When times are hard, businesses often call upon the government to help. The coronavirus pandemic was a prime example of this, with various funding support announced by the government to allow survival.
Unsurprisingly, when establishing a business or seeking to overcome a challenge, many owners will refer first to government-backed support and funding.
If your company has a funding gap, it is worth checking what is available. There won’t always be assistance, but when there is, it can be rewarding and offer competitive terms.
We have explored seven government-associated funding sources that could benefit your business.
- Energy Relief Bill
- Start-Up Loans
- Innovate UK loans and grants
- Other grants
- Investment Funds
- Loan schemes
- How do I know what is available for my business?
The Energy Bill Relief Scheme
The Energy Bill Relief Scheme was announced recently to help companies overcome the mounting energy crisis. It is automatically applied to eligible businesses’ energy bills.
The relief offers a discount on energy for six months (from October 2022 to March 2023), at which point support will be reviewed.
To calculate your discount, the estimated wholesale portion of the unit price you would pay this winter is compared to a baseline ‘government supported price’. The price is:
- £211 per MWh for electricity
- £75 per MWh for gas
There are some eligibility criteria for the relief, as your business must be one of the following:
- On existing fixed price contracts that were agreed on or after 1st April 2022
- About to sign a new fixed price contract
- On out-of-contract or variable tariffs
- On flexible purchase or similar contracts
If you are eligible, you will receive funding which should mitigate some energy cost concerns in the coming months.
Start-Up Loans
A Start-Up Loan could be an option if you are just beginning a venture. It is a British Business Bank initiative offering government-backed loans of up to £25,000 per director for new businesses. The average amount given is £7,200.
Each loan has a fixed interest rate of 6% and is repayable over 1-5 years, depending on your terms. You will also receive free guidance for 12 months alongside the funding, which could prove highly beneficial for fledging companies.
Upon applying, you will need to undergo a credit check and some other checks to ensure you meet the lender’s criteria including forecasts for the busines. You also must have been trading for less than 36 months or only starting an enterprise.
Innovate UK loans and grants
Innovate UK is a government-backed agency providing grants (up to £10 million) and loans (up to £1 million) to innovative UK businesses. It is available for companies of all sizes, including SMEs.
Different types of innovation will make you eligible for funding. However, if your business corresponds with government priorities, you are more likely to be accepted (especially for grants).
Examples of these current priorities include:
- Artificial intelligence and data
- Clean growth
- Improved mobility
- Tackling the issues of an ageing society
There will also be funding opportunities open to ventures in certain industries and sectors or that offer a specific service.
Other grants
Grants are highly desirable, given that you do not need to repay them. The government offers grants in various areas (either directly, via government-backed agencies or local authorities).
However, they are often limited and highly competitive. There are usually select criteria a business must meet to become eligible, meaning many companies won’t be.
It is still worth checking if there are grants open to your business. The grants available will often depend on the region you’re based in, your industry/sector and how you operate. The government has a grant checker tool to help your search.
If a grant is available, it is worth applying as the money can hugely benefit your company with no cash flow implications.
Investment Funds
Another standard funding option for businesses is investment funds. They are often government-backed and usually specific to a location. Examples include the Greater London Investment Fund and the North of England Investment Fund.
An investment fund is pooled and used to promote business growth while offering favourable returns and security for investors. They usually provide a mixture of equity and debt options to eligible businesses.
If you are considering funding, check if there is an Investment Fund in your area. Remember to check the criteria to make sure your company is eligible.
Loan schemes
An alternative to Investment Funds is a loan scheme. The government tend to offer these schemes to serve a specific purpose (such as the post-pandemic Recovery Loan Scheme). There will also often be designated to an industry or demographic area.
The amount offered will vary dependent on your eligibility, the lender you are partnered with and the overall funding cap of the scheme. Thanks to government backing, they often provide competitive terms, including low interest or fixed rates. Some might also offer additional perks, including guidance or mentoring.
It is worth reviewing the current government loan schemes and whether they align with your company’s needs. You should also check its criteria to see if you are applicable.
Growth programmes, incubators and accelerators
A growth programme (also known as an incubator or accelerator) is an initiative which offers funding and other assistance to SMEs to encourage expansion. They provide intensive support over a set timeframe to prepare ventures for future investment and survival.
There are some differences between each type. An accelerator tends to target start-ups with a minimum viable product already in place, but that need guidance to expand into the world. An incubator focuses on business ideas that have not been realised yet, giving entrepreneurs the resources to commercialise them.
There may also be growth programmes that help SMEs in specific areas, such as the government’s Help to Grow Digital scheme (providing funding to support technology adoption) and Help to Grow Management Course (which offers 90% government-funded training).
Again, check for growth programmes that apply to your needs or your specific sector/location, especially if you’re a relatively new business looking to take the next step.
How do I know what is available for my business?
With many government options available but often restricted to SMEs in specific industries or locations, it is hard to tell what’s accessible to your company.
Fortunately, there are ways to uncover relevant support. The most useful is the government’s online finder tool, which allows you to search for available support and funding. Results can be filtered to regions, industries, business stages, employee numbers and finance types, making it easy to find precisely what you’re looking for.
The available support will constantly evolve, so it’s worth regularly checking.
Another option will be your local council, which may be able to pinpoint support in your area.
It’s also crucial to remember if government support isn’t available, there may be other alternatives. Speaking to a financial specialist will allow you to uncover non-government funding that will help you to achieve your business goals.
In summary
There is government support for businesses, but it can be scarce. Determining what is available and whether it aligns with your company is vital. If you find relevant assistance, remember to spend time understanding how it works and ensure it is the right fit for you.
You need to search elsewhere if there isn’t any government help available for your specific needs. Fortunately, there are competitive alternatives that will still offer rewards to your company and help you to achieve your goals.
Pegasus Funding will work with you to identify the best solution for your business – whether it’s government-backed or otherwise. We can also provide valuable financial guidance that builds resilience and prepares your company for a long future.