If you are considering applying for a business grant or loan to make your business more sustainable and environmentally responsible, there are a variety of initiatives that can help you.
Support on offer depends on where you are based, the type of business you run, the kind project you want to set up, and its intended benefits and environmental impact.
Identifying and applying for funding can be time-consuming and may feel daunting.
This guide to sustainable business support is designed to help you save time. You’ll discover the types of support available, how to prepare for funding, and how to secure a grant or loan for your business.
Here’s what we cover:
Types of green business support
6 steps to help you find the right support
Finding a sustainability grant or green loan
Getting help to secure sustainable business funding
FAQs on sustainability grants and loans
Types of green business support
Sustainability is now on the agenda for most businesses as tackling the climate crisis and working towards a net zero economy by 2050 are increasingly pressing issues.
From small businesses to global corporations, business owners and leaders are placing sustainability as a firm priority.
Inevitably for some businesses, sustainability measures may incur extra costs in the short-term, so accessing suitable grants and loans is a good way to get the help you need to make your plans a reality.
If this sounds like you, read on to explore the funding available for your sustainability plans and environmental improvements.
Sustainability grants
A grant is a sum of money that you don’t have to repay, although do note that there will be certain criteria you must meet, along with restrictions on how you can spend the funds.
Some grants are given as ‘match funding’, which means you’ll have to contribute towards the project you’re raising the funds for.
Sustainability grants are available throughout the UK and are usually provided by your local authority, the government, specialist agencies, and non-governmental organisations (NGOs).
Green business loans
Loans must be repaid but you’ll usually have a favourable interest rate and they’re less restrictive than grants, so you’ll have more choices on how to use the money.
Business loans can be swiftly arranged and are often best suited to be used on projects where you forecast getting benefits from the investment over a longer period of time.
Local government authorities and business support agencies often provide loans, sometimes on favourable terms, for small businesses.
Meanwhile, most banks offer loans specifically to help businesses become more sustainable or to develop green products, services or clean technology.
6 steps to help you find the right support
It’s important to spend some time looking at the options to find the right funding support that matches the aims of your sustainability and environmental plans.
Taking a methodical and considered approach is best, and we recommend the following steps:
1. Scope your project
If you don’t scope out your project it will be difficult, if not impossible, to demonstrate why you need financial assistance.
You need to explain clearly what your project is aiming to achieve, detail how you will do it, and provide the methods on how you will make sure the project stays on track both from a budget and time perspective.
At this stage, you should also figure out any processes that need to be included and the responsibilities you will task yourself, your team, or any external consultants with.
2. Outline the benefits of your project
This is your opportunity to shine and really sell the benefits that your sustainability project will accomplish.
It’s important, however, to outline the benefits in an achievable way using data and hard facts where you can, rather than using assumptions or unrealistic dreams.
For example, what sort of environmental impacts, such as waste or emissions, will your project reduce, what are the savings you expect and how will all of this be measured?
These kinds of data-driven benefits will speak volumes and will be essential to any applications you make for any sustainability grants, green loans, or environmental awards.
3. Choose the most effective method of support
It’s likely the nature of your sustainability project will determine the type of support you will be eligible for, so you should have a clearer idea of where to find support once you’ve completed your scoping exercise.
It’s worth remembering that grants tend to work best for projects with defined goals that can be measured as they progress and that they often have a completion deadline.
If you do secure a grant, it’s likely to be on the basis that you are given the money in stages, which is usually dictated by project milestones or targets.
This is important to know because if you fail to meet any agreed targets, your funding could be withdrawn.
Alternatively, if you are seeking funds to buy assets, such as equipment or machinery, a loan will probably be a better option.
4. Understand your financial contribution
It’s true that there’s usually no such thing as free money.
Even if you’re awarded a grant, chances are you’ll have to match a percentage of what you are given with your own money. Always verify the maximum amount you can apply for and the amount you will have to contribute.
And then check thoroughly before you apply, and throughout the duration of the application process, to make sure you thoroughly understand what your responsibilities are and any risks that you may encounter.
If you secure a loan, ensure you fully understand the timeframes involved and the amount of interest you will be paying back, and if there are any penalties should you find yourself unable to meet payments.
5. Outline your project’s costs
Again, without this information it’ll be virtually impossible for anyone to understand what kind of support you need and be reassured that you know your project scope and goals inside out.
Be transparent with this information and include all the costs that you know are needed to run your project along with contingency budget to cover any unexpected events or issues.
Your costs should also detail how the grant or loan you are applying for will be spent.
And it’s a good idea to outline any cost savings you anticipate as a result of your project.
6. Update your business plan
When applying for financial support, it’s likely that you’ll have to produce a business plan (or update your existing one).
It’s here that you can state what your business is all about, why it exists, and your ambitions for the future.
You need to make sure that your sustainability project is highlighted in this document and be crystal clear about the benefits it will bring and how any potential funding will help support your overall business goals.
