Small Business Loan and Grant Funding Options
All businesses need some form of capital to begin their venture. Some may require additional injections of cash from time to time to finance working capital. Managing this liquid asset is vital for the long-term survival of any small business.
Fortunately, in the UK, there's a wealth of options for funding small business ventures. This article examines some of them.
Non-Repayable Grants for Small Businesses
There's always been government-backed grant schemes for small businesses. Way back in the early 80's, when I started a small sound recording and music production business, I used such funding. This kind of help is still available today.
Government grants are usually for start-up businesses only. So if you've been running your business for a while, you may need to look elsewhere. They also tend to have strict terms and conditions. If not adhered to, it can result in having to pay back the grant. However, under normal conditions most grants don't need repaying.
The Prince's Trust
For young people under 25, The Prince's Trust can be a source of free advice and funding. They provide two kinds of grant:
- Community Cash Awards, which assist in setting up a project that benefits the community. Your project could be a small business bringing employment to the area.
- Development Awards can help with training programmes or buying equipment and tools for your start-up business.
To be eligible for these grants, you need to be 25 years old or under and not currently employed or undergoing training. You can find more information at The Prince's Trust website.
Direct Government Grants
There's a wealth of schemes available in the UK. These are especially prominent in the designated 'assisted areas', seen as having a particular need for business development. If you're within one of these areas, you'll have a broader range of grants open to you.
The application procedure can be daunting and lengthy. This process is partly designed to test the mettle of the applicants. It's intended to weed out people that don't have the commitment or stomach for running their own business. For that reason, persevere if you have both!
European Union Grants
Since the UK joined the EU, its citizens can take advantage of the numerous grants to assist small businesses. These are mostly through the EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF). The EU places importance on Small to Medium Sized Businesses (SME's), which currently employ over 65% of the European workforce.
The Regional Development Agencies (RDAs) in England, the Scottish Enterprise, the Welsh Development Agency and Invest Northern Ireland all offer financial aid. Support is also provided through these regional agencies, although the government is planning to merge them with local enterprise partnerships (LEPs).
Local Authorities, Councils and Development Agencies
These bodies also offer a range of grants for SMEs and new businesses, so be sure to check the opportunities in your area.
Other Ways to Fund Your Business
Use Your Savings
If you have confidence in your new business, this may be the time to put your money where your mouth is. If you have savings, you may want to use them. It is, of course, much easier to do this if you are single and have few family responsibilities. How much money you invest depends on your circumstances.
Get a Loan
Banks and other financial institutions lend more money to small businesses each year. You should have a sound business plan or been running for several years with a solid financial track record. You can apply for a secured or unsecured business loan to fund your venture.
If you have a unique business idea, you may be able to sell it to investors who will put up the cash to get you started. The concept must be compelling, and you must have the personality to sell it to your 'Business Angels'. Have seen the popular BBC series 'Dragon's Den'? It's where a group of hopeful entrepreneurs attempt to charm money from a group of hard-headed business investors. You'll get entertained as well as realising how difficult this can be in practice.
Further information about funding from all these agencies and other sources is available from the organisations below:
- The government business register provides up to date listings of all regional support throughout the UK.
- Smallbusiness.co.uk has an excellent section on all types of grants for new and existing businesses.
- Grant Finder lists all available funding for UK businesses. It's free to use the site, but you need to register before using the service.
Website: Idox Grant Finder