Government grants for small businesses: Grant and loan support to help your business

Funding your business can be difficult, whether that’s getting it off the ground, or growing a successful enterprise.

A variety of government grants and loans are available to address just this need and should be investigated by all businesses.

Read this article to learn about the financial support that’s available to your business.

Here’s what we cover:

• What are small business grants?
• The benefits of government grants for small businesses
• Who is eligible for small business grants?
• What are the different types of small business grants?
• Small business grants in Scotland
• Small business grants in Wales
• Loans available for businesses
• How to apply for grants and loans
• Final thoughts on applying for government grants and loans

What are small business grants?

Put simply, a small business grant is money given to your business. It’s different from a loan because it doesn’t need to be paid back (unless the grant is claimed fraudulently).

Sound too good to be true?

Well, there are usually conditions attached to the grant in terms of who can apply for it, and then how it should be used.

This is because grants are typically designed to encourage certain behaviour or characteristics within a business or address an acknowledged business deficiency.

For example, you may need to be a certain kind of business in a particular part of the UK (measured not just by country but county or even city and town).

And the grant may only cover something such as paying for broadband for your business, or growing your business provided you do so by taking on new staff recruited from the local area.

The government typically funds grant schemes for UK businesses and asks local authorities and other agencies to both administer them and decide on those conditions.

Additionally, some institutions might have their own grant schemes.

With the government pledging to help small and medium-sized enterprises (SMEs) through the stages of startup and growth, there’s a range of funding for small businesses to take advantage of.

The benefits of government grants for small businesses

Taking a government grant for small businesses can give a much-needed boost to your business finances during difficult times.

It can help with numerous challenges such as covering staff costs arising due to sick leave, a certain amount of research and development, and the cost of renting a premises.

You don’t have to repay it, so you might as well make use of the grants available to you, to help take the pressure off.

Who is eligible for small business grants?

Each small business grant will have its criteria for eligibility set out on its website.

Usually, for both local and national grants, your business will need to be based in the UK and have the right number of staff to qualify as a small business.

There may also be criteria depending on how much money your small business makes, or what sector it serves.

What are the different types of small business grants?

There are different small business grants available according to government priority, sector, and emergency, to name but a few.

Some small business grants are nationally applicable, while others are only available in certain local authorities or regions.

Here are a few of the main business grants available from the UK government and other official bodies at the moment.

Emergency business grants

Often, when national emergencies occur, the government will step in to help keep the economy as stable as possible.

For example, to help businesses survive the coronavirus disruption of 2020, the government created several grant schemes.

More information on available grants to help your business through national emergencies can be found on the government website.

Regional funding grants

A variety of grants are available across the UK, administered by councils, academic institutions, and others.

Formerly called the Regional Growth Fund, these business grants over varying amounts are conditional upon a series of criteria, including the nature of your business and the amount of time it’s been operating.

To find out which grants your business might be eligible for:

• Visit the business finance support finder page on the UK government’s website
• On the page are a series of drop-down menus—start by choosing ‘Type of support’ and selecting ‘Grant’
• Continue by selecting your business stage, industry, number of employees and region
• Take a look at the schemes that are available to you.

Here’s some examples drawn from the entries in the list.

• Rural SMEs in England, Scotland, Wales and Northern Ireland can group together to get up to £3,500 for broadband.
• Businesses in Hertfordshire with five or more full-time employees aiming for growth can get up to £3,000.

In short, diligently searching the list can pay dividends. And remember, there might be multiple grants you can apply for.

Innovation funding grants

Businesses that undertake research and innovation as part of their core business—typically science, technology, or engineering-based—can apply for grants as well as loans and procurements from Innovate UK, which is part of the UK Research and Innovation (UKRI) body.

Take a look through the list of current opportunities. It can be filtered by industry sector and is frequently refreshed with new opportunities.

It’s also possible to get tax relief and tax credits for certain kinds of research and development projects.

This is where you’re able to reduce the amount you pay in tax or get some money back from the government on a regular basis based on your turnover.

Again, these are conditional on your business ticking certain boxes but there are no conditions on what you do with the money you save.

Small business grants in Scotland

If your business is based in Scotland, you may be eligible for the following grants: 

SMART: Scotland Grant 

This grant is available to small and medium-sized businesses, university spin-outs, and individuals. 

