Grants for your business

It is extremely rare for a grant to finance 100 per cent of the costs of any project.

Grants typically cover 15 to 50 per cent of the total finance required for a project.

The normal, organic process of company development does not usually qualify.

You will probably need to show how the project ties in with the strategic direction of your business as outlined in your business plan. (See Writing a business plan).

The project must not be under way already.

The project must help towards achieving the objectives of the grant provider - usually a department or agency of local, national or European government.

In most cases, you must be able to demonstrate that the project would not take place and achieve the same benefits without the grant.

UK Trade & Investment offers funding to help exporters, as well as a range of charged-for, but subsidised, services.

Contact your local Business Link or UK Trade & Investment (020 7215 5444 or www.uktradeinvest.gov.uk).

The Government's LINK programmes support partnerships between UK companies and research organisations which develop products and processes in a range of technology and market sectors.

Visit www.ost.gov.uk/link or call 020 7215 0053.

The European Commission's CRAFT programme provides funding to small and medium-sized businesses wanting to take part in EC research framework programmes in the field of science and technology. Visit sme.cordis.lu.

A range of funding is available under the Small Business Service's R&D Project Grants scheme, which replaces the Smart scheme. The scheme's awards process places increased emphasis on proving your company's financial health.

An associated grant to investigate an innovative idea, to help businesses prepare for innovation has also been launched.

Call 0845 600 9 006 or visit www.businesslink.gov.uk.

Businesses in Wales wanting to develop new products and processes can apply for grants of up to �25,000.

Contact Regional Innovation Grants (029 2082 8730).

For example, the government-backed CleanUp initiative provides funding of up to 75 per cent of the cost of fitting emissions-reduction equipment to polluting vehicles (www.cleanup.org.uk or 0845 602 1425).

Assistance is generally provided through Business Link and the Learning and Skills Council.

These areas include those in general industrial decline, those where major traditional industries such as steel, coal, textiles and fishing have collapsed, and some rural areas and inner-city areas.

There are several different tiers of funding which reflect the relative economic needs of different regions.

At present Cornwall, Merseyside, South Yorkshire and West Wales and the Valleys get the most support.

Businesses in areas which receive high levels of support may be able to apply for Regional Selective Assistance, which provides partial funding towards projects with a fixed capital expenditure of over �500,000 in England. Different levels of funding are available elsewhere.

Apply for a Regional Enterprise Grant if your capital requirements are less than this.

Projects will only qualify if they create jobs or safeguard existing ones.

Industries that may receive specific support include rural diversification, crafts, tourism and agriculture.

A lot of government support is targeted at growing businesses, rather than one-man bands.

Local support (eg subsidised rent and rates) is often available to encourage small businesses to start up in particular areas.

Ask for a list of grant schemes (including contact details) your project might qualify for.

A business adviser will probably be available to help you narrow down the range of schemes.

These might include your bank, your trade association or the Department of Trade and Industry.

There are a number of free and subscription websites that list available grants.

By answering a few questions you can pinpoint a shortlist of grants that you might qualify for. Try www.j4b.co.uk, www.grantnet.com and www.governmentfunding.org.uk.

The European Commission.

Avoid calling the Commission's main switchboard.

Instead, send an email or phone the section which deals with the scheme you are interested in, using the contact details provided by Business Link.

Government departments, such as the Department of Trade and Industry, and the Department for Transport, Local Government and the Regions (DTLR).

Business Link, local councils or Regional Development Agencies.

It is probably worth paying for help to apply for any grants potentially worth �50,000 or more.

Experts can help you to 'model' your project so that it is more likely to meet the qualifying criteria of the grant.

Some accountants and consultants are grant experts. Check their experience of successfully obtaining grants for businesses similar to yours.

Negotiate the fees.

Flat-rate fees may seem less expensive in the first instance, but must be paid even if you do not get a grant.

You will get advice on whether it is worth applying.

You can often get help to complete the application form.

Are funds still available under the scheme?

Will funds still be available by the time your application has been processed?

When are grants handed out?

Some schemes only pay out money to successful applicants once a year.

What does the scheme aim to achieve?

It will help to know what sort of projects have been funded in the past.

How long is the application process, and what does it involve?

This usually involves filling in a form.

If you are awarded a grant after a long delay, and the situation has changed since your initial application, it may be possible to adapt and refine your project idea.

These benefits must fit in with the aims of the grant scheme.

They might include specific benefits to the local community, to the region or to your industry or a potential increase in British exports.

This should include full costings.

Explain how your own background, experience and expertise make success probable.

If there seems to be a significant risk of the project failing, you are unlikely to be given a grant.

You might have to wait to be reimbursed, so you may need to make arrangements for a bridging loan.

In instalments, at fixed periods.

In arrears, against proof of actual expenditure.

With some payments up front, and the rest as you meet the stipulated requirements at each stage.

For example, a payment might be conditional on the project employing a certain number of people.

This may involve visits to your premises, or you may have to visit them to present a report.

There may be a final audit before you are given the last payment.

You may have to wait up to six weeks for a decision.

Such grants generally involve simple application procedures.

You are usually able to submit a relatively simple Stage 1 application in the first instance.

This enables the grant provider to assess whether your project stands a serious chance of being funded.

A Stage 1 application form will only be two to five pages long, but it can take two or three days to prepare, because you must include costings.

You can then decide whether or not to proceed with a full Stage 2 application.

A Stage 2 form is usually 15 to 25 pages.