Finance · 22 January 2016

National grants: A guide to what’s out there?

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



Fred Heritage was previously 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.