Finding a sustainability grant or green loan
There are a whole range of sustainability grants and loans administered by local authorities, the government, business support organisations, specialist agencies such as the Carbon Trust, and banks.
While the amount and criteria will vary depending on the provider, the type of finance on offer, and even where you are located, may influence what you can apply for.
As a rule of thumb, smaller pots of funding are usually available from local authorities, while larger amounts are generally found through central government schemes, banks and specialist agencies.
Generally, a sustainability grant and loan provider will expect to see what you will use the money for, and how it will support sustainability and green measures in your business.
Sustainable projects that focus on energy efficiencies, waste reduction and management, buying equipment or machinery, or developing new products and services tend to be viewed as worthy of investment.
Types of funds to think about
Local authority grants
Your local authority may have funding available to support your quest in making your business more sustainable.
Options, deadlines and criteria varies from area to area, so the easiest way to find out what is best suited to you is to check out your local authority’s website or give them a call.
You can browse an A-Z of all local authorities in England, find all local authorities in Scotland, and locate those based in Northern Ireland.
You can also get in-depth information on local authority and government funding too.
Other grants
The government also runs various initiatives that offer finance for sustainable and green business projects.
The Department for Business, Energy and Industrial Strategy and the Department for Environmental, Food and Rural Affairs (DEFRA) both run initiatives to help businesses become more sustainable and it’s worth keeping an eye out for when these are announced by checking their websites or registering to receive their email alerts.
You can also search Gov.uk for business support and grants.
There are other organisations and specialist agencies that also distribute funds to help support their missions.
WRAP, for example, manages grants and other investments to help increase the use of recycled materials and support business waste reduction costs.
Similarly, the Carbon Trust helps small businesses in England, Scotland and Wales to improve energy efficiency and reduce energy costs through its Green Business Fund.
Your energy supplier may offer grants to help you improve the energy efficiency of your business. Availability and eligibility criteria will vary, depending on the type and size of your business and where you’re located.
Contact your supplier to see what they offer.
It’s worth registering with Grants Online, which is a database of grants and funding schemes covering a huge range of providers and it also includes an environment and energy category.
Green business loans
Your bank might offer loans for sustainability projects, so it’s worth including them in your search and check if you may be eligible for any special incentives or conditions.
Lloyds Bank runs a ‘Clean Growth Finance’ package of discounted lending for businesses, which may suit you if you are planning to reduce your environmental impact and boost productivity in areas such as production, heating, or transport.
Barclays Bank’s ‘Green Trade Loans’ provides capital funding that you can use for regular or one-off purchases of goods and raw materials to support a variety of sustainable projects including energy efficiency, renewable energy, and sustainable food production.
HSBC’s Green Finance Initiative is designed to provide financial support for sustainability projects and its minimum loan starts at £300,000.
Triodos bank only lends money to businesses and projects that make a positive difference to society, whether that be environmentally, socially or culturally.
Getting help to secure sustainable business funding
Securing finance often feels like a daunting, time-consuming task, so it makes sense to get help and share out the load.
If you can, ask your staff, business mentor, or your shareholders to help, especially if they have the skill sets and experience in applying for funding.
In addition, you could ask for help from:
- The awarding body. Go straight to the source to seek clarification and advice on the application process to ensure you avoid making any errors that could affect your chances of securing the funds you need.
- Your accountant. They, or a suitable financial consultant, can help you work out your repayment capabilities, advise on the right funding path for your business, and check your proposed project budgets.
- Business support organisations. If you’re a member of a trade association, a business club, or an organisation such as the Chamber of Commerce or Federation of Small Businesses (FSB) you could seek advice on the application process for the grant or loans you’re after.
If you’re really struggling for time or know-how, you could appoint and pay a bid writing consultant to prepare your funding applications.
Low-cost green initiatives
If you’re not quite ready for funding or haven’t yet been successful in securing a grant or a loan, there are low-cost or free initiatives you can do to address sustainability in your business.
They include:
- The SME Climate Hub. Get free tools and resources, and learn how to measure and reduce your emissions.
- Business Declares. Join a network of like-minded businesses taking purposeful action to reach carbon neutrality.
- Business in the Community (BITC). As a member, you’ll get support to continually improve and measure your responsible business practices to create sustainable change.
- Read our tips on business sustainability.
FAQs on sustainability grants and loans
What are the four types of grants?
While there are seemingly endless sorts of grants available for a variety of different purposes, there are actually just four main types of grant funding and each is structured in a different way.
These are:
- Competitive
- Formula
- Continuation
- Pass-through grants.
Who funds sustainability research?
Most sustainability research is funded by government grants, companies doing research and development, and non-profit foundations or non-governmental organisations.
The UK Research Councils (UKRI) organises research council grants, quality-related block grants from Research England, and grants and wider support for innovative businesses from Innovate UK.
Sustainability Hub
Explore how your small business can create a robust sustainability strategy, save money, and attract more customers by visiting the Sustainability Hub.
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