How to get Business Start-Up Grants
Getting started in business can be challenging and expensive, and there are many legal and financial hurdles to cross before trading can begin. Applying for a start-up grant can make this significantly easier, however, the process of doing so also involves some legal complexity.
There are over 200 grants available for small businesses, each catering to different sectors, industries and services. There are far fewer grants available for larger businesses.
In the following guide, we will outline the different types of grants and grant alternatives and explain how you might obtain one for your own business.
Grants and their alternatives
Grants targeted towards start-up businesses are called direct grants. These involve the provision of money to businesses for the purpose of covering essential costs. Grants can provide funding all the way up to £500,000.
Essential costs include:
- Equipment; and
- Finances required to reach new markets.
Depending on the grant, your business may be required to provide 50% of the value of the grant towards the project, and provide evidence of the ability to do so.
Not all start-up businesses will be able to qualify for a start-up grant, however, there are other options that may be available. One example is equity finance, which involves selling a share of the business in return for financial support. In practical terms, this means that you will have to exchange a portion of long-term success for some short term support. The short-term support may enable your business to get off the ground, which it might not have been able to do without selling the share.
Some government schemes offer a significant reduction on Income Tax of up to 50% on investments made into a new business. This can be applied to amounts up to £100,000. However, to be eligible, a business must have been officially registered with HMRC for at least two years and have a minimum of 25 employees. Because of this, equity finance may not be ideal for small businesses such as sole traders, run by one person with typically fewer employees.
Another option may be to acquire a soft loan, which, in practice, is a government-approved grant with a small amount of interest. One benefit of soft loans is that their terms are specifically designed to benefit small businesses.
The Start-Up Loans Scheme, which is backed by the UK government, offers loans of up to £25,000 with a relatively small 6% interest rate compared with other loans. Business owners who successfully apply for the scheme will also receive business support and mentoring from official bodies.
Sherlock & Co can help
If you are looking to start-up a new business or project, a grant may help you get off the ground. To find out what you are eligible for and how to apply, contact our expert chartered accountants today on 0161 330 3067 or fill in our quick contact form and a member of our team will be in touch.