Finance · 22 January 2016

National grants: A guide to what’s out there 

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Small businesses can benefit from over 650 national grants

According to the online database GRANTfinder, there are more than 650 UK government grants that have a national focus, administered by a wide range of departments and agencies. With so many grants available, Business Advice has hand-picked a select few that we think are most relevant, and will most intrigue and excite the country’s micro business community.

When it comes to raising funds to finance small business and startup growth, government-backed grants continue to represent one of the best options. Rather than other sources of finance, like corporate grants, government grants are more likely to have the interests of business at the heart of what’s intended to be achieved. Funds tend to be better directed towards projects that are more likely to boost business activity as a way to achieve growth in the economy.

The Department for Business, Innovation & Skills (BIS), the Department for Education, the Department for Environment, Food & Rural Affairs (Defra), the Department for Transport (DfT), the Directorate General and HMRC, together with agencies like the Homes and Communities Agency, Innovate UK and the Arts Councils, all award small business with access to grant funding.

National grants are open to a wide variety of sectors. Some are specific to certain industries, like exporting, others are for individuals or businesses of a certain size, like apprenticeship grants or startup funds. Some deliberately exclude certain sectors –  retail or shipbuilding, for example.

Innovate UK Smart Grants

Innovate UK is the government’s “innovation agency”, working with companies and partner organisations to drive science and technological innovation. Since 2007 it has invested over £1.5bn in business funding, and helped more than 5,000 innovative firms with projects thought to add £7.5bn to the UK economy.

Its Smart Grants scheme provides grants to startups with significant scientific or technological intellectual property. There are three types of Smart Grant available: proof of market, proof of concept and development of prototype. The level at which firms apply depends on the stage of the business, current finances and the type of product looking to be developed.

Proof of Market: Allows companies to assess the commercial viability of projects via market research, market testing and competitor analysis. It also assesses a project’s intellectual property position, the costs of commercialisation, timescales and funding needs. Companies at this stage of the scheme can obtain funding for up to 60 per cent of total project costs with a maximum of £25,000, for up to nine months.

Proof of Concept: Enables ventures to explore the commercial and technical feasibility of a new technology or product. It includes initial feasibility studies, basic prototyping and specialist testing to provide proof of a product or technology’s technical feasibility. Intellectual property protection is also included as is a look into production options. At this stage, firms get funding for up to 60 per cent of project costs with a maximum of £100,000 for up to 18 months.

Prototype Development: This grant can be used to develop an innovative product, service or industrial process. Companies use it for clinical trials and testing, market testing and intellectual property protection, as well as developing market strategies and work on product design. This stage of the scheme sees companies receive funding for up to 45 per cent of project costs for micro firms (35 per cent for medium enterprises), with maximum funds of £250,000 for a two-year period.

Any UK SME undertaking research and development is eligible to apply, with applications accepted on a rolling basis for assessment by industry experts.

Innovation Vouchers

These are small, but useful Innovate UK grants worth up to £5,000 each and can be used by startups to pay for external expertise to fuel business growth. Innovation vouchers can be used to buy time and support on specialist equipment or facilities, and an expert can be used for advice on a novel idea or the design of a product. Innovate UK helps to recruit whatever type of expert a company needs, whether it be from universities, technical institutes, intellectual property or design firms.

Apprenticeship Grant

Companies that hire apprentices, combining practical training with job-based learning for a period of up to four years, can provide can obtain grants of varying size depending on the area of business and the age of apprentices. Funding for 16 to 18 year-old apprentices begins at 100 per cent, with employers with less than ten staff also having potential access to an additional fund worth £1,500. Businesses with fewer than 50 employees can apply for funding so long as apprentices are under the age of 24, with firms able to apply for support for up to five apprentices.

Prince’s Trust Grants

Since 1976, the Prince’s Trust Grants have been providing financial assistance to Britain’s young entrepreneurs, offering an exclusive enterprise programme which lends grants and gives mentors to young individuals to help them start a business. Entrepreneurs must be between 18 and 30 years old to be eligible to apply, with the maximum amount available to individuals set at £1,500 and £3,000 for business groups. A marketing grant of up to £250 is also available to individuals under the scheme to help develop a market value for products.

Grant for Business Investment (GBI)

Previously called “Selective Finance for Investment in England”, the GBI is a grant option for businesses with investment projects that stand to increase productivity or employment, or reduce the skills gap, in economically deprived areas. The minimum grant available is £10,000, with funds administered by the various Regional Development Agencies.

Companies of any size can apply, but those that do not fall into the SME category must prove a project is located in an Assisted Area. Offshore wind farm projects have so far been particular recipients of these grants.

Heritage Lottery Fund Startup Grants

As the largest dedicated financier of heritage in the UK, the Heritage Lottery Fund has awarded £6.8bn to over 39,000 projects since 1994. Its startup grants are awarded to individuals running non-profit organisations or entrepreneurs starting a business. Starting at £3,000, the maximum limits aren’t set in stone, with the amount given dependent on the financial state of the applicant’s business.

Horizon 2020

This is a large EU funding pool designed to support European small businesses with finance for ground-breaking research or innovation that improves understanding or responds to challenges posed by societal issues like food security or climate change. Grants can be accessed via a number of UK government agencies and can amount to anywhere between £100,000 to over £10m. These grants provide access to the expertise, technology and science needed to help create enormous projects that add value to whole industries. Horizon 2020 focuses on European cohesion, so applicants can expect to bid alongside European competitors.

Design Leadership Programme

Young businesses and universities can apply for subsidies for the government’s design leadership programme, which offers up to ten days of design and innovation-focussed mentoring over a period of six to 18 months. The programmes cost anywhere between £2,000 and £10,000 depending on the needs and scale of a business, and successful applicants receive a 50 per cent subsidy. Science-based startups commonly receive these subsidies.

Technology Innovation Fund (TIF)

The TIF is a grant scheme funded by the National Physical Laboratory (NPL) to give new and innovative small firms access to the NPL and its research and expertise. Successful applicants receive $400 per day, regardless of the facilities used.

Support under the scheme is offered in four ways. Companies can access advice surgeries for between an hour and one day, and a consultancy service offers five to ten days of support. Help is also provided via a “research club”, whereby business partners pool money to gain longer and fuller access to the scheme. Finally, technical assessments on certain projects related to low carbon technologies are included under the grant, supported by the Centre for Carbon Measurement.

Seed Enterprise Investment Scheme

Strictly speaking a tax break rather than a national grant, the Seed Enterprise Investment Scheme (SEIS) offers incentives to investors in startups. Introduced by the government as a way to boost new enterprise and encourage economic growth, SEIS mitigates some of the risk to investors of investing in early-stage companies. Investors effectively purchase half-price shares in startups, with the potential for high returns.

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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