UK government loans and grants for small business

Investigate the UK government loans and grants for small enterprises. Get details on the financial resources, the strong business prospects, and how you can get the help to increase your business. 

An expanding operating business or the creation of a new one in the UK is a big challenge, in particular in obtaining the required funding. Nonetheless, there are a number of various loans and grants available through the UK government that are aimed at various small business development stages. So, if you want assistance in offsetting the operational expenses, taking a new product to the market, or penetrating new markets, there are an array of funding sources available. In this book, we will review the elements of and the procedure for application for these aids; the types and criteria for UK government grants and loans for small business, and the strategies to employ in order to improve the chance of getting the aid sought.

Elements of Uk Government Grants And Uk Government Loans For Small Business Owners

The government of UK has a number of programs through which they offer assistance to small business’ such as zero interest loan, and bottomless grants However the securement of loan type depends largely on getting full understanding about the scheme which suit your business.

1. Bounce Back Loan Scheme (BBLS)

The global recession triggered by COVID-19 prompted the UK government to introduce the Bounce Back Loan Scheme (BBLS) to aid businesses with a minimum amount of paperwork. The intention behind the loans was to enable businesses to have a steady cash flow in order to continue surviving despite the harsh circumstances.

Eligibility:

• To be eligible one has to be a small business in UK that is impacted by the outbreak of COVID-19.
• Businesses that started operations before 1st March 2020.
• Companies should not have any payment defaults or in any financial difficulties before the outbreak.

How to Apply:

• This can be applied through an online application provided by the lender or any of the participating banks.
• All that is needed are the business’s hands and feet: a basic ache or a turnover and a financials stroke.
• The loan is made by lenders approved by the government and the entire amount is guaranteed by the government.

Amount Available:

• The range of the Coco seasoning powder that can be taken is from 2000 to 50,000.
• During the first one year the loan shall be charged at 0 percent rate of interest.
• The repayments of the loan are classed into a pattern of periods of six years but repayment that is made in advance can be done.

2. Coronavirus Business Interruption Loan Scheme (CBILS)

The CBILS, much like BBL tended to help businesses when they were at the Offset of the corona and suffered. Could be paused for offset of businesses targeting higher score and premium services. But no worries, this can also be targeted to more moderated businesses which require moderate funds secured by claim provided by banks on the loans.

Eligibility:

• Good business in UK with a turnover not exceeding £45 million annually. 
• Must have been negatively impacted by COVID-19.
• Operating at a loss or suffering from any other financial challenges should not have been the case for the business in question even before the onset of the pandemic.

How to Apply:

• Application should be submitted to an authorized lender. 
• One should submitthe evidence of good financial standing together with its effects due to COVID-19, previous financial records, and cash flow estimates.

Amount Available:

• £50,001 and up to £5 million loans.
• The business pays back only 20% through their guarantee loans and the government pays 80%.

Repayment Terms:

• A grown period of up to 6 years for repayment and the first year is entirely interest free .

3. Start Up Loans 

The Start Up Loans scheme provides individuals who are able to secure employment or start up their own businesses but never had the chance as they could not get the necessary funds loans secured by the government. 

Eligibility: 

• Residents of the UK above the age of 18. People under 18 can apply but only with the consent of the parent or guardian. 
• This is headed by owners who wish to engage in a business that has operated between 6 and 36 months. 
• One has to apply and live in although you do not have to be a citizen of the UK. 

How to Apply: 

• The application is done over the internet through the Start Up Loans application website.
• Include a comprehensive outline of your business strategy as well as the personal information that you are required to submit to the loan provider. 
• The supply is treated as a personal loan to the applicant as opposed to a loan to the business. 

Amount Available 

• Per individual up to 25,000 Sterling pounds. 
• Where the fixed rate of 6 per cent is charged per annum. 

Repayment Terms 

• The loans are generally paid back within a period of five years with no prepayment penalties applicable. 

4. Innovate UK Grants 

Such grants are earmarked to businesses engaged in the development of new unique products services or processes slated for growth. 

