New business grants FAQs

Receiving new business funding can be a welcome boost when starting a business. There is an abundance of new grants available for small businesses across the UK. They can save you money, lower your start-up costs and help you grow your business. However, navigating the field of funding and grants can be a challenging one, particularly when you’re a new business.

This new business grants guide will answer some frequently asked questions we’ve received from clients. It will divulge some helpful tips on how to bid for funding efficiently. It will also include some of the latest news and advice around UK grants for businesses.

So, let’s start off with the basics…

What is a grant?

A grant is a sum of money given by an entity that doesn’t need to be repaid, unlike loans. Often, grants are given for a specific purpose such as new business start-up grants or linked to public benefit. They are, in general, awarded for either a specific idea or project, but they can also be for new businesses. You will likely to be able to find a grant available in almost any business sector.

What grants are available?

There is a wide range of grants available for businesses. For example, new business start-up grants and council business grants, grants for charities and grants for small businesses. They can range in price from a couple of thousand to the hundreds of thousands. As well as grants for businesses, there are a range of grants available for specific sectors that have certain objectives. For example:

Who gives out new business grants?

New business grants in the UK are often awarded by either a public body, charitable foundation or specialised grant-making institution. The government gives out a fair amount of grants for start-up and small businesses. In fact, UK government grants account for around 13% of total UK government expenditure.

A few years ago, you wouldn’t have been as able to find funding to start a new business. However, now there are a fair few new business start-up grants available. We predict there will be more on the horizon due to the government investing in smaller businesses. There are more cash grants for small businesses available to apply for each day.

The UK government is encouraging the development of new SMEs (small and medium enterprises). They even have a target of awarding SMEs 33% of all government tender contracts by 2022. Moreover, due to the COVID-19 pandemic, the government is seeking to secure SMEs as supply chains closer to home. As a result, the government is supporting them via the provision of grant opportunities encouraging new business. This is all in the hope of aiding COVID-19 recovery and encouraging a diverse business marketplace throughout the UK.

What type of grant funding is available?

In general, grants can be split up into the three following types:

  • Direct grants

Direct grants are when money is directly given to a new business to cover start-up costs. These could include expenses such as staff training, equipment and more. It’s unlikely that you will be able to find a grant that covers 100% of your business start-up costs. Some may expect your business to match around 50% of the value of the grant.

Alternatives to business grants

  • Equity finance

Equity finance is a type of government grant that can offer new businesses income tax reductions. You will have to sell a share of your business in return for finance. This can apply to businesses that are less than two years old and have fewer than 25 employees.

  • Soft loan

A soft loan is not a grant. For a loan, you will need to pay the money back via agreed repayment terms and conditions. Soft loans often have lower interest rates and more generous terms than other lending routes.

Eligibility for grants

Each grant will have different eligibility criteria. Some may have certain objectives you need to achieve if you are successful with your proposal and receive funding. These objectives could include job creation, innovative solutions and sustainability goals such as net-zero ambitions. Some grants may require a business to have been trading for a minimum of one or two years. There are some that are specifically tailored towards starting, developing and growing businesses.

Depending on the grant, you should check if it has a location restraint. Local councils may have new business grants available for businesses that are based within their community. Therefore, you will have to prove that your business resides and trades in that area in order to be eligible. If you’re a small business based in Worcester, you’ll unlikely be eligible for a start-up council grant based in Newcastle.

 Important aspects of a grant application

  • Always prepare your proposal as early as possible

Time planning is essential when applying for new business funding and grant proposals in general. Some grants may not have a time limit but once the funds have gone, they’re gone.

The phrase ‘the early bird catches the worm’ comes to mind here.

It should state on the grant documents if there is a submission date or if it will remain open subject to funding. Some grants may only be available or open at certain points in the year. Therefore, planning efficiently and well in advance is a necessity. You want your proposal to be the best it can be. So, planning adequate time can help you really excel.

When planning your proposal for new business grants, set realistic internal deadlines. Leave plenty of time for unexpected issues or delays to arise. You should leave plenty of time for your team to collect any data they may need to strengthen your proposal. There’s nothing worse than being pressed for time and rushing. This can lead to easily avoidable errors resulting in a weakened application. Factoring in enough time can help ease the pressure of writing a proposal. It allows you to make it the best it can be.

