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Best small business and start-up grants and loans in the UK

Discover more about small business start up grants and the options available to you below.

The best grants and loans for businesses

Grants and loans can provide vital funding for start-ups and small businesses in the UK.

However, many entrepreneurs delay the application process or don’t realise they’re eligible for financial support. But registering can take as little as two minutes, so it’s worth knowing your options.

If you’re looking to raise funding, here are the best finance opportunities on offer in the UK to help grow your business.

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Coronavirus grants and loans

The Covid-19 pandemic has impacted all businesses, with many small businesses in particular feeling the knock.

To support the lifeblood of the economy, the government introduced a number of dedicated grants and loans intended to lend a helping hand. 

  • The Coronavirus Business Interruption Loan Scheme (CBILS) – The government is helping small businesses access funding of up to £5 million by guaranteeing lenders 80% of the amount and paying interest and fees for the first year. The scheme is running until the end of January 2021.
  • The Coronavirus Job Retention Scheme (CJRS) – The ‘furlough’ scheme supports employers who can’t afford to retain their staff as a result of the pandemic by covering 80% of employees’ salaries while they’re out of work. The total is capped at £2,500 per worker per month and the scheme is open until the end of March 2021.
  • The Kickstart Scheme – With the aim of reducing unemployment, the government is providing employers with funding to create job placements for 16-24-year-olds on Universal Credit.
  • The Future Fund – Companies working in innovation can borrow between £125,000 and £5 million if they’ve struggled as a result of the pandemic. You can apply before the end of January 2021.
  • The Bounce Back Loan Scheme (BBLS) – The government will guarantee 100% of SME loans worth up to 25% of their revenue, plus interest and fees for the first year. Applications close at the end of January 2021.
  • The Local Restrictions Support Grant (Open or Closed) – These two funding options are available for businesses impacted by the pandemic or forced to close as a result of the second Covid-19 lockdown.
  • The Additional Restrictions Grant (ARG) – If your business isn’t eligible for any other small business grants or loans, you could receive funding from the ARG through your local council.

Small business grants

For small businesses that need a boost, there are lots of funding schemes available to apply for in the UK.

And the benefit of a grant is that, while there are terms and conditions, you never need to pay the money back.

  • The Seed Enterprise Investment Scheme – This small business grant fund encourages investors to put their money into new ventures by offering tax relief to those who buy shares. Companies can receive a maximum of £150,000 through the scheme.
  • Grow It – If your organisation works on social projects designed to support the local community, the Grow It award can provide up to £15,000 and expert guidance.
  • The Gigabit Broadband Voucher Scheme – Businesses in rural locations can access up to £3,500 to upgrade to a high-speed broadband connection
  • Arts Council National Lottery Project Grants – The Arts Council is providing much-needed support to organisations with a focus on creative initiatives, including theatres and art galleries. Small business grants range from £1,000 to £100,000.
  • CRACK-IT Challenges – Encouraging collaboration between businesses and academics, this competition invites SMEs to solve scientific or technological processes or develop a brand-new product. If your application is successful, you can secure a contract of up to £1 million across a period of up to three years.
  • The Tradeshow Access Programme – This scheme gives organisations a helping hand when it comes to working internationally. Small business grants of between £500 and £2,500 allow SMEs to carry out promotional campaigns and attend trade shows in foreign countries, but you must match the grant fund provided. You can also use the money to build foreign export contracts, complete market research and access guidance from international business experts.

