Business Grants: What, Why, and How to Apply ?

Between 2020 and 2021, the UK government spent £7.8 billion on business grants, targeting businesses that had to close during the pandemic. Small business grants for 2023 will again be extended in line with the amended Local Government Finance Act 1988.

But what is a grant in business, and are there business grants for women? Do you have to pay back a grant, and when does it make sense to take a business grant? Keep reading to find out.

What is a Grant in Business?

Business grants are non-repayable financial aid provided by government agencies and philanthropic foundations to businesses that need money. The main advantage of a__pplying for a grant__ over other funding options is that you don't have to pay the money back, and you don't have to give away any equity.

Depending on the type of business grant you are applying for, you could get the money in the following ways:

• Reimbursed after you've spent your own money
• Receive a lump sum upfront
• Match the value of the grant before receiving it

Small business grants can be difficult to obtain because they target specific types of companies. For example, grants may be focused on specific geographic regions, industries, business types, or community groups. There are also specific business grants for women, so other business owners may not qualify.

Some factors that can affect your chances of getting a small business grant are:

• Location
• Size of business
• Sector/industry of your business
• Business objectives

Types of Business Grants

• Direct Grants: Small business grants often come in the form of direct funding, which is provided directly to a business to support the cost of a specific project.

• Resource Grants: Business grants, like Innovation Vouchers, help small businesses get the resources they need to develop projects.

• Tax Reliefs: More often than not, the UK government provides tax relief schemes to small businesses, such as those offered in the wake of the COVID-19 pandemic.

Soft loans are another option for small businesses, but they are technically not grants since they need to be paid back. However, the repayment terms for these loans are often more generous than other loans, and the interest rates are low.

When Does it Make Sense to Take a Grant?

Grants are highly competitive, so it's important to have a well-written, compelling proposal that clearly explains your goals and how you plan to achieve them. It makes sense to apply for a business grant if you find yourself in one of the following situations:

• Objective: Grants are usually given for specific purposes such as community development, research, or education. Consider why you need the money and if you have a strong proposal for it.

For example, if you just want money to hire people, it might not make sense to apply for a grant, but if you want to expand, a business loan might be a good idea.

However, if you are a small business or non-profit organization with limited financial resources, you might be able to find a grant that will help you achieve your goals without taking debt.

• Timeline: How soon does your business need the money? If you are okay with waiting for a few months, applying for a grant won't hurt. Grants typically have an application period of several months, so be prepared to wait if you're applying for one.

The competition is fierce, as there are many businesses looking for grants and only a few small business grants available.

• Funds: Most grants require businesses to put up 50% of the money for the project they are taking a grant for. Make sure you can put in the remaining 50%.

• Mission and Values: If the grant aligns with your mission and values, it makes sense to apply for one, seeing as you are more likely to use the funds effectively and with integrity.

• Requirements: If you can meet the eligibility requirements, including any deadlines and reporting requirements, it makes sense to apply for the grant. The eligibility requirements of small business grants differ as per the grant, so make sure to read the documentation properly.

How to Apply for Small Business Grants ?

The best ways to apply for a government business grant in 2025 are as follows:

• Find a grant you’re eligible for: You can use the business finance support link to apply for the government business grants you are eligible for.

• Research: Once you’ve chosen the grant, read the objectives of the grant. Figure out if the time frame of the grant would be okay for your business needs. If possible, contact the awarding body to assess your chances of winning it.

You also want to verify whether you would be able to produce the remaining 50% of the funds for the project.

• Apply: For applying for the grant, ensure you are presenting your business plan, organizational history, and work plan. Ensure your application matches the objectives of the grant and how your business can help the organization meet their objectives.

Takeaways

Applying for a business grant can be a wise choice for small businesses and non-profit organizations with limited financial resources. With the government and philanthropic foundations offering non-repayable financial aid, small businesses can achieve their goals without taking on debt.

The eligibility requirements for business grants vary, but it's important to research, understand the objectives, and present a well-written proposal that matches the grant’s goals.