Whether you want to set up a business or help an existing business grow, the UK has a few small business grants designed to help you succeed.
Depending on where your business operates, what industry you’re in, and even how old you are, the UK government’s website lists over 100 grants that small business owners potentially qualify for.
Here, we’ll take you through some of the most important small business grants you should know about. Choose from grants for start-ups, grants to help your business combat climate change, and grants designed to mentor young entrepreneurs.
Read on to discover how they work, how to apply, and what to have in place before you do.
What are small business grants?
A small business grant is money awarded to help you achieve something for your business.
For example, your region might offer funding to help you run your business in a more environmentally sustainable way or to create jobs for the local economy. You might also be able to get a grant to fund research and development for a new product.
Some grants are allocated based on an application form you send to the awarding body, while others (for example, the UnLtd Grow It Award of up to £15,000) are more like competition prizes. Other grants go hand in hand with mentoring, which means you’ll work with a more experienced entrepreneur who will give you the best possible chance of making your business successful.
Grants are different to small business loans because you don’t have to pay them back, but you’ll have to show that you’re using the money for its intended purpose.
Some grants also work with a system of “fund matching”. For example, you might get a grant of £2,000, but you have to show that you’ve invested the £2,000 in your business. This means that, if you want to pursue funding in this way, it’s important to work with an accountant to track how you spend the money.
UK small business grants to know about
Let’s start with a list of grants that are open to small and medium enterprises in different sectors. Many of these grants are funded in part by the UK government.
UK government grants
- Apprenticeship funding: The government may be able to help you pay to train an apprentice. This funding can cover up to 95% of their training fees and provide additional cash to support an apprentice under the age of 18 or 25, depending on their background.
- The Tradeshow Programme: Here, eligible UK businesses that want to export their products can apply for financial support (grants of £2,000 or £4,000) to make it easier for them to exhibit at trade shows in other countries.
- Broadband installation vouchers: Small and medium businesses in rural areas can get “Gigabit Vouchers” to cover some of the cost of installing high-speed broadband.
- Electric vehicle grants (AKA plug-in van, taxi, or wheelchair-accessible vehicle grants): To accelerate the uptake of electric vehicles, there’s also funding to support car dealerships selling electric vehicles, and to support businesses as they switch to using EVs. For example, taxi companies may be able to claim up to £7,500 to buy new electric cars.
- The National Lottery Heritage Fund: The Heritage Fund offers grants starting from £3,000 to protect heritage — the historical and environmental sites that we should preserve for future generations. There are also several funding options for creating or protecting woodland areas.
- The Arts Council National Lottery Project Grants: These grants are for publicly funded art and aim to encourage creativity and culture.
Grants for 18 to 30-year-olds
Young people starting out in business may also be eligible for grant funding to help them access the resources they need to get their ideas off the ground — especially if they work in social enterprises.
- The Prince’s Trust: The Prince’s Trust offers training, mentoring, and funding (in some cases, start-up business grants instead of their usual low-interest loans) for young people who want to start a business.
- Spaces 4 Change from UnLtd: This grant is for groups or individuals who want to improve their local area by taking charge of vacant spaces in their communities. It’s primarily aimed at social ventures, and the funding is up to £5,000.
Business start-up grants
Start-ups can be uncertain places to work, and those early months and years are critical. Financial help and mentoring can help a start-up develop into an established business.
- Innovate UK: Innovate UK is part of the UK’s Research and Innovation body, and awards grants to new businesses in different industries that are trying to break new ground with their projects.
- The Seed Enterprise Investment Scheme (SEIS): The SEIS is a venture capital scheme for companies that are new to the stock market. The funding offered is up to £150,000.
Grants for research and development
If your small business is innovating in the fields of science, technology, or medicine, there might be a grant to help fund your work.
- R&D tax relief: While not strictly a grant, it’s worth knowing that researchers can claim tax credits on the money they spend on development projects, provided they’re trying to advance their field and break new ground. Equipment for your studies or the salaries of the staff running your project, for example, can be treated as deductibles in your tax return.