It provides the financial support you need to run feasibility studies that show your business could succeed in the real world. To get the grant, your project will need to generate intellectual property that your business will own. 

The support covers 70% of costs for small businesses and 60% for medium businesses. 

Your project will need to last between six and 18 months, with the maximum grant being £100,000.  

Workplace Innovation Grant 

The Workplace Innovation Grant can contribute up to £5,000 towards activities that help your business introduce new and innovative workplace practices. Your project must meet at least two of these criteria:

• Aim to motivate staff beyond pay
• Enhance your workplace culture
• Improve workplace practices. 

IBioIC Facilities Access Fund 

The Industrial Biotechnology Innovation Centre’s (IBioIC) Facilities Access Fund provides grants of up to £10,000 to support critical research and development projects.  

Your project will need to be led by an industrial partner, and should cover biotechnology applications such as biorefining, food and drink, biomanufacturing, waste management, textiles and agritech.  

Forestry Grant Scheme 

This scheme provides financial support for businesses that create either new woodland spaces or run the sustainable management of existing woodlands.

Any sized business can apply, and it’s managed by Scottish Rural Payments and Services agency and Scottish Forestry.  

Workforce Upskilling Grant (Fife) 

If your based in Fife, you may be able to get up to £2,000 towards improving productivity and profitability through staff training.

Any business in the area can apply, and the grant can cover the total cost of the training up to the max amount.  

Orkney Islands New Business Start Up Grant 

Orkney Islands Council funds the New Business Start Up Grant and can give you £500 to £1,500. You must be based in the region and employing fewer than 50 people.

You should be developing a startup business with the aim of turning into a full-time sustainable enterprise. 

The council is looking to target tourism, food and drink, renewable energy, lifeline local service providers, and community-based social enterprise companies.

Franchise businesses are also eligible. 

West Dumbarton Business Start Up Grant 

This simple grant provides people in West Dunbartonshire up to £500 towards their startup costs.

All you’ll need to apply is a business plan and proof of trading, such as evidence of a business bank account and identification (passport or birth certificate). 

Small business grants in Wales

ReAct+ 

Sectors: SMEs.

Amount: Up to £3,000 in quarterly instalments for the first 12 months; up to £1,000 for job-related training. 

Details: Businesses that recruit someone who has recently been made redundant can access funding to cover the costs of some of their wages.

The scheme aims to help people get back into work quickly, and it’s hoped businesses will receive other benefits from employing them in addition to the funding, such as improved productivity and having a trained, skilled workforce.

An additional £1,000 is available if you recruit a disabled person or a young person aged 18 to 24. If you recruit a young disabled person, an additional £2,000 is available. 

Conwy Business Support Grant 

Eligible regions: Conwy.

Sectors: Social enterprises, farm diversification, retail/wholesale, tourism, services (this is not an exhaustive list). 

Amount: £200 to £1,500 to cover 50% of project costs. 

Details: If a Conwy business has a planned project that will result in extra staff and increased turnover, then it may be eligible for this grant.

It can be used to buy capital equipment (including IT hardware), marketing material, specialist training, and pay other professional fees that will help a business achieve its desired outcome. 

ISO Grant Scheme 

Eligible regions: Gwynedd County. 

Sectors: SMEs. 

Amount: Cost of consultant.

Details: SMEs can use this business funding to help them gain ISO accreditations that will demonstrate their products, services, and systems are safe and of a good quality.

The money will pay for the cost of a consultant to work with the business to achieve the standard needed for accreditation, although it won’t pay for the certification itself. 

Caerphilly Enterprise Fund 

Eligible regions: Caerphilly. 

Sectors: SMEs, startups, community organisations.

Amount: Up to £2,000 to cover 50% of expenditure (revenue); up to £10,000 to cover 50% of costs (capital).

Details: Businesses can apply for funding for both capital and revenue costs, including external and internal building works, feasibility studies, marketing, and IT equipment.

Applicants must demonstrate how their funded project would bring economic, social, cultural, and environmental benefits to Caerphilly. 

Cardiff Knowledge Transfer Partnerships 

Eligible regions: Cardiff. 