  • A full-proof business plan with sales projections, cash flow and loss forecasts

Grants for small businesses and new business start-up grants will often require you to include a business plan. This business plan should include sales projections (if relevant), cash flow and loss forecasts for the coming years. You will also likely need to provide examples of your company’s balance sheet where possible. If you’re a start-up business, you may be required to provide predicted trading profits and losses.

Grant awarding bodies will often expect a business plan to be professional. If you’re a new business, there are mentors available that can help you develop a full-proof business plan. This is something you should look into if you’re serious about applying for new business start-up grants.

  • Provide evidence of your money handling capabilities

Funders want to be reassured that their money is in capable hands. You should provide evidence that you have a sound methodology for money management. Including past projects where you managed the cash-flow can be used to demonstrate your capabilities. This can help reassure funders that their money is safe in your hands, strengthening your application.

  • Realistically evaluate running costs

Carrying on from money handling capabilities, you should realistically evaluate the funding costs. When applying for new grants for small businesses, you should be asking for a reasonable amount. Be grounded with your costs. Don’t account for three of the latest Apple Macs when three cheaper brands will do the job. This is important. If you ask for too much, you may be held accountable for, or accused of, fraud.

  • Always proofread your proposal before you submit

Before you submit, you should always proofread your submission. Ideally, you will complete the proposal early, leaving a couple of days in between before you read over it. This means you will have a fresh pair of eyes and be more able to pick up on small mistakes. You can check if it’s in line with the specification. You can see if you’ve answered everything required in the grant documents.

Asking a co-worker or friend to look over your proposal before you submit is also beneficial. Getting another perspective is always good, helping you get a rounded view. They can point out if you can expand in certain sections or if you’re rambling unnecessarily. Reading aloud can also help you check if it’s coherent, allowing you to catch sentences that don’t quite work.

How do I write a new business funding proposal?

When writing a new business funding proposal, it’s important to remember to:

  • Be specific about what you plan to do with your business
  • Write in plain English, avoiding overly technical jargon
  • Write as close to the word or page counts as possible
  • Show how your business meets the grant’s qualifying criteria
  • Be clear about your measurable outcomes if funding is granted
  • Create specific aims and well-defined criteria to quantify success
  • Answer all questions addressed in the grant documents
  • Be realistic with business costs
  • Provide evidence that you are capable of delivering the work
  • Provide projections for the return on the grant funder’s investment.

How can I secure new business funding?

Finding the right grant opportunity for your business can be one thing but securing it can be another matter altogether. Often if you’re a new business you may be inexperienced in writing a grant proposal which is totally understandable. It can be hard to know where to even begin once you’ve found the perfect opportunity. That’s why outsourcing your proposal to a Grant Writing Consultant can help.

Grant Writing Consultants are experts in writing funding proposals. They know what funders are looking for and how to best convey it. They have the time management skills and experience to increase your chances of success.

Before you move forward with a new business funding opportunity, you should ask yourself:

  • Is this opportunity right for me?
  • Do I meet the minimum eligibility criterion?
  • Can I comfortably meet the submission deadline?
  • Do I need to match the funding?
  • Can I match the funding if I need to?
  • Am I able to deliver on all the funder’s objectives?

If you’ve never submitted a proposal for grant funding, you may be wondering where to start. What sort of questions do funders ask and what can be expected from the grant documents. Well, below is an example of a typical layout for a bid for funding. Of course, this is a general outline as every funding opportunity is different.

Example grant funding format

To start, you can expect the grant documents to contain the project or grant summary. There will be a description of what the funder’s objectives and aims are. Following this, you should describe how your business fits the scope.

Here are some examples of the type of application questions you may be asked, depending on the grant:

  • What is the problem you want to solve?
  • Who is the target audience of your business?
  • What is unique about your approach? Do you use any innovative solutions?
  • Are you capable of delivering and supporting the business?
  • Do you need additional support?
  • What will you do with the funding?
  • How will you manage the business and risks effectively?
  • Finances or projected finances.

Need help with writing your new business grants application?

Our Grant Writing Service is for businesses who want to start applying for grants, but don’t know where to begin. If you don’t have the resources or the time in-house to write a winning grant – we can help. Our Grant Consultants have over 60 years of experience in bidding for funding and grants. They can take care of the whole thing for you – they’ll even submit it on your behalf.

Get in touch to find out how we can help your business grow!

You can access our Grant Tracker service which hosts all the latest grant opportunities in the UK from 1,500 data points. Opportunities will be manually tracked, enabling for accurate keyword labelling, optimising your search for the perfect grant.

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