Introduction to business grants and loans
Grants to ordinary businesses are relatively rare in the UK, and vary from place-to-place and time-to-time. There has to be a reason why a grant-giving body would want to support you – for example to regenerate a particular run-down neighbourhood, to encourage the survival of some craft skill or to ameliorate some economic disaster afflicting a particular industry.
Except in the last case, a grant can be thought of as a kind of bribe to change your business behaviour. Expect there to be strings attached.
Applying for a grant can be a very complicated process, and even if you get it the grant will often only cover part of your project costs. You will still have to find the rest from other sources.
Q: Where can I find a grant?
A: Local Business Links are a usually a good source of information about any publicly-funded grants currently on offer in your neighbourhood. For example, grants are sometimes available for doing up premises or improving shop displays, particularly in regeneration areas. The geographic area in which such grants are available is often very precisely defined.
If you are involved in the agricultural sector or certain types of rural business a complex system of financial incentives and schemes apply. This is the most heavily grant-aided part of the economy, but as usual strings are attached and finding your way to the money can be difficult, The best place to start is Defra itself.
Internet search sites can help find a wide range of public, private and charitable initiatives. Apart from Google, there are some specialised funding search sites you can try – notably Grantnet and J4B.
Be cautious about web sites (or firms) that say there is a myriad of unclaimed government grants out there and that then offer to find you one for a fee. Don’t pay until they get you the money!
There is no government grant available to everyone who wants to start a business. This is an urban myth.
The reality is that outside the arts, education and agriculture sectors grants to businesses in the UK are rare by international standards. Business here does not have a grants culture, but something a lot closer to a genuine enterprise one focused on customers.
In this culture grants have to be politically defensible. If a government body gives public money to one business, other businesses it competes will feel justified in complaining. So in the UK grants are not available across the board but only for purposes a minister, councillor or civil servant can defend.
So for example Nesta uses lottery money to encourage innovative and creative businesses. However, its grants are awarded on a competitive basis, and where large amounts are involved it usualy wants an equity stake – in other words partial ownership of the business.
In the UK the key source of revenue for businesses is overwhelmingly customers, during the start-up period as well as later. This after all is what distinguishes a business from a charity or public sector body.Businesses requiring more money to get going than early customers, friends, familly and the entrepreneurs’ own resources can provide have two other options.
They can seek a business loan from a bank or quasi-bank institution, or find an invester willing to put money into the business, usually in return for an equity stake.
Chasing for unlikely grants can be a distraction from putting together a strong offering that will prompt customers to voluntarily hand over money to you in return for your product or service.
Note also that your early customers will bring not just money when you most need it, but quite possibly also valuable information you can use to help guide your business. This feedback from real paying customers is something officials at a government agency or grant-giving charitable trust will be hard-pressed to match.
Print this post
