EVERY entrepreneur who sets out to start a business dreams of getting some
kind of free funding. But in reality, grants are neither easy to come by nor
liberally handed out.
There are some available, but it can be a bit of a lottery as to who receives
them. Applicants must hit the jackpot both geographically and by business
sector.
As a rule, grants are there to benefit their provider as much as the
recipient, which means they tend to be focused on the needs of a particular
area. For this reason, the money available for start-up businesses varies
enormously according to region.
If you happen to be situated in east London, for example, you could be in
luck. Barking and Dagenham Small Business Centre is a participant in the
government-funded Local Enterprise Growth Initiative and has overseen the
birth of 135 businesses since it opened in January.
The centre offers two grants for start-ups in the area. To be eligible for a
£1,000 award, entrepreneurs are obliged to complete a four-step process.
They must visit a business counsellor, attend a four-day course, submit
detailed business plans and register with the Inland Revenue. An additional
£2,000 is available for former claimants of incapacity benefit.
Hasnat Ahmed received a grant of £1,000 from the centre, enabling him to start
up his printing business, Mayaseed. Ahmed decided to become self-em-ployed
after experiencing problems with his local printers. “I had dealt with
printers in the past and always had problems getting my printing done on
time. I used to think, ‘why don’t printers offer an out-of-hours service for
rush jobs?’ So I decided to look into it myself.”
Ahmed used the money he received to print his business cards and letterheads
and to produce a presentation pack to introduce his services to businesses
in the area. “Although it wasn’t a large amount, I was starting out from
scratch so the grant enabled me to get off the ground,” he said.
Mayaseed has now been trading successfully for six months and has recently
expanded into IT and web solutions. “It’s a great feeling to see your dreams
taking shape,” said Ahmed.
Another source of funding that is dependent on your postcode is the Selective
Finance for Investment in England scheme. Particular areas of Britain have
been designated “assisted areas” – graded on the basis of how much
regeneration they need. Most start-ups in the manufacturing or service
sectors in these areas are eligible to apply to the scheme. Grants vary
between 7.5% and 15% of the project Textile designer Laura McCafferty,
above, has been able to exhibit at art shows after receiving a grant of more
than £9,000 costs, depending on the size of the business and its potential
to improve the region’s industrial productivity and create jobs.
There is no single, comprehensive list of the grants that are available in
Britain, but Business Link, the government-funded advice service for small
businesses, comes closest to providing one. Its website sets out who is
eligible, how to apply for a government grant, and why an application might
be rejected. It also has a helpful grants directory and, most importantly,
contains a list of the regional Business Link offices.
It is best to contact your local branch for a one-to-one session with a
business adviser who can explain what grants might be available and whether
you are eligible. GrantsNet provides a similar listing.
Some grants do not depend on your company’s location, though they are much
fewer in number. According to Business Link, the government is keen to
encourage technological research and development, and so funding for small
businesses in this area is generous.
The Department for Business Enterprise and Regulatory Reform (BERR) offers
four types of grant for individuals and small to medium-sized businesses to
develop technologically innovative processes and products. Grants vary from
£20,000 for micro-projects lasting less than 12 months to £500,000 or more
for exceptional projects where a lot of development work needs to be done.
BERR grants are administered through the nine regional development agencies
in Britain.
The London Development Agency has recently provided a grant of £2.7m to fund
the expansion of the London BioScience Innovation Centre (LBIC). The
enlarged building now contains technology and research space for small
businesses. According to Professor Colin Howard, chief executive of LBIC,
the new centre “provides a great opportunity for small businesses to get off
the ground and develop into successful enterprises”.
For businesses in the creative sector there is the Arts Council. To be
eligible for a grant your business must be of benefit to people in England
or help art organisations or artists. Grants range from £200 to £30,000 and
are awarded only after applicants have been through a rigorous process to
check their eligibility. It is essential that there is more to your business
than a desire for personal financial gain.
Laura McCafferty is a textile designer who received a grant of more than
£9,000 to help with marketing. After getting an initial payment to cover
professional photography of her work, she applied for a second, larger sum
to finance exhibiting costs. With this funding in place, McCafferty has been
able to exhibit at art shows and focus on developing her work, along with
opening up new markets to the benefit of other textile artists.
McCafferty said: “Having spent a year laying creative and business
foundations, the grant took the pressure off and allowed me to push things
further. I was able to create a lot of new work, exhibit nationally and
internationally, gain knowledge and grow as a creative business.”
She advised other entrepreneurs applying for funding to “think of yourself as
an investment. You have to see your proposal as a two-way thing. Explain how
your business will benefit the organisation giving the grant as well as how
the funding will assist you.”
The Prince’s Trust is another possible source of grants but, to be eligible,
individuals wishing to start a business must be within a certain target
group. The trust focuses on providing funding for former offenders,
educational underachievers, those leaving care and the long-term unemployed.
Development grants for those hoping to train in a particular profession are
awarded frequently – you can apply for up to £500 to cover the costs of a
course or essential equipment. The trust also awards grants to potential
start-ups. Applicants must submit comprehensive business plans, but the
business can be anything from a hairdresser’s salon to a workshop for disc
jockeys.
Although no mean feat to obtain, free funding is still worth pursuing. As
Richard Holmes from Business Link said: “The advantage to a business
gettinga grant is that it’s not debt or equity, you don’t have to pay
interest and there are no new shareholders to satisfy.”
WHERE TO FIND GRANTS
Business Link businesslink.gov.uk
GrantsNet grantsnet.co.uk
Barking and Dagenham Small Business Centre bdsbc.org
Selective Finance for Investment in England Scheme london-innovation.org.uk
Regional Development Agencies englandsrdas.com
The Arts Council artscouncil.org.uk
The Prince’s Trust princes-trust.org.uk