Sectors: SMEs and large organisations. 

Amount: Variable, but guidance states £25,000 a year for SMEs (67% grant), and £35,000 a year for large organisations (50% grant).

Details: A Knowledge Transfer Partnership (KTP) is a three-way partnership between an organisation, a graduate and, in this instance, Cardiff University.

It’s designed to provide businesses with access to academic skills and expertise.

Alongside SMEs and large organisations, third sector businesses of any size can receive a grant contribution of 75% of eligible project costs, subject to a cap. 

Carmarthenshire Business Renewable Energy Fund 

Eligible regions: Carmarthenshire. 

Sectors: New and existing businesses in, or planning to locate within, Carmarthenshire. 

Amount: Between £1,000 and £10,000 (covering 50% of total project costs). 

Details: This grant was established to help businesses in the Carmarthenshire area purchase renewable business energy systems, such as small scale wind turbines or commercial solar panels. 

Carmarthenshire Rural Enterprises Fund 

Eligible regions: Carmarthenshire. 

Sectors: Rural enterprises. 

Amount: Up to £100,000 (£20,000 per job created or to cover 25% to 45% of costs, whichever is lower). 

Details: This grant helps rural businesses fund development projects for their premises that will ultimately safeguard and/or create employment opportunities in the region. 

Rhondda Cynon Taf Enterprise Investment Fund 

Eligible regions: Rhondda Cynon Taf. 

Sectors: SMEs, startups. 

Amount: £1,500 to £10,000 (commercial premises); £500 to £1,500 (home-based premises) to cover up to 50% of costs. 

Details: The Enterprise Investment Fund aims to support economic growth across Rhondda Cynon Taf by helping businesses to expand and achieve its growth plans. 

Swansea Digital Development Grant 

Eligible regions: Swansea. 

Sectors: SMEs.

Amount: Between £500 and £1,500. 

Details: This grant is for businesses in Swansea to improve their digital visibility and online presence.

This can cover revenue costs associated with website development and training courses. 

Swansea Property Enhancement Development Grant 

Eligible regions: Swansea city centre, Morriston town centre. 

Sectors: SMEs. 

Amount: Up to 40% of costs. 

Details: This scheme focuses on improving the appearance of commercial premises and on finding occupants for vacant and derelict properties.

The amount of funding that organisations can receive will vary on a case-by-case basis, with possible areas that the money can be used on including shop fronts, roofs, floors, ceilings, signage, wiring, and others. 

Barriers to Start-up Grant 

Eligible regions: Wales. 

Sectors: Economically inactive and unemployed individuals aged 25 and over. 

Amount: Up to £2,000. 

Details: This startup grant is for unemployed and economically inactive people looking to start a self-employed business in Wales.

Alongside a grant worth up to £2,000, the scheme also provides one-to-one support and confidence-building webinars, alongside advisers to provide further start up guidance. 

BG Effect Business Fund 

Eligible regions: Blaenau Gwent. 

Sectors: Startups. 

Amount: Up to £1,000 to cover 80% of costs. 

Details: This startup business grant aims to help new enterprises develop and achieve their growth objectives, whether that’s by funding expert advice and support, necessary equipment purchases, marketing materials, or business location costs. 

Blaenau Gwent Kick Start Plus 

Eligible regions: Blaenau Gwent 

Sectors: Start ups that are six months to three years old 

Amount: Up to £1,000 to cover up to 50% of costs 

Details: Established to complement the startup grant, this Kick Start grant aims to help businesses develop and expand further.

Eligible costs of this fund include marketing, website development, IT, and training. 

Caerphilly Business Start-up Grant 

Eligible regions: Caerphilly. 

Sectors: Startups.

Amount: Up to £500 to cover up to 50% of costs.

Details: Individuals in Caerphilly wanting to set up a business may be able to receive support from this startup business grant.

Funding can be used to help new businesses grow and develop by contributing to the costs of equipment, IT equipment, web development, marketing, building works, and other costs incurred from starting a business. 

Neath Port Talbot Innov8 Scheme 

Eligible regions: Neath Port Talbot 

Sectors: Startups 

Amount: Up to £1,.000 (to cover 50% of costs). 

Details: This grant is part of a wider support package for people aged 18 and over who are looking to start, develop or grow a business in Neath Port Talbot.

