Unfortunately, people aren’t out on your local high street handing out free cash to small businesses. Finding small business grants can take some diligent searching, and businesses need to check carefully whether or not they fit the criteria before getting their hopes up. That being said, valuable grants definitely do exist especially to help small businesses grow. 

Is a small business grant the same as a small business loan? 

No – there’s a big difference. 

A small business loan is an amount of money given to you for your business that you’ll need to pay back within an agreed timescale. This is different from a small business grant, which doesn’t need to be repaid. In the case of grants, however, there are normally specific uses and purposes for the money that is given. Most small business grants will specify that all of the money has to be invested in your business, but conditions vary. 

Government grants for small business

Innovate UK

Innovate UK provides government grants to ‘develop and realise the potential of new ideas, including those from the UK’s world-class research base’. 

R&D tax reliefs

Research and Development (R&D) reliefs support businesses that work on unique and innovative projects across science and technology. The grant can be claimed by companies working to advance their friend through research and development. The grant allows you to reduce your tax bill by claiming relief on things related to the research project, including staff wages, project materials and utilities.

Grant for unemployed entrepreneurs

The New Enterprise Allowance closed for applications in January 2022. This programme offered advice and mentorship for people on Universal Credit who were looking to start a business. 

This grant isn’t available anymore, however, if you claim Universal Credit, you could be eligible for a 12-month start-up period. This would mean that Universal Credit payments will be based on your self-employed earnings, and you don’t need to look for other work. 

You’ll also get support from a work coach. It is also worthwhile looking into whether a Start Up Loan would be helpful. To be eligible, your business has to be less than two years old.

Apprenticeship Grant

The government gives financial help to small businesses who are willing to train an apprentice. If you pay less than £3 million per year in salaries, then you won’t have to pay the apprenticeship levy. This means you just 5% towards the cost of training and assessing an apprentice. The government pays the rest. If you employ fewer than 50 employees, the government will pay 100% of the apprenticeship training costs, up to the funding band maximum of of a specific age. This is normally 16-18, or 19 to 24 with an education, health and care plan provided by their local authority, or has been in the care of their local authority.

Grants for installing high-speed broadband

Rural or countryside businesses are eligible for vouchers towards the cost of installing new gigabit-capable connections. Small businesses can receive vouchers are worth up to the cost of £3,500.

Air quality funding schemes

Some local authorities in England have been given a budget to help businesses deal with clean air zones. Eleven cities in the UK are launching low emission zones, and you could be eligible for a grant to help you pay for upgrading or changing your vehicle.

The National Lottery Heritage Fund

The National Lottery Grants for Heritage prioritises projects that ‘promote inclusion, boost the local economy, encourage skills development and job creation, and support wellbeing.’

A grant/funding for start-ups

Is a startup the same as a small business? What’s the difference?

The kind of grants and funding you’d get for a small business and a startup is different, because…well…they are different kinds of companies. However, there is some crossover. 

A small business is a business with a maximum of 100 employees. As long as it has a clear market and is earning revenue, you are ‘running’ a small business. A ‘startup’ is a business (usual small but can be medium-sized) that seeks to disrupt the market or create a completely new market. They seek to scale quickly, make an impact and overtake the competition. 

Startups usually have a more ambitious goal than most small businesses, whereas small business owners are happy for their business to fulfil a need and earn revenue without a plan for market (or even world) domination.

Seed Enterprise Investment Scheme (SEIS)

This is a specific grant scheme for start-ups. 

This grant scheme helps start-ups to raise that much-needed capital. Beneficiaries get a maximum of £150,000, including any state aid given in the three years running up to the date of investment.

Check on their website to see if you meet the conditions. If you do, keep in mind that investors can claim and keep SEIS tax reliefs relating to their shares. The SEIS tax reliefs will be withheld or withdrawn if you don’t meet these conditions for three years after the investment. The money must be spent within three years of the share issue.

There is also the Enterprise Investment Scheme (EIS) which is similar, except for established businesses not start-ups.

Governments and other public organisations aren’t eager to give out money, but plenty of excellent small business grant options available. The first thing to do is to work out if you are eligible for a grant or a loan. Naturally, a grant is preferable because it doesn’t have to be paid back. However, a loan is likely to be of a higher amount, so they may be preferable for some businesses. Also, many specialist small business loans have favourable rates. 

Grants are usually available from the government directly or government-affiliated organisations like The National Lottery Heritage Fund. So make sure you search carefully and check whether your business fits the criteria before you get too excited. Be optimistic, though, there is help out there!