Government grants for start-ups

There are hundreds of government grants available for small businesses – which could save you money, lower start up costs and help grow your business.

Read our guide to finding a government grant for your new business.

Government grants for new businesses in the UK cover a range of awards – from saving money on premises and rates, through to buying cheaper plant or IT equipment.

Grants come in a number of forms, with over 100 government grants for small businesses available across the UK.

While there are lots of grants available, getting a small business grant from the government can be a challenge.

Government grants are often complex with lots of processes and stages, and each grant will have its own requirements and criteria for applying.

Most small business grants are awarded to help launch a start-up or new business, with the aim to generate jobs and stimulate the economy.

There are fewer grants available for more established businesses.

Here’s our guide to applying for a government grant for a new business.

1. Where to find government grants for new businesses

Government grants are available for UK businesses, as well as via the Welsh and Northern Ireland Assemblies, and from the Scottish Parliament.

If you’re starting a UK business, begin with the useful Business Finance Support Finder.

The Welsh government has access to a similar list of grants at its Business Grants website.

Enterprise Ireland has access to funding for small businesses up to larger enterprises, while the Scottish government’s Funding Opportunities website provides access to over 600 grants and funding options.

2. What type of new business grants are available?

Government grants are available in all kinds of forms – from reduced costs and free equipment, to cash awards to help your new business grow.

Generally, government grants come in the form of a direct grant.

  • Direct grant – this is money given to your new business to cover start-up essentials such as training, investment in equipment, or reaching new markets such as overseas exports. Some grants will expect your business to provide 50% of the value of the grant, but funds of up to £500,000 are available depending on your business sector.

Alternatives to business grants

Business grants may not always be available or suitable for your business.

But the good news is that there are alternatives to business grants out there, such as:

  • Equity finance – This is when you sell a share of your business in return for finance. Some equity finance schemes, such as the Seed Enterprise Investment Scheme, offer up to a 50% reduction in income tax on investments made in new businesses up to £100,000. Businesses have to be less than two years old and have fewer than 25 employees.
  • LoansLoans with lower interest rates and generous terms than can be found via other lending routes. Backed by the government, the Start Up Loans schemeoffers personal loans of up to £25,000 with a 6% interest rate and access to free business support and mentoring.
  • Purchase order finance - This financing option allows businesses to pay their supplier's upfront costs before receiving payment for an order, ensuring a smooth delivery process. Unlike other types of funding, Purchase order finance is available to businesses of all sizes, including new startups and small businesses.
  • Trade credit - This type of short-term, unsecured debt allows a business to borrow goods or equipment from a supplier with an agreed-upon deadline for repayment. One of the best things about trade credit is that it's usually interest-free meaning that you only have to pay back the value of the goods you purchased without any extra fees.

3. How do I apply for a government business grant?

Each scheme is different, but check you meet the general terms and criteria before you get too far into the application process.

Most grants are very specialist, such as creating a specific type of business or building a business that will help regenerate a local community.

Here are some tips you may wish to consider if applying for a new business grant.

  • Talk to the grant body – talk to the grant awards body to assess your chances of making a successful application.
  • Read the grant objectives – take time to learn why this grant is being awarded and what it aims to achieve, such as hiring staff from a local community or developing environmentally friendly products. Write your application referring to the objectives as closely as possible to stand the best chance.
  • Have a great business plan – as with other types of funding, the awards body for the grant will expect to see a professional business plan and, if you’ve started trading, examples of your business position and balance sheet.
  • Focus on the grant use – grants are usually awarded for a specific project, such as buying IT equipment or funding broadband installation. Use the application to show how this will help grow your business and benefit others, rather than on the (in this case) IT equipment itself.
  • Check your funding – most grants will look to match the amount you’re willing to invest, so if you’re seeking a grant of £10,000 then make sure you’ve a matching amount available.
  • Start applying early – you’ve a better chance of receiving a grant if you apply when a scheme first launches. Grants may have a limited pot of money to invest – early on, there’s simply more funding available and less competition to get it.

Want to learn how to manage your start-up’s finances? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free Learn with Start Up Loans courses include:

Plus free courses on finance and accounting, project management, and leadership.

Disclaimer: While we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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