Business grants are one way to secure capital when your small or start-up business needs it most. Unlike loans, they don’t usually need paying back. This helps businesses minimise financial risk while innovating or expanding.
And while that may sound like a great way to inject funds into your business, be aware that there aren’t a huge number available. Also, you will need to meet strict criteria before you can access such grants.
The rules might also state that if you don’t use them as designed, the money may need to be repaid. So, don’t think that it’s an easy or guaranteed way of funding your business without interest or repayments!
While there are national and government grants available across the UK, some areas also have specific pots of funds to help SMEs and start-ups from other organisations.
Grants are one way that business are funded. We’ve looked at 5 other ways to fund your business in a previous blog.
With forecasts showing the economy is growing at a snail’s pace, businesses are under pressure when it comes to cash flow. Accessing grants might, therefore, be useful for your small or medium sized business.
So, what do you need to know about business grants and which ones are currently available (Sept 2024)? Let’s take a closer look…
What business grants are available?
Grant funding tends to be targeted towards certain aspects of business. It usually includes:
- Innovation
- Exports
- Environment and energy
There are often grants available for businesses in other areas. The biggest challenge is usually keeping track of what’s new, and knowing if you’re eligible. Eligibility is usually the biggest hurdle. But don’t discount grants as they can be a useful source for a cash injection.
Grants, which are primarily funded by national or local governments, are often also created for specific sectors. This includes start-ups, growing businesses and those looking to employ new people.
There are a host of business grants, and the government lists what is currently available in the UK. But here are five of the most popular grants currently available.
Innovate UK
Innovation is seen as an essential part of economic growth. To help, Innovate UK offers grants to businesses that are planning research and development for new products, processes or services. They can also be used to fund improvements to existing ones. This includes collaborative research (domestically or internationally) and feasibility studies and is aimed at innovation-driven companies.
Check out the Innovate UK website for details and to apply.
Seed Enterprise Investment Scheme
Often known as the SEIS grant, this is a government initiative to help companies raise equity finance by offering tax relief to investors who buy shares in the companies. The scheme can provide up to £250,000 for SMEs. Eligible businesses must meet a number of criteria, including having less than £350,000 in gross assets and employing fewer than 25 employees.
Prince’s Trust Enterprise Programme
Most people have heard of the Prince’s Trust. The Trust supports young people. In the case of the Enterprise Programme, it is aimed at entrepreneurs aged between 18 and 30 who are unemployed or working fewer than 16 hours a week. The programme offers grants of up to £5,000. You also receive mentoring and support to start and grow your business.
UnLtd Social Enterprise Funding
If you run a social enterprise, you could apply the UnLtd Social Enterprise Funding grant. There is up to £8,000 available for social businesses running for less than a year and £18,000 for those trading for one to four years.
R&D Tax Credits
Research and Development tax relief isn’t a grant as such, but can provide free funding if your business is trying to innovate in science and technology. The relief can be used to either reduce a company’s corporation tax bill or provide a cash sum as part of the corporation tax return. We have looked at R&D tax relief before, so here’s a link to our blog that explains the rules in more detail.
Recording grants in your accounts
Grant funding should be recorded as income in profit and loss accounts. Any grant income that relates to future expenditure is deferred in the accounts for a number of years. This enables you to enter the grant on the balance sheet. At a later date, you can release the sum to the profit and loss account when the money is spent.
Grants to purchase machinery, capital equipment and other fixed assets should be deferred and released to the profit and loss account. All grants are usually classed as taxable income for corporation tax purposes.
If you want to know more about accounting for grants, then we can help. Contact our team today.
