and £5,000, and the Prince’s Trust says small business grants may be available in special circumstances.

If you’re an entrepreneur who’s building a solution to social problems in the UK, check out UnLtd. If you’re 16 or over, willing to participate in learning, and working for the benefit of others, UnLtd could help you start out. They offer “awards from £500 to £15,000 across three separate startup packages.”

New Enterprise Allowance

The New Enterprise Allowance gives you mentoring and an allowance if you want to start, or develop, a business. To be eligible, you’ll need to be over 18 and either:

  • get Universal Credit, Job Seeker’s Allowance or Employment and Support Allowance (or have a partner who does)
  • be a lone parent, sick or disabled and on Income Support

Your mentor will need to approve your business plan. After that, you may get an allowance of up to £1,274 over 26 weeks. You should speak to your Jobcentre Plus work coach if you want to apply for the New Enterprise Allowance to help start or develop your own business.

Grants for taking on an apprentice

You can get financial help from the government to train an apprentice in your small business.

If your pay bill is less than £3 million a year, you won’t pay the apprenticeship levy. This means you get five per cent towards the cost of training and assessment for your apprentice, if the apprenticeship started on or after 1 April 2019.

The government pays their 95 per cent share directly to the training organisation. You also pay your share directly, according to a payment schedule you agree with the training organisation.

Use the government’s enquiry form to ask the National Apprenticeship Service about the funding available.

The government's also introduced the Kickstart Scheme, which gives funding to businesses who create “new job placements for 16 to 24 year olds on Universal Credit who are at risk of long term unemployment.”

You can get 100 per cent of the living wage for 25 hours a week for a total of six months, along with pension and National Insurance contributions. The start dates of placements can be spread up until the end of December 2021.

Where can I find small business grants in the UK?

Other financial help available to your small business will depend on where in the country you’re located, the size of your business, the industry you’re in – and whether you’re looking for business startup grants or funding to grow your business.

You can use the government’s Finance and support for your business online tool by selecting the ‘grants’ tick box. You can also filter by how long you’ve been trading (useful if you’re only looking for startup business grants), industry, number of employees, and region of the UK.

There’s also more information on the grants available in the different nations of the UK on the following portals.

Small business grants in England

The Local Enterprise Partnerships (LEP) Network website lists the 38 regional Growth Hubs. They’ve been set up to provide business funding, support and guidance in their local areas.

They make it easier for business owners to find the support they need by bringing together all of the available national and local business support in one hub.

You can search for business support available in your local area on the LEP Network website.

Small business grants in Scotland

If you’re based in Scotland, you might be able to apply for a business grant from Scottish Enterprise.

A new funding model will be in place from the end of February 2021, which aims to create “a simpler, more inclusive funding model that will help create jobs and a greener economy.”

The Scottish Enterprise website also has details on funding for businesses affected by coronavirus, as well as information on grants that are available from other organisations.

Small business grants in Northern Ireland

The Established SMEs Funding section of Enterprise Ireland lists several ways you can get financial help for your small business if it’s already up and running and you’re based in Northern Ireland.

It also offers High Potential Start-up Funding if your business idea has “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 3 years of starting up.”

Small business grants in Wales

If your small business is located in Wales, you can use the Welsh government’s Funding Locator to find and apply for various grants. Sources of funding include:

  • the Welsh Government
  • the UK Government
  • local authorities
  • charitable organisations

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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