Both the UK Government and the EU are keen to encourage SMEs to expand – this gets more people into work and increases the tax take for the Chancellor of the Exchequer.
There are literally dozens of business grants and support schemes which are available to businesses but to be successful in their application businesses need to make a strong case which places severe time demands on the directors. As well as the initial business case there are also further demands to ensure that the various administration processes are fulfilled to claim the stage payments. With many extra rules and special conditions specific to certain regions and a minefield of selection criteria to overcome it is not a process to be undertaken without specialist guidance.
What are Grants?
Grants are: “a form of non-repayable financial assistance given to an organisation to undertake or continue activities which it could not carry out without that support”.
Generally grants for small business are paid quarterly in arrears (after expenditure) and will only be for part of the total cost (typically between 35% and 50%) of the particular project – so they require some financial commitment form the company. A business will not be required to repay a grant, the award is interest free, crucially no security is required and there is no dilution of equity or intellectual property rights. Whilst a grant is effectively “free money” it is important to understand that you will need to fund the part of the project that is not grant-assisted and be able to prove that you can do so.
How much can I get?
How long is a piece of string? – well it’s actually anywhere between £5,000 to £500,000. The amount of grant will be determined by the type of grant scheme, the specific nature of the project and the size of business. The good news is that many grants are specifically targeted at small and medium size businesses (SMEs).
What kinds of projects are supported?
It may be invest in capital equipment, to improve manufacturing processes or build a new plant to increase throughput and create new jobs, to assist in achieving CO2 emission reductions or to undertake innovative research and development. Crucially to qualify, the project you are seeking investment for must meet the grant criteria. MAS grants (Manufacturing Advisory Service Grants) used to be only available for manufacturing process improvement but have now been expanded so that a MAS grant can cover most areas including sales marketing and product innovation. The landscape is constantly changing and our business consultants can provide details of the kost up-to-date grants available.
What’s involved in a grant application?
In the vast majority of cases you will be required to prepare a comprehensive proposal including a project plan, technical work plan, detailed cost breakdowns, resource summaries, marketing plan, business plan, and project business cash flows. You will also need to show evidence of your financial ability to fund your share of the project.
Are there restrictions on business grants I can apply for?
There is no fixed answer – grant applications can occur during fixed funding rounds, they can be in response to a specific call for proposals, or a continuous rolling programme. Grants for starting a business are available as are UK small business grants for established companies.
How long does it take?
A fairly typical timeframe would be about six to eight weeks to prepare the application and about the same again for the application to be assessed by the awarding organisation.
What are the chances of success?
It does depend very much on which grant scheme it is but we would expect most awarding bodies to approve between a third and a half of all applications – and the better prepared the proposal the more likelihood of success. By comparison the normal rate for a venture capital investor
Grant schemes vary tremendously, but it’s not unusual for an awarding body to award between 35-50% of applications. That’s a far greater proportion than a typical venture capital investor would invest – less than 2% of their applications are approved.
Signa Business Advisers can put you in touch with one of our grant specialists who will guide you through various options available and assist with both your application and the administration of the claims once your grant is approved.
If you would like more information on how Signa can help please call us on 01494 562738 or send us a message.