Starting your own business can feel like a daunting prospect, especially if you’re in need of funding to launch your new idea. Government grants can be a good way to source the funding that you need to get your business off the ground, but you need to know where to look to find this type of funding.
In this article, we’ll explain how you can start your own business using government grants, including the types of funding that are available and how you can apply for the money you need to start your new business.
Can You Get A Government Grant To Start A Business?
The government offers many different types of grants to support start up businesses. However, these are not well publicised, and it can be difficult to get accepted for a government start up grant.
For the best chances of success, you need to know what types of grants are available and how to go about applying. This will give you the best possible chances of securing government funding for your new venture.
Read on to learn about the different types of new business government grants that are available, and how you can go about applying for government funding for your start up business.
What Types Of New Business Government Grants Are Available?
If you’re looking for a grant for your new business, you might be wondering what types of new business grants you can get from the UK government. There are many different start up grants available from the government, and the types of grants that will be available to you will depend on the industry in which your new business will be operating and your location.
Through the UK government, you may be able to get grants to cover the initial cost of purchasing equipment, for training or for expanding into new markets such as international trade.
Certain industries will find that government start up grants will be more accessible to them, such as businesses that are investing in green energy initiatives. This is because the government wants to encourage businesses to expand in these areas.
Most government grants will be matched funded. This means that you’ll be expected to fund 50% of the costs yourself, with the government grant providing the other 50% of funding, up to a predefined limit.
Where To Find New Business Government Grants
It can be difficult to know where to look when you’re searching for a start up grant for your new business. Luckily, the government lists all available small business grants on its ‘Business Finance Support’ website. This means that you can search through available finance options and view the details of grants that are suitable for your business.
How To Apply For A New Business Government Grant
Once you’ve found the right government business grant for your new business, you can begin the application process. The process of applying for your small business grant will depend on the criteria of the individual grant. Whilst some will require a written application, others may need a business plan or even an interview.
Before applying for the grant, it’s important that you carefully read the application criteria. This will ensure that your business is eligible for the grant, as well as giving you an idea of exactly what the funding committee is looking for in the applications.
You’ll then need to check exactly what you need to do to apply for the grant. This could include writing a business plan, supplying references or creating a written application. It’s a good idea to get a business partner or friend to read through your application before sending it off, to check for any errors and ensure that it reads well.
Other Funding Options For Start Up Businesses
Government business grants can be competitive, with many applicants for a single grant. This leaves many business owners wondering whether there are any alternative options for funding their start up.
Fortunately, there are many other funding options for new businesses, alongside government grants. This includes business loans and equity finance. Let’s take a look at some of the most popular ways to finance a new business.
Start Up Business Loans
Business loans are offered by many of the leading high street banks, including Lloyds, HSBC and Santander. This type of finance enables you to borrow a sum of money, paying it back in monthly instalments. It’s important to be aware that you’ll be charged interest on the amount you borrow, so you’ll end up paying back more than you borrow.
Business loans can be either secured or unsecured. A secured business loan will be secured against your house, car or other assets. This means that if you fail to repay your loan, the bank could take control of your assets as payment.
In contrast, an unsecured loan is not secured on your assets. This means that you won’t need to put up any collateral to secure your loan, as it is based upon your current circumstances.
Equity finance involves selling a share of the business in return for finance. This can be a great way to get your business off the ground, but it’s important to remember that you will no longer own 100% of your business. This means that your profits will be shared with another individual or company.
In order to return to owning 100% of your business, you’d need to buy out the other party. If your business has quickly grown, this may end up costing significantly more than their initial investment, and it relies on the other party being willing to sell their share.
So, it’s vital that you’re sure that this is the right option for your business before deciding to sell a share of your start up.
If you need short term finance for your business, a business overdraft can be a good way to finance your start up. With an agreed overdraft, you can use your business bank account to borrow a predefined sum of money to get your business started. You’ll be able negotiate the size of your overdraft with the bank, based on your credit history.
Whilst overdrafts can be useful in the short term, it’s important to be aware that they usually come with high interest rates. For this reason, we’d never recommend using an overdraft as a medium or long term finance option for your business.
Business Credit Cards
Business credit cards are another short term finance option for your start up business. In fact, this is the most common type of finance for small businesses.
Like a personal credit card, a business credit card enables you to make purchases which you then pay for at a later date. It’s important to check the individual terms and conditions of your credit card, but most will remain interest free for at least 30 days, giving you a short period of time to pay off your credit card before any interest charges are applied.
If you don’t pay off your business credit card within this initial interest free period, you’ll begin to accrue interest, increasing the debt that is owed. For this reason, it’s recommended that credit cards are only used as a short term finance option for small businesses.
Crowdfunding is one of the fastest growing finance methods for small businesses, having soared in popularity in recent years. This method of small business finance involves asking many people for a small investment in your new business.