- Knowledge transfer partnerships: If you work in technology or industry, you can also get funding to bring a graduate into your business to help with an innovation project. These schemes are largely run through Innovate UK and Local Enterprise Partnerships (more on this later). The goal is to apply their academic thinking and expertise to help drive business growth and development.
- The Eureka Eurostars Scheme: For start-ups that want to collaborate with universities or research centres, Eurostars can also help to fund R&D. Even post-Brexit, the UK is still counted among the 37 Eurostars countries.
- CRACK IT: CRACK IT Challenges award funding contracts to applicants who can solve a challenge that’s often related to medical research and development. For example, a 2022 challenge focused on improving research techniques for conditions relating to the thyroid.
There are also more than 30 innovation competitions listed on gov.uk, many of which aim to encourage collaboration between different organisations, sometimes internationally.
How to find small business grants by country
A good place to start searching for regional grants in England is to find your nearest Local Enterprise Partnership (LEP). These 38 hubs are designed to help local businesses connect with experts in the public sector, third sector, and academia to deliver on the government’s economic growth agenda in local authorities. So far, they’ve supported 2 million businesses and created over 180,000 jobs.
There are lots of opportunities for environmental grants here, including The CO2 Utilisation Challenge and The Green Heat Innovation Support Programme. You can also apply for a SMART:SCOTLAND Grant for research and development, and there’s Regional Selective Assistance (RSA) funding for businesses that want to generate income or create jobs in certain areas of Scotland.
Check out the Business Wales website to see your options for Welsh small business grants. The funding locator can help you figure out your options for grant funding and other sources of financial help.
Your first port of call is the Enterprise Ireland Website. The main categories here are:
- Crisis response: Helping businesses to survive crises like increased energy costs, environmental challenges, and the impact of Brexit.
- Green transition: Helping small businesses keep pace with NI’s decarbonisation goals.
- Digital transition: Helping companies to bring the latest communications technologies into their workplaces so they can compete on the European level.
What to know before you apply for a small business grant
The application process can be time consuming
You’ll usually have to submit a detailed business plan with your grant application. And just like when you’re applying for a job, it can help if you tailor your application to each grant organisation you apply to.
If it seems overwhelming, you may be able to ask the awarding body for more details about what they’re looking for, or ask another businessperson in their network if they have any advice.
You should work with an accountant
Small business grants can give your project a fantastic boost, but they can make your tax return more complicated.
If you want to get a grant, it’s probably time to start working with a professional accountant. They’ll be able to make sure that you’re keeping the right records of how you spend the money, helping you avoid the possibility of having to pay the grant back because you can’t show that you used the money as intended. What’s more, an accountant should also be able to give you advice about which grants you could apply for.
You should apply early
Some grants have opening and closing dates each year, while others let you apply at any time. Either way, once you have the time to prepare your application, it’s a good idea to apply as soon as possible. This is because small business grants are usually awarded from a finite pot of money. Once the money is allocated to a certain number of businesses, there won’t be any more funding until the following year.
Business funding for SMEs: A summary
Small business grants can be a helping hand if you want to make your business ideas become a reality, whether you’ve gone as far as you can on your own, or you need help covering the costs of expanding.
The grants you’re eligible for will depend on your age, your location, and your business goals. A good place to start researching is the government’s business finance support tool, or you can ask your accountant or local authority about what schemes you might be eligible for.
What grants are available for sole traders in the UK?
Sole traders may be able to apply for grants and small business awards even if they don’t have any employees. This is particularly true for social enterprises and smaller community-based projects where there are lots of funding opportunities, but it’s unlikely that a scheme is being run by a large team. Self-employed people in rural areas are also eligible for Gigabit Vouchers to help them install high-speed broadband in their homes.
Do you have to pay back a small business grant?
The main difference between loans and grants is that you don’t have to pay back a small business loan. However, it’s also important to note that a business grant is not free money. If you don’t meet the terms and conditions of your grant, you may have to give back the money in full.
Do I have to pay tax on grant funding?
Put simply, yes. Although the grant has to be used for a specific purpose, it still counts towards the total income for your business in that tax year, so you’ll still have to pay tax on the money you receive.
You should aim to work with a professional accountant to make sure that you’re keeping track of how you spend your grant money, and so they can help you complete your tax return accurately.