There are several business funding grant schemes available, all of which have their own advantages and disadvantages. Choosing the right type for your business can be a daunting task but is, however, crucial to your business’s success. Below is a compilation of the different grant schemes to consider:
Direct Grant is the most common business funding grant scheme available and is what everyone usually pictures grants to be like. A direct grant involves a cash award which does not need to be repaid. Sounds like a good deal. However, it’s important to note that this type of grant usually requires you to match the amount being offered, meaning you have to raise 50% of the total investment. In addition, direct grants usually come with conditions attached like a spending limit. Securing a direct grant is indeed competitive as it is, in essence, securing free money for your company. Start-ups involving environmental science and technology innovation usually have high chances of securing this type of grant.
Having proper training as well as having access to certain resources can make a huge difference in your business’ success. However, these are often too costly, especially for start-up companies. This is where a resource grant comes in. Through a resource grant, you can either gain access to resources being offered by the grant or go through a mentorship or training program.
If you watched Shark Tank, this is the type of grant scheme being offered to the participants. In an equity finance scheme, investors offer to fund your business for a share of your business and in effect, a cut in your future profits. This type of scheme is usually hard to attain for small businesses as one would have to demonstrate their business’s sustainable growth as well as prove that their business is profitable for the investor.
Tax relief is a program which offers businesses a reduced tax due. There are plenty of tax schemes available, most of which are offered by the government. Examples of which include an employment allowance. An employment allowance is a tax relief program wherein business owners are granted reduced National Insurance contributions needed to pay for their employees up to a certain amount.
A soft loan is a type of loan which offers flexible payment terms, has less stringent requirements and has favourable interest rates. While a soft loan is not considered a grant scheme as it requires eventual repayment of investments, soft loans are usually backed by the government and often also offer supplemental non-financial support. It’s definitely something to consider should getting access to grants prove to be too difficult.