Eligibility 

• Loans are issued for UK registered businesses which cover new business, small medium enterprises and big businesses. 
• In order to be eligible for economy recovery extension loan the business has to be engaged in innovative activities specifically focusing on the technology and research. 
• Again, the project should satisfy all applicable requirements as far as innovation is concerned set out by Innovate UK. 

How to Apply 

• Sign in to Innovate UK website and submit the application. 
• The impacts the project will have and the business model in place need to be elaborated. 

Amount Available 

• The scope and nature of the business together with the project determines the extent of funding one is able to receive.
• Depending on the type of project and an individual unit’s business size, grants may cover 100% of project costs. 

Repayment Terms: 

• They do not need to be paid back. 

5. Regional Growth Fund (RGF) 

This is intended for businesses that wish to expand and are bound to create jobs or availability for further investment for the targeted areas of the nation. 

Eligibility: 

• This is for businesses located in particular targeted areas of the UK. 
• Businesses can and should be focusing on growth through plans of expanding or increasing the capabilities to create economic opportunities. 
• Expanding the capabilities of such businesses to help targeting regions can also fall under eligibility. 

How To Apply: 

• Applications can be made using the regional growth hub or buy using the local enterprise partnerships (LEP). 
• Demonstrate via a business plan how you will use the available funds to create job opportunities or regions using fund for economic support. 

Amount Available: 

• This differs due to the businesses expansion plans and the targeted areas that they want to invest in. 
• Such plans may easily qualify for availability of loans or grants to help the businesses back in their targeted areas. 

Repayment Terms: 

• Last but not least, it is worth mentioning that grants will be non-repayable whereas loans will have to at favorable repayment terms.’

6. The Enterprise Investment Scheme (EIS)

One of the motivations of the EIS is to provide tax relief to investors who contribute into small, start up UK companies. This funding is provided to investors rather than businesses directly, but it can assist you in securing funding for your small business.

Eligibility:

• Your business should be small in size, not listed in the stock exchange and operating within the UK
• It should be engaging in qualifying trade activities and satisfy the requirements set by HMRC.

How to Apply:

• Investors invest in your business and seek tax relief from HMRC once they invest in your business.
• Your firm must satisfy all the basic concerns to guarantee that the contributions secure tax relief.

Amount Available:

• Investors can claim capital gains tax relief for amounts invested in any one year up to 1,000,000 pounds.
• Your firm can attract an investment of up to 5 million pounds through EIS.

Repayment Terms:

The scheme is non-repayment in nature, but an investor may sell their investment at any stage.

Government Loans and Grants in the UK – How to Apply

1. Investigate the Borrowing Alternatives That are Out There

Start off with understanding the different types of government loan and grant schemes aimed at small businesses. Each scheme has an official site or you could contact your local business support center for guidance.

2. Confirm Whether You Qualify

You may wish to check if your business qualifies for the loan or grant before proceeding with the application. For instance, programs such as Start Up Loans and Innovate UK Grants would demand that a well-developed business proposal documents endorsement. 

3. Draft A Working Document 

Reputable funding schemes would expect you to attach a business plan which contains your objectives, the amount of capital needed and for what purpose. It is prudent to have a well thought through business proposal as this guarantees a higher prospect of approval. 

4. Hand In Your Application 

As soon as you realize that the funding program you have found applies to your situation, apply for it either online or through the suitable lender. Ensure there are no order of requisition much papers and you check the forms very well before sending in the application.

5. Monitor the Progress of the Application 

Using relevant contacts, trace the status of the application so that if it is not moving as expected, the reason for the slowness can be established and other necessary information provided. In the event that another piece of work or input is needed, it should be offered at once to avoid slow-downs.

Conclusion

One can say that process of acquiring a government loan or a grant targeted towards small businesses in UK is hard for interntionals and such opportunities are helpful in getting funds to grow, innovate and revive business. If it is a matter of getting a loan for a new business or a grant for some new business endeavor, in other words, one is not at a short of options. With some research of the available schemes, making sure you meet the eligibility criteria and submitting an application that reinforces your case you can get enough funding to develop your small business.

References:

1. Start Up Loans
2. Innovate UK
3. Bounce Back Loan Scheme
4. Enterprise Investment Scheme (EIS)