Alongside the funding, entrepreneurs can access workshops and courses, information on business premises, and ongoing support. 

Loans available for businesses

It’s also worth considering loans.

Like grants, they’re offered via a variety of institutions. It’s a mistake to think that banks are the only route for loans.

Often, the deals from non-bank institutions are better value than standard bank loans and are underwritten by the institutions to remove any barriers.

This makes them available to businesses that may not have a good credit standing (perhaps because they’re new, for example).

On the other hand, when it comes to getting a loan from a bank, as well as considering the traditional high-street offerings, take a look at challenger banks too as they might provide good options that meet your needs.

Start Up Loans

This government-funded initiative provides loans, mentoring and support for startups or very small, early stage businesses with potentially viable propositions but who are unable to attract investment from high-street banks.

To be eligible for Start Up Loans, there’s a series of criteria you need to meet, including:

• You have to be based in the UK
• You’re over the age of 18
• You must be starting a new business or have been trading for less than two years
• You can afford to repay the loan that you receive.

You can easily keep any necessary business records with  and accounting software for your small business.

The scheme provides free business planning to ensure applicants are in the best possible position to receive funding.

Every loan application is considered according to the needs of your business and you can borrow up to £25,000.

The final loan size will be determined by your business plan.

UK Export Finance (UKEF)

UK Export Finance says its mission is “ensure that no viable UK export fails for lack of finance or insurance” and as such it aims to help UK exporters in two main ways.

The first is via its Direct Lending Facility, which gives loans to overseas buyers of up to £200m when they purchase capital goods or services from UK exporters.

The interest rate is competitive and the loan period can be several years to make it easier to repay.

The second way UK Export Finance helps is similar. Its Buyer Credit Facility provides a guarantee to banks making loans to overseas buyers, again so they can purchase capital goods or services from a UK business.

This can be for a loan, or a line of credit.

You might direct an overseas purchaser to the Direct Lending Facility to get orders for your business.

With both schemes, your business gets the loan cash up front, as if this were a cash contract in exchange for the goods and/or services.

The borrower then repays the loan. In other words, the money never actually passes through their hands.

UK Export Finance can also help UK exporters to raise tender and contract bonds and access working capital finance, via the following:

• Bond Support Scheme 
• Export Development Guarantee
• Export Working Capital Schemes.

To be eligible for export insurance, your business must be based in the UK and the buyer must be overseas.

For those who export goods, services or intangibles, UK Export Finance is definitely worth investigating.

How to apply for grants and loans

To apply for a grant or a loan, you’ll probably need to demonstrate that you fulfil the criteria or qualifications. This may involve handing over your business plan, or even creating one from scratch.

It might involve providing statements showing the state of your finances for a certain period, and it may require you to create projections of your profit and loss for a period such as the next year or so.

If a grant comes conditional on performing a task—such as growth involving making new hires from the local area—then you’ll need to demonstrate in a written way how you intend to make this happen.

Examples include consulting with your local Job Centre Plus, expanding your payroll, or working with relevant employment agencies.

Because of this, applying for grants and loans can be time consuming.

Consulting those who’ve already been through the process can be useful because they might know of any pitfalls or areas to which grant or loan providers apply particular attention.

Additionally, most grants and loan applications come with instructions or guides—often quite detailed—and you should fully read these first.

After all, the institution is considering handing over actual money and fraudulent applications are not uncommon.

You need to show that your financial needs are legitimate.

The best way of doing this is by demonstrating you’ve applied care and attention to your application, and have supplied the relevant documentation to build your case.

Final thoughts on applying for government grants and loans

Many successful businesses owe their success not just to hard work but also to accessing much-needed funding in the form of grants and loans.

It can be a time-consuming practice to look through what’s available and apply but the financial rewards really can make it worth it.

Seeking the advice of other local businesses, such as via a Chamber of Commerce, can be a good way to get started.

Similarly, searching for advice online or just picking up the phone and making calls can kick start the process.

Often, the institutions behind grants and loans are very happy to discuss what’s required, and to evaluate your business to avoid potential disappointment or wasted effort in applying.

Editor’s note: This article was first published in July 2017 and has been updated for relevance.