The best grants for small business in 2022

It’s surprising how unexpected costs can crop up when you’re running a small business, especially when you’re just starting out. But no matter what stage your business is at, it’s likely that you’ll need to take out a business loan or some form of finance option at some point – whether to help with cash flow, update old equipment, or fund an expansion.

But before you compare business loans it’s worth looking at what grants are available.

What’s the difference between a loan and a grant?

When you take out a loan, you need to repay the amount borrowed plus interest in a set number of repayments, as agreed with the lender. However, if you get money through a grant, then you don’t need to pay it back.

Most loans are offered by private lenders that add interest to the amount you borrow as a charge for their service. The government does offer loans, such as startup loans, which are available to help people start a new business or grow an existing one.

Grants are usually publicly funded schemes awarded to businesses by the government or a charitable organisation or trust. They come with certain conditions attached, as they’re designed to help those that need the money most or to promote a public cause. The Kickstart Scheme, for example, offers funding to create new jobs for 16 to 24-year-olds on Universal Credit who are at risk of long-term unemployment.

What types of business grants are available?

There are a range of business grants available in the UK, each for different purposes. This includes: 

Direct grants

Direct grants are those that involve cash being given directly to a business to help fund a specific project. These schemes usually involve fund matching, which means any money you raise to pay for the project will be matched by the same amount of grant funding - essentially, you need to put up half of the money needed. 

In most cases, there will also be conditions about how the money can be spent. This is to make sure you’re acting in good faith and spending the money on the project it was raised for.

Resource and training grants

If you want to invest in skills or need access to resources and expertise to get a project off the ground, then the following resource and training grants might be an option:

  • Innovation Vouchers - Get up to £5,000 to cover the cost of help and support from an external expert or consultant. Available for startups and established SMEs, these grants are supplied by the government via Innovate UK and could be useful if you need help with anything associated with research and innovation, from new tech to intellectual property.
  • Local business support – It's worth checking to see if your local authority offers business support grants to fund training workshops, expert advice, business accelerators, and other forms of training. 
  • Business support networks - Sometimes other business owners – or former business owners – are the best people to turn to for expert support. Business support networks help business owners get peer-to-peer advice. This can be especially useful if your business is involved in new technologies or has certain best-practice initiatives.
  • Business support helplines - You can get advice and financial help for your business from a range of government-backed schemes. This includes things like help with tax, exporting, and writing a business plan. For more details, go to https://www.gov.uk/business-support-helpline

Tax relief

Despite what the adverts say, tax can be taxing when you’re running a business. That’s why there are a number of government schemes designed to help cut the tax burden on small businesses.

  • National Insurance relief – This could be worth looking into now that it has been confirmed in the Autumn Budget that National Insurance contributions will rise from April 2022. If you have any employees, you might be able to claim National Insurance relief of up to £4,000. However, this is the total allowable relief for each business, not for each employee, and you won’t be eligible if you run a limited company that has only one company director and no other employees.
  • Business rates relief – If your business occupies one property with a rateable value less than £15,000, then you might be eligible for business rates relief. As part of ongoing Covid recovery plans, businesses in the retail, hospitality, and leisure sectors will have a year-long 50% discount on business rates.
  •  Employment Allowance - This enables you to reduce the national insurance contributions you pay for your staff by up to £3,000 per year.
  • Corporation Tax relief – The current rate of Corporation Tax is 19% on company profits, but this will rise to 25% as of April 2023.  You can find out more about this at our Autumn Budget roundup guide. But, there are certain circumstances in which your business might be able to claim relief on Corporation Tax. Check the government website for information on allowances and reliefs.

Who is eligible for grants? (Offer types of grants for each group)

In some cases, the type of business grants you’re eligible for depends on your current circumstances.

Grants for startups

Not to be confused with Startup loans, which are government-backed unsecured loans that can be used to help start a new enterprise or grow an existing one, startup grants are available for a range of business needs.

Here are some of the startup grants currently available:

  • The Prince’s Trust - Provides grants for people aged 18 to 30 who want to start and run their own business. The Trust also offers mentoring, training and other useful resources.
  • New Enterprise Allowance – Provides funds to start or develop a business, but there are certain conditions attached: 
    • You need to be aged 18 or over.
    • Either you or your partner must receive Universal Credit, Job Seeker’s Allowance or Employment and Support Allowance, or you must get Income Support and be a lone parent, sick or disabled.

As part of the 2021 Autumn Budget, the Chancellor announced a £150 million “angel investors” fund will be launched to encourage the launch of more startups outside of London.  You can read more about angel investors with our guide to finding the right investor for your business.

Grants for young people

As well as The Prince’s Trust, there are a number of other grants available to people aged 18 to 30 who are looking to start their own business, including:

  • UnLtd – Provides funding and support for social entrepreneurs with social change at the heart of everything they do.
  • Shell LiveWIRE - Provides access to knowledge, skills, networks and resources to help young people realise their business goals and create jobs, provide sustainable income, and drive innovation.

Grants for businesses with apprentices

You can get funding from the government to pay for apprenticeship training and assessment or as an incentive payment for other costs. If your business pays the Apprenticeship Levy, you’ll get a grant to spend on training and assessing your apprentices and the government will add 10% to this.

If your business doesn’t pay the levy, you’ll pay 5% towards the cost of training and assessing your apprentice and the government will pay the remaining 95%, up to a funding maximum. This money will be paid directly to the training provider, and you’ll need to arrange how and when to pay your 5% directly to them.

The Kickstart Scheme has also been extended until March 2022, with applications open until December 17, 2021. If your business hires an apprentice between now and January 31, 2022, you may be eligible for an incentive payment of up to £3,000.

Grants for women

With male-owned businesses more likely to attract funding, organisations are increasingly looking to fund women in business and give them a more even opportunity to succeed.

You can check out the business grants available specifically to women in our guide to grants for female entrepreneurs.

Tips for getting a grant

You should only ever apply for a business grant once you’re sure you meet all the eligibility criteria, but there are some things you can do to help your application.

Contact the awarding body before applying

It might help to get in touch with the awarding body to let them know a little more about your business. This could be especially useful if there’s an issue that’s holding up your application as you’ll have a contact who will know your business and can offer advice on the next steps.

Apply as soon as possible

As you can imagine, awarding bodies get inundated with applications. This means it’s best to get your application in as early as possible.

If you apply as soon as the grant opens, competition won’t be as fierce as it’s likely that fewer people will know about it. The key to applying early is to keep searching to see when suitable grants become available.

Consider a consultant

If you don’t have time to keep an eye on upcoming grants or to search what’s currently out there, a grant consultant can do the work for you. 

Consultants will know the best ways to apply, keep track of applications, and even communicate with awarding bodies. This can be useful if you’re applying to a large body that’s more difficult to contact.

Although consultants can be quite expensive, it could be a price worth paying if their expertise helps you land the funds you need. A word of caution though, some awarding bodies don’t accept applications submitted through consultancies.

Pay close attention to the grant’s objectives

It’s important that you know exactly what you’re applying for and that you’re sure your business can meet the requirements of the grant. You’ll need to show evidence of this and give a breakdown of why you need the funding and how you’ll use it.

What are the alternatives to business grants?

If you aren’t eligible for a grant or you’ve had an application turned down, it might be worth considering a business loan. Working with Think Business Loans, the finance division of Bionic, you can compare a range of loans and lenders to find finance that fits your business.