Sally Percy, journalist

With the UK heading towards recession, small and medium-sized enterprises face challenging times ahead. Many businesses are already anticipating cash and liquidity challenges as they navigate the lengthy downturn that has been predicted by the Bank of England.

In fact, research by financial comparison website NerdWallet has revealed that one in three small businesses say their survival is dependent on accessing finance by the end of the year.

Traditionally, SMEs have often turned to loans and business credit cards to secure the finance they need. Yet grants can also be a good source of funding – and unlike loans and credit cards, they have the advantage that they don’t need to be paid back.

The rising cost of gas and electricity is a major concern, so many businesses will be interested in energy grants

There are a number of grants that accountants will want to be aware of when advising their SME clients on available funding options. Here are some of the most useful.

Business energy grants

The rising cost of energy is a major concern for businesses as well as consumers, so many businesses will be interested in energy grants. Gas and electricity regulator Ofgem has published an online guide to help small businesses locate energy grants, schemes, and advice on lowering carbon emissions and efficient energy use.

Innovation competitions

The government’s Innovation Funding Service enables businesses to apply for funding through ‘innovation competitions’. Eligibility criteria vary depending on the nature of the competition, but funding is allocated to support innovation within certain sectors and to help solve specific business problems, such as competitiveness and productivity. There are also awards for female innovators.

Knowledge Transfer Partnerships

Knowledge Transfer Partnerships (KTPs) connect UK businesses and not-for-profit organisations with universities and qualified graduates, with the aim of driving innovation and solving real-world challenges.

They are part-funded by grants, with a typical KTP project delivering a package of support valued at around £80,000 to £100,000 annually.

Typically, 67% of project costs are covered for micro, small and medium-sized businesses, with the businesses themselves needing to fund the remaining cost of the project.

National Lottery Community Fund

The National Lottery Community Fund, as the name suggests, distributes funds raised by the National Lottery. It gives grants to UK organisations that are helping to improve their communities, offering smaller grants of between £300 and £10,000, as well as larger funding packages of up to £500,000.

Some grants are reserved for projects that have very specific social outcomes, such as empowering young people and helping those in challenging circumstances.

Power to Change

A charitable trust, Power to Change, supports community businesses in England to create places that are better to live and work in. It offers a number of programmes for community businesses, including programmes that focus on financial capability and future planning.

It also co-funds the Community Shares Booster Fund, which provides development grants of up to £5,000 to community businesses that are at any stage of a community share issue.

UK Tradeshow Programme

The government’s UK Tradeshow Programme helps businesses to exhibit at an overseas trade show. It provides training on how to successfully exhibit at tradeshows and offers grants of either £2,000 or £4,000, which can be used to cover the costs associated with exhibiting.

A host of business and start-up grants are available to SMEs, often based on geographical location

The programme is open to businesses that plan to exhibit at a tradeshow for the first time or wish to venture into new markets, have a turnover of between £250,000 and £5m, and have not committed to attending the event before applying for support.

Additionally, the programme offers support for businesses that wish to attend an overseas trade show.

And as well as the schemes described above, a host of other business and start-up grants are available to SMEs, often based on geographical location. See the government’s website.

SMEs that are working on innovative projects in science and technology should also aim to make use of research and development (R&D) tax relief.

Businesses that qualify for SME R&D relief can deduct 130% of their qualifying costs from their yearly profit, as well as the normal 100% tax deduction, creating a 230% deduction in total. They can also claim a tax credit if the company is loss-making.

Getting the right fit

Rhiannon Philps, personal finance expert at NerdWallet, believes there are two important considerations for business owners to bear in mind when applying for grants.

The first is to ensure that their business meets the eligibility criteria of the grant. Secondly, the grant should align with their future plans – for example, if they are applying for a growth grant, their business should have growth plans in place.

‘It’s important to think about both the short and long-term goals of the business and then look for the grant that fits with those goals,’ she says.

Philps notes that while the application process can be arduous, grants do bring considerable benefits. ‘Grants exist to help businesses,’ she explains. ‘They can help a business grow, develop and expand – which, in turn, helps the economy.’


Help to Grow

The government’s Help to Grow scheme offers management training and discounted software to encourage SMEs to boost their innovation and productivity.

The management scheme is open to UK-based businesses, including social enterprises, that have been operating for more than a year and have between five and 249 employees.

As well as training on topics such as financial management and marketing, it provides mentoring and support with developing a business growth plan. There is a £750 joining fee.

The digital scheme is open to UK companies with between one and 249 employees that have been actively trading for over a year and are purchasing software for the first time.

Under the scheme, eligible businesses can get a 50% discount on approved software, including accounting and customer relationship management software, up to a maximum of £5,000.