What Government Grants Are Available for Small Businesses in the UK?

The UK Government offers various loans and grants to help businesses stay afloat, save jobs and expand their offering. However, navigating the world of grants and loans and knowing which scheme is right for you can be difficult without a guide.

We’re taking a closer look at all the ins and outs of grants and loans to help equip you with the knowledge needed for your small business or start-up. 

• How Are Small Business Grants and Loans Different?
• What Business Grants Are Available to Small Businesses?
• Are Small Business Grants Taxable?
• Government Support for Businesses Affected by Coronavirus (COVID-19)

How Are Small Business Grants and Loans Different?

Grants and loans are very different, but their purpose remains the same - to help individuals in need of financial assistance. 

The main differences between loans and grants are interest rates and repayment obligations. For example, if you receive a small business loan, you have to pay the money back. This is different from a small business grant as you don't have to pay a business grant back.

However, some business grants are provided because you must also invest the same amount into your business. This means if you’re given a £5,000 grant, you’ll have to invest £5,000 into your business.

What Business Grants Are Available to Small Businesses?

If you’re struggling to find the funds to help your business thrive, there are many grants you could apply for.

Regional Growth Fund (RGF)

For funding under £1 million, you could be offered a grant from the Regional Growth Fund. This programme is run by national and local organisations and provides grants or loans to businesses that meet their specific criteria.

Resource and Training Grants

There are lots of small business training grants to help small businesses thrive, including:

• Innovation vouchers - Provided by the government through Innovate UK, companies may be eligible for claims of up to £5,000 to cover the cost of expert advice. This could be to seek professional advice on your latest idea or how to implement intellectual property effectively.
• The National Apprenticeship Service - This funding depends on your business industry and provides funding for 16-18-year-olds. To support this, your business could have access to an Apprentice Grant of up to £1,500 for small businesses hiring apprentices aged 16-24. 

Are Small Business Grants Taxable?

HMRC regards cash grants are a form of income, so yes, they're taxable. This means the amount you’re left with after the relevant allowances and expenses have been taken will likely be liable to tax. 

The government is aware that keeping on top of taxes can be challenging given everything else business owners have to take care of. This is why they have schemes to help reduce the costs of paying taxes on business grants.

Tax Relief for Small Businesses

• Business rates relief - Businesses that occupy one property with a rateable value of less than £15,000 could be eligible. 
• Employment allowance - This could reduce your employees’ (secondary) Class 1 National Insurance each time you run your payroll until the £3,000 has gone or the tax year ends.
• Research and Development Tax Credit - This scheme aims to encourage small businesses to spend more money and time researching and creating new products and services, helping existing ones by reimbursing them via cash payment, or corporation tax reduction.

Government Support for Businesses Affected by Coronavirus (COVID-19)

The coronavirus pandemic has affected businesses across all industries. To help businesses that have been impacted or forced to close, the UK Government announced a new package of relief measures on 17th March 2020. As rules and regulations are always changing, it’s best to check the government website for the most up-to-date information.

The Coronavirus Business Interruption Loan Scheme launched 23 March 2020 and primarily supports small and medium-sized businesses with access to short-term cash flow support from accredited lenders. 

It provides up to £5 million for smaller businesses in the UK who are still experiencing lost revenues. To learn more about this scheme, click here. 

All the rules and regulations surrounding small businesses can be hard to understand, especially when you’re a start-up. We have a resource to make starting out that much easier. 

Download Our Small Business Starter Kit

From tax codes to VAT registration, the business world can be a minefield, particularly when you’re just starting out. It’s important to have a clear business plan to make the process much smoother, which is why we created our starter kit. 

It’s filled with the best small business tools and tips to help grow your business. Access your starter kit using the button below.