What is the distinction between a grant and a loan for small businesses?

A small business  Grant is money for your company that you must repay within a certain time frame. This is not the same as a small company grant, which you will not be required to repay.

Some subsidies will be given on the condition that you additionally invest the same amount in your firm. For example, if you receive a £10,000 grant, you must also have £10,000 to invest.

Tutorial on SME Funding Applications

The application process will differ based on the grant, but here are some broad guidelines to get you started:

converse with the grant-making body - learn what they're searching for and personalise your application to the goals (for example sustainability or job creation)

create a detailed business plan

Describe how you intend to use the money - Be precise here and demonstrate how the financing will assist you in growing your firm.

Apply soon - Some awards have a limited amount of money, so it's always a good idea to submit your application as soon as possible.

Make a cashflow forecast - this is useful for managing your company's finances and is sometimes required when seeking for financing (although more commonly with loan applications)

Are you just getting started as a small business owner? Check out our guide to starting a business and don't forget to get business insurance.

Small business government grants

This page provides an overview of a variety of small company grants available from the government and other organisations throughout the UK.

You can go straight to the government grants by clicking on the links below, or you can keep reading for a complete list of small company grants:

• R&D tax breaks for innovators in the United Kingdom
• Grants for unemployed business owners
• Grants for employing an apprentice
• Grants for high-speed broadband installation
• Grant programmes for improving air quality

UK Innovate

Innovate UK is a government initiative that gives funds to "create and realise the promise of new ideas, especially those from the UK's world-class research base." Learn more about the Innovate UK grant.

Tax breaks for R&D

R&D tax breaks help businesses who want to conduct research or make a breakthrough in their sector (even if the project is unsuccessful). This means you can lower your tax burden by claiming deductions for expenses relevant to the research project, such as staff salary, project materials, and utilities.

You may be eligible for R&D tax credits if you have:

fewer than 500 employees, a turnover of less than €100 million, or a balance sheet total of less than €86 million

Our R&D tax relief guide explains what an R&D project is and how you claim tax reduction for it.

You can inquire with your local government about grants available in your area as well as funds specialised to your industry.

Grants for unemployed business owners

The New Enterprise Allowance application period ended in January 2022. This programme provided coaching and a stipend to Universal Credit recipients who wanted to establish or grow a business.

Although there is no grant available, claiming Universal Credit may entitle you to a 12-month start-up period. This simply means that your UC payments will be based on your self-employment earnings, and you will not be required to seek additional employment. More information can be found in our overview of self-employment benefits.

A specialist work coach with experience dealing with self-employed persons will also assist you.

If your company is less than two years established, you should consider whether a Start Up Loan may be beneficial.

More information about transitioning from benefits to work and starting your own business is available from the government.

Grants for employing an apprentice

You can acquire government funding to train an apprentice in your small business.

If your annual pay bill is less than £3 million, you will not be required to pay the apprenticeship levy. This means you will get 5% of the cost of training and assessment for your apprentice if the apprenticeship began on or after April 1, 2019.

The government pays the training organisation directly for its 95% part. You also pay your portion directly, in accordance with a payment schedule agreed upon with the training organisation.

Use the government's inquiry form to inquire about financing from the National Apprenticeship Service.

Grants for high-speed broadband installation

Businesses in rural locations may be eligible for vouchers to help pay for the installation of new gigabit-capable connections. Businesses can get vouchers valued up to £3,500.