As the majority of entrepreneurs know, starting up a new business entails a series of challenges that not everyone is able to rise to. These challenges include a wide range of issues, from making sure that your business practices comply with the relevant regulations to finding ways of staying ahead of your competitors. But before any of these things can happen, it is crucial to ensure that you get up on the right foot financially speaking.
According to a 2014 data set published by Entrepreneur Weekly, approximately 25 per cent of small businesses go bankrupt during their first year. This figure goes up to 44 per cent in the third year and to a scary 71 per cent in the 10th year. By far, the most commonly quoted reason for failure is incompetence, a broad term that includes poor knowledge of business finance. How can you make sure that your small business is off to a good start? In this post we take a look at some of the start-up grants and funding schemes available to small UK businesses.
Public bodies
It is often a good idea to start looking at the funding options available from public government bodies. These are made available via your local city council, and start-up grants can cover part of the costs involved in purchasing machinery, renting and buying a business property, etc. Go online and check the business section of your city council website to find what is available and whether you meet the requirements.
Another important source of funding (which operates at national level) is Start Up Loans. This scheme is funded by the UK government and as of 2014, it has lent more than £66 million to over £13,000 nationwide. If you are currently unemployed and in receipt of certain government benefits, you may qualify for the New Enterprise Allowance scheme, which offers start-up loans and weekly payments of up to £1,200.
Local government agencies
In addition to looking for funding opportunities at public government bodies, entrepreneurs can also check the options offered by certain local government agencies. One of the main things to bear in mind is that this type of funding is allocated on a highly selective and specific basis. This means that grants may only be available to businesses that operate in a specific sector or that are based in certain geographical locations.
For example, if your business is based in Wales, you may want to contact the Welsh Development Agency. Business owners who are in Northern Ireland may want to check the funding options offered by the Northern Irish Development Board. If your company is involved in the agricultural or environmental industries, Natural England may be able to help you out. If you live in a designated Rural Development Area and wish to launch a business in the tourism, forestry, or agro-food sectors, you may be eligible to receive a Rural Economy Grant.
Other examples of local government agencies that may offer financial support include:
– The Department of Trade and Industry
– The Scottish Executive
– Enterprise Ireland
– The Fuse Fund
– The UK’s Technology Strategy Board
– The Department for Business, Innovation, and Skills
– The Heritage Lottery Fund
– The Arts Council of England
Please note that this list is not exhaustive. You can search for relevant funding options through this website.
Soft Business Loans
While they are not exactly the same as a grant, soft business loans might be an interesting source of funding for start ups given their ‘softer’ repayment conditions and lower interest rates. There are more than 400 soft loan schemes available in the UK, which are administered by local enterprise agencies or by large companies that wish to support other local businesses. You can purchase a hard copy of the Directory of Soft Loans Schemes online.
CDFI Funding
Community Development Funding Institutions are a recent social enterprise development that can provide financial help to businesses during the start-up stage. All in all, there are more than 60 CDFIs spread across the UK territory. This type of funding is given to entrepreneurs aged 18 to 30 years old. Loans start at £250 and are repayable over a period of between 1 and 3 years at fixed interest rates. In addition, CDFI loan recipients benefit from other perks, such as a business mentor, free access to accounting software, discounted fees on PayPal and eBay, and access to a virtual business centre.
The institutions that offer this kind of funding are grouped into regional and local consortiums. Check the Community Development Funding Association website to find your nearest consortium and to apply for funding.
Where to find more information
You can find detailed information and further advice of small business finance in the following websites:
https://www.gov.uk/business-finance-explained
http://www.ukbusinessgrants.org/programs.php
http://www.smallbusiness.co.uk/starting-a-business/start-up-funding
http://www.j4bgrants.co.uk/default.aspx
https://www.gov.uk/business-finance-support-finder
http://www.cdfa.org.uk/about-cdfis/what-is-a-cdfi