If you’re a small business owner or thinking of starting a business, finance is probably your biggest concern. You may be wondering if there is any funding available for start-ups.
We’ve prepared a overview some useful grants to apply for.
Accelerating Commercialisation Grants offer ventures up to 50% of expenditure on a project, which is capped at $250,000 for commercialisation offices and eligible partner entities, and $1 million for other applicants.
The R&D tax incentive aims to help all businesses stay ahead of the curve through a tax offset that encourages innovation in even the smallest ventures.
From July 1 2016, companies with an annual turnover under $20 million can claim a 43.5% refundable tax offset against R&D expenditure that amounts to $100 million or less.
The VCLP programme aims to draw in foreign investors to Australia and boost the local VC market with tax benefits.
To be eligible, funds must register as a VCLP under the Venture Capital Act 2002 and make high risk investments that hold for at least 12 months.
The investments must be in ventures where total assets are valued under $250 million, 50% of assets are located in Australia and 50% of employees are also located here.
Horizon 2020 (H2020) is the largest ever European funding program for research and innovation. It has a budget of 79 billion euros and will run until 2020. Its aims are to:
- ensure that Europe produces world-class science
- remove barriers to innovation
- make it easier for public and private sectors to innovate together
Types of business support
All publicly funded schemes are designed to encourage new and growing businesses, to bring wealth and ultimately create jobs. To help achieve this the government makes available a portion of taxpayers’ money to help and encourage enterprise through small business grants.
This cash gets distributed through a variety of ministries, departments, agencies and quangos on a national and local basis. Most businesses are eligible at any one time to apply for a number of different business start-up grants and support schemes which are distributed in a wide variety of forms.
Government grant resource the ‘business finance support finder‘ is a great tool to help those starting a business find relevant funding to suit their needs and you are able to customize your search by your business location, size, and type of business activity.
Want to read more on grants?
Government business grants available
This is a cash award, which is usually given out for activities such as training, employment, export development, recruitment and capital investment projects. With a direct grant most schemes usually require the company involved to put up around 50% of the cost.
The government’s ‘business finance support finder’ directory has over 300 direct grants agencies listed such as UK business “innovation” organisation the Technology Strategy Board. The directory also features various local grants providers which are facilitated by the government’s £3.2bn Regional Growth Fund, such as Catalyst for Growth which has direct grants of £5,000 to £500,000 available for chemical start-ups launching in the North West of England.
A soft loan is a special type of grant where the terms and conditions of repayment are more generous (or softer) than they would be under normal financial circumstances. So, for example, the interest rates may be less, or there may be no interest to pay at all, and the repayment terms could also be for a longer period.
There are hundreds of organisations that offer soft loans and guarantees but the most notable is government-funded scheme Start Up Loans which offers new businesses loans of up to £25,000 for 6% interest with a 12 month repayment “holiday”. To date it has helped to fund over 10,000 start-ups with over £50m invested. You can find out more about the Start Up Loans scheme here. (If you need a higher value business loan, fill out our business loans form and we may be able to put you in touch with the right people).
If you’re starting a social enterprise or charity there are organisations such as Big Issue Invest, the investment arm of the Big Issue, which has soft loans from £50,000 to £1m available for positive impact, socially-driven entrepreneurs and also operates ‘participation loans’ where repayment is linked to future performance of the enterprise.
For young entrepreneurs aged between 18-30, The Prince’s Trust provides soft loans of up to £4,000, as well as support for your business idea, with interest capped at 3% and repayments spread over a period of two to five years.
With equity finance a capital sum is injected into the business and the provider of the funds takes an equity share of the enterprise. When the value of the firm increases the stake can then be returned. However, unlike venture capitalists, the expectations and requirements of the providers of public funds are usually less demanding.
It is also worth noting the government Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) which help companies raise finance by providing tax relief to investors who buy a share in your business.
Free or subsidised consultancy
Start-ups can often find themselves in the situation where they are lacking a particular set of skills and there are some specially run schemes which provide this knowledge either for free or at subsidised rates. For instance, the Welsh government runs a business support service offering free, independent advice on starting a business and operates an instant hotline for business queries.
Access to resources
As with a lack of skills, it can be the case that start-ups do not possess the physical resources or facilities they need in order to develop particular projects. In the same way there are a number of initiatives, particularly incubator and accelerator schemes, that can help overcome these concerns by providing access to publicly owned facilities. One such initiative is the department for business, innovation and skills’ (DBIS) GrowthAccelerator which provides advice and coaching to fast-growth businesses with fewer than 250 employees.
Technology and Best Practice transfer
The transfer of technological advances and new best practice initiatives can often take a long time filtering down to smaller businesses. The government has set up schemes which aim to overcome this through business support networks and there is now a number of well-established best practice initiatives such as Investors in People (IIP), which specialises in business tools and resources.
When it comes to research and development, the costs involved can prevent small firms from taking part. However, by sharing the costs with other businesses, and then sharing the expertise, this problem can be avoided.
To find out more about grants for starting a business, visit our dedicated small business grants channel here.
More about UK grants you can find here