Navigating grants for startups and small businesses

Business grants and other types of financial support are available to startups and small businesses across the country. In this guide, we’ll explain where to find grant funding, how to apply and answer some other frequently asked questions.

What is a grant?

A grant is a sum of money awarded to an individual, business or organisation by an awarding body, with the agreement that the money will be used for a specified purpose. 

While some other forms of funding - such as business loans - have to be repaid, there is usually no requirement to repay a grant, as long as it’s used for its intended purpose. However, some grant bodies will also require the applicant to match the amount of funding they receive.

Where to find information about grants for startups and small business

Grant funding is available for everything from getting a startup off the ground to helping businesses reduce their carbon emissions or lower their energy costs.

Some grants are available nationally and others are awarded by local bodies to businesses in specific regions. If you’re looking for grant funding for your business, the government’s website has a list of grants, loans and other support available in different parts of the UK.

Wherever your business is based, it’s also worth checking the website of your local authority (such as your city council) to see if any grants are available for businesses in your region.

Grants for businesses in Scotland, Wales and Northern Ireland

If your business is based in Scotland, Wales or Northern Ireland, it’s also worth checking to see if any grants are available from the relevant devolved government. 

Scottish Enterprise offers support to help businesses in Scotland find and access funding. It also offers some grants of its own. Further information about grants and funding for businesses in Scotland is available on the Scottish government’s website 

Businesses in Wales and Northern Ireland can find out about grants and funding on the Welsh government’s website and the Invest Northern Ireland website.

How to apply for a startup or small business grant

As different grants are awarded by different government bodies and organisations, the application process can vary greatly between grants. The website of the organisation awarding each grant should be your first port of call for information about the application process.

Whichever grant you aim to pursue, here are a few things to keep in mind when making your application:

1. Check the eligibility criteria

Before you start any grant application, be sure that you meet all of the eligibility criteria. If you’re in any doubt about whether you’re eligible, it’s a good idea to contact the awarding body to find out before you make your application. 

2. Align your application with the purpose of the grant

Whether it’s helping to grow the local economy, restoring a local high street or reducing carbon emissions in a specific area, the majority of grants are created with a purpose. Take the time to understand the purpose of the grant you’re applying for and ensure that you can explain how your application aligns with it.

3. Review your business plan before applying

Presenting your chosen grant’s awarding body with a compelling, professional business plan could help to strengthen your application. Check out our guide to writing a great business plan to learn more. 

Some frequently asked questions about business grants

What’s the difference between a grant and a loan?

The main difference between a grant and a loan is the requirement for the money to be repaid. A loan requires successful applicants to repay the money, while a grant usually does not.

Are business grants taxable?

Grant payments are often taxable as they’re a form of income. If you’ve received a grant and are in any doubt about whether you need to declare it as income on your tax return, check with an accountant.

Do business grants affect Universal Credit?

Grant payments are usually treated as a form of income. If you usually receive Universal Credit and you secure a business grant, there’s a chance that it may affect your Universal Credit eligibility. Your work coach should be able to tell you about what income will affect your Universal Credit claim, so it’s worth checking this before you apply for a business grant.

Manage your business finances with Freeagent

No matter how your startup or small business is funded, FreeAgent can help you manage its finances. Our small business dashboard brings together your cashflow, expenses, bank accounts and more, helping you stay on top of your admin and see the bigger picture. Get your own business dashboard with our 30-day free trial.

Disclaimer: The content included in this guide is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this guide. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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