What is a business grant?
A business grant is an amount of money given for a purpose or specific project that a company does not need to pay back (unless it breaks the terms of the grant).
What are the benefits?
- Capital – The business will get a non-repayable sum ranging from several hundred pounds to hundreds of thousands. This can help with growth or a specific project.
- You will not have to compromise any plans with shareholders or give up any equity.
- Gaining a grant can give confidence to banks and investors.
- It will also give you validation – a large company has thoroughly examined your ideas and your project and has decided the plans are secure enough to warrant the funding.
- If you are after R&D grants, some companies will do a patent search for you, which will save you money and time.
- A grant will also force you to structure your work. You will need to have detailed plans and deliver them on time and fairly regularly.
- Once you have secured a grant, you have the experience and relationships that make it easier to get another one.
What are the disadvantages?
- The majority of government grants expect you to come up with some of the money yourself – as a rule of thumb, think 50%.
- In some instances, you will only get the grant after a certain amount of work is completed, so you will need enough money in the bank to cover the costs until then.
- The grant will need to be used for a specific project, rather than simply spreading it around your business.
- If you are researching what grant is right for your business without help, it can take a good few working days.
- Depending on the provider, the application can take from a few hours to months to complete. The applications range from a few pages to hundreds of pages.
- Competition is typically very high.
- Often in the application you will need to explain how your project will benefit a wider audience – either social, environmental, economical or otherwise.
- If you do not stick to the plans on your application, you may get your grant revoked and you will have to pay everything back.
- Flexibility is limited as you will have to stick to your original plans.
- You will need to stick to deadlines.
- You won’t get any advice as you would from private investors.