Small business loans

  • The Enterprise Finance Guarantee (EFG) – The British Business Bank introduced the government-backed EFG to help small businesses grow by guaranteeing loans of between £25,000 and £1.2 million. To be eligible, you must be based in the UK and turn over less than £41 million per annum.
  • The NatWest Small Business Loan – NatWest offers a selection of flexible loans with contract terms of up to 10 years. You can borrow between £1,000 and £50,000, but you may need to provide security or a guarantee in order to access funding.
  • The HSBC Small Business Loan – For loans of between £1,000 and £25,000, HSBC offers a variety of funding options. The bank offers a fixed interest rate and a three-month repayment holiday at the start of the contract term. You can stretch your repayments across a period of between 12 months and 10 years. 
  • The Royal Bank of Scotland Small Business Loan – You can borrow between £1,000 and £50,000 with RBS’s flexible small business finance options. There is a fixed interest rate and you can choose the repayment period to suit you, from one to 10 years.
  • Lloyds Business Loans – Choose from a selection of funding options at Lloyds Bank. You can borrow between £1,000 and £25,000 over terms of up to 25 years with either fixed or variable interest rates. Lloyds also offers loans of more than £25,000 for businesses with a turnover of up to £25 million.
  • Funding Circle Business Loan – Funding Circle offers unsecured business loans for entrepreneurs who don’t want to use their assets as security. You must have been in business for at least three years, and you can borrow anything between £50,000 and £500,000. Plus, there’s no upfront fee or repayments to be made in the first 12 months.
  • The Greater London Investment Fund Loan (GLIF) – If your organisation is based in the UK’s capital, you could be eligible for between £100,000 and £1 million in funding. You must have a viable business model and you’ll only be approved for the loan if you can’t access other private sector finance. The GLIF is a useful option for SMEs with a negative track record or no collateral.
  • Fredericks Foundation Loans – The Fredericks Foundation supports business owners who have been unable to secure other forms of finance. If you’ve been up and running for less than 24 months, you may be able to borrow between £2,500 and £15,000, subject to your credit rating. For SMEs older than two years, the foundation offers funding of up to £35,000.
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Start-up grants

  • The New Enterprise Allowance – The government created this initiative to connect expert advisers to people hoping to launch a new start-up. If you successfully join the programme, your mentor will review your business plan and you may be eligible for a weekly allowance of up to £1,274 for 26 weeks.
  • The Do It Awards – UnLtd created this scheme to help entrepreneurs develop organisations working on social issues. If you need to raise funding for your project, you may be able to access £5,000 to build a thriving business. UnLtd also allocates dedicated award managers to all its small business grant recipients, and provides access to high-quality training opportunities and industry events.
  • The Eureka Eurostars Scheme – Eureka is the biggest international funding programme for SMEs working in research and development. Its Eurostars programme covers up to 60% of R&D project costs, up to a value of €360,000. When you use this scheme, you’ll join an international network of SMEs and research institutions.
  • The Plug-In Van Grant – If you’re setting up a business and need a vehicle for transportation, you could save money by taking advantage of the government’s electric van grant. You can receive funding to cover up to 20% of the cost of a low-emission van or truck, up to a maximum of £8,000. If you need a car for your business, the grant fund covers 35% of the cost, up to a value of £3,000.

Start-up loans

  • The Start Up Loan – Backed by the government, this is the most well-known start-up loan available to entrepreneurs in the process of developing a business. Individuals can apply for up to £25,000 each, up to a maximum value of £100,000 per business. Once the loan is approved, recipients can repay the amount over five years, at a fixed interest rate of 6%. The scheme also includes a year of free business mentoring.
  • The Prince’s Trust Enterprise Award – In collaboration with the Start Up Loans Company, The Prince’s Trust provides funding of between £500 and £5,000 to would-be business owners between the ages of 18 and 30. The loans incur interest at 6.2% annually.
  • The Virgin Start Up Loan – Virgin runs a loan scheme providing access to funding of between £500 and £25,000 to entrepreneurs looking to start or develop their business. You can agree on a repayment period of one to five years, with a fixed interest rate of 6%, and there are no set-up fees or early repayment penalties.

How can an accountant help me get a grant or loan?

Consulting a financial specialist will help you identify the right funding scheme for your business and boost your chances of gaining approval.

If you’re interested in applying for a business loan, an accountant will be able to determine your repayment capabilities and advise on the best finance option for you.

An independent financial adviser can also help you establish how much capital you need to generate, and how you will spend it once it’s in your account.

During the consultation stages, you should meet to discuss your funding options and prepare for your application by organising any relevant paperwork, including your business plan.

If you found this article useful, then you might also find our article on small business crowdfunding informative, too!

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About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.