Securing funding for your startup can be a real test of your business acumen. Luckily, the UK Government provides a range of funding options designed to help startups flourish. However the two main options are:
- 1) Startup loans; and
- 2) Government grants
Applying for a startup loan from the Government can be one of the most straightforward ways of securing funding for startups. The Government works in conjunction with the Start Up Loans Company to provide funding for startups of amounts ranging from £500 – £25,000.
Applicants will need to meet the following eligibility criteria in order to be considered:
- Aged 18+
- UK resident
- Founded/plan to start a UK-based business
- Trading less than 24 months
- Not be Bankrupt/on Debt Relief Order within last 24 months
- No outstanding Individual Voluntary Arrangement or Trust Deed within last 24 months
- Not participating in a Debt Management Programme/Debt Arrangement Scheme
Loan terms are typically 1 – 5 years with a fixed interest rate of 6% per annum. These loans are backed by the Government and require no application or early repayment fee.
You can call on free support and guidance to complete your business plan and even request business mentoring for 12 months after the loan is received.
For these reasons it’s definitely an option to consider and should be one of your first points of call.
Government grants are given to help you develop your business and are usually for funding a specific growth initiative.
While this may prevent you from having to give away equity (as with a typical investor), there are several considerations to be aware of:
- There are innumerate grant options and the application process can be time-consuming
- The application process is highly competitive and funding is far from guaranteed
- Application criteria is often niche, meaning you may have to adapt your product/service
- It’s unlikely to cover all your costs, and some will demand you match the grant with your own personal money
- Certain sectors are more likely to receive grants, including energy/environment, exports and innovation
Each grant is different, but it’s likely you’ll need to meet the following criteria to be considered:
- Have a compelling Business Plan that provides an outline of how the grant will be spent
- Meet business size and classification stipulations set out in grant terms
- Be within the region or industry for which the grant is intended
To assist you to find a suitable grant for your business, you can try using the Government’s finance finder.
There are however other, honorable mentions to consider too:
- The growth voucher scheme provides funding for startups looking for strategic advice on almost anything
- The Regional Growth Fund works similarly to Government grants, but has capital set aside for specific regions
Securing funding for a startup is no mean feat, but by familiarising yourself with the options available you’ll be able to come to the right decision for you. Do consider Government schemes, as they may just be the best way for you to secure the capital needed to turn your startup into a blossoming brand.
For more personal startup advice, why not book a time to meet with one of our specialists at a drop-in session.