Small business grants: what are they and what's available?

As an owner of a small business, managing cash flow and finding funds to grow can feel like a juggling act.

Thankfully, government bodies and other organisations offer grants to help small businesses access funding without getting into further debt or having to pay steep interest rate.  

In the first few years of its life, a small business can find funding particularly challenging. When you are trying to expand your offering and reach more customers, you probably need to spend money quicker than you can make it.

This can feel like an uphill struggle, but there may be funding out there to help you manage your cash flow or take your business to its next stage of growth. That’s where small business grants come in. 

What is a small business grant? 

A grant is a lump sum that you don’t have to pay back. Small business grants work in lots of different ways, and this differs from provider to provider, but most will require the funding to be used or invested into your business in a certain way.  

There may be some conditions attached to your grant as well. For example, you may need to invest as much money as you receive, or the amount you are awarded could be based on how much you’ve raised from other sources. 

How can you find a small business grant? 

A number of organisations offer small business grants, from charities to banks. You will need to shop around to find ones suitable for you and available at any given time. 

A good place to start is with your Local Enterprise Partnership (LEP), of which there are 38 across the country. They are business-led partnerships between local authorities and local private sector businesses, and they provide funding and advice to help businesses improve the regional economy and infrastructure.  

You could also look at individual grant providers’ websites to see what is available, or subscribe to their communications to receive updates. The government has a ‘grants’ box that you can select on its funding search tool called the ‘finance and support for your business’ section, which is another good place to start. 

How to apply for a small business grant 

As with all funding, there is no guarantee that you will be given a grant, even if you meet the eligibility criteria. That is why you should take time over your application, as you would in a pitch for a loan. You’ll need to show that: 

• Your plans meet the objective of the grant 

• You know exactly how you will use the money (which should be in line with the grant’s aim) 
• Your business is successful or promising, even if it’s currently struggling  
• You are ready to start using the money straight away  

All grant funding applications have their own set of questions and criteria, but here are some general tips for how to approach your application:  

• Include a good business plan (with cash flow forecasts) and ensure it is up to date 

• Get financial and/or accountancy advice to make sure the numbers are all in order 
• Start early – you will need to gather lots of information, carefully write and revise your application, and submit everything well ahead of the deadline 
• Check the deadline! 
• Show how your business is benefiting people – unlike bank loans, grants are often trying to address challenges in the economy or local community   
• Be clear and concrete about how your business and its plans will achieve the aim of the grant, such as by investing in new equipment or vital hires  

• Pay attention to the wording the provider uses – mirroring its language can show your business is aligned with its values 

Types of small business grants 

Grants are generally tailored towards certain businesses or those facing specific challenges. There are grants in the following key categories: 

Self-employment grants

People who are self-employed can access grants from time to time to help cover for loss of income that isn’t their fault.

A key example is the Self Employment Income Support Scheme (SEISS), which acted like the furlough scheme for self-employed people during Covid-19. (Applications for this scheme have now closed.) 

Start-up grants

You may be able to access funding to cover the costs of equipment and products while you get your business off the ground. One example is the New Enterprise Allowance, which gives you access to mentoring and an income while you develop your own business. 

Another key example is the Prince’s Trust programme. This is one of the notable small business grants for young people, which is designed to help those aged 18 to 30 start a business. 

Grants for taking on an apprentice

To incentivise businesses to train people and give them new skills, the government offers grant schemes to help fund apprenticeships. 

These include the National Apprenticeship Service and the Kickstart Scheme. The latter provides funding to businesses to create roles for people aged 16 to 24 on Universal Credit who are at risk of long-term unemployment. 

What grants are available for small businesses? 

There are lots of grants out there for small businesses, and a financial adviser may be able to help you find them and create a successful application. 

Two examples of well-known grant providers include the National Lottery and Power to Change, which target community-led businesses and often have funding available. Another big name is Innovate UK, which helps businesses that are introducing new ideas and research.  

We should also mention the Covid-19 related grants. The pandemic has caused turmoil for organisations across sectors. 

To help businesses cope through a challenging period, and to support start-ups to keep new businesses entering the economy, there have been a number of grants available. The ones that are still open include:  

• Additional Restrictions Grant (ARG) – a support package that local authorities can issue for businesses that are most affected by Covid-19 related restrictions. 
• VAT rate reduction for hospitality, holiday accommodation and attractions – businesses in these industries have been able to pay a lower VAT rate. Until April 2022, they can pay a rate of 12.5%. 

Finding the right grant for your business 

If you are struggling for cash, it can feel like any funding is good, but this isn’t always the case. Grants often come with specific instructions on how the funding can be used, so it’s important that these align with your business goals too.

Before applying for any funding, make sure you speak to a financial adviser or accountant to explore all your avenues and ensure you are on the best course for success. 

Unbiased has 27,000 independent financial professionals across the country. Let us match you to your perfect financial adviser. 

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