Government Grants for SMEs

The task of finding funding to support the establishment and growth of Small to Medium sized Enterprises (SMEs) is a hard one. So many worthwhile cases, put up by really dedicated and very knowledgeable people, just cannot get the requisite funding for one reason or another. Using to the full our extensive experience of seeking funding, and our knowledge of what the Funder is seeking, we can help companies avoid the pitfalls that await them.

Thus the Business Plan contains, not what the owner wants, but what the fund provider wants to see in terms of

• The Money required
• What it will be used for
• That it is based on a solid business model
• The return on Capital
• The exit route and final payback

Now for the appropriate business activity there are ways to improve the likelihood of getting funding and that is to seek support from the Government, via the Grants System. Public funding of activities deemed to be in the national interest is now really big business, see some statistics.

There are some 4,500 individual grants and we will indicate the major grants available to UK companies which are classified as SMEs. (An SME has Turnover less than £250million and employs fewer than 250).

A basic principle of the Grant Award Concept is that it is not a panacea for a funds shortage; it is a helping hand and can under certain circumstances be as much as 65% of the funds required, but as a helping hand it is invaluable to those companies who arrange themselves and their businesses to obtain a grant offer.

It is a badge of achievement, and a significant achievement for any SME to be awarded a Grant since the due diligence involved before Public money is invested is both extensive and intensive. The award gives other funders a degree of confidence in the proposal before them that inclines them very heavily in the borrowers favour.

The Grants are administered by the Regional Development Authorities and their record is really quite impressive;

In 2004/2005 in England they helped to create 108,833 jobs as a result of their activities including the Grants, and created 7,538 new enterprises, investing some £754 million in the process.

Grants are being awarded to those cases that are professionally presented and which line up with the objectives behind the Grant Assistance; which is to increase the Intellectual Reservoir in the UK, and through that to improve our employment capability, with increased job opportunities and generally improve the economic well being of the whole country and especially economically deprived areas.

The Grants vary in the amount of Matching Funding required; Selective Finance for Investment (SFI) Grants vary according to the classification for the postcode where the investment will take place, Tier 3, 2, and 1, with the Grant varying from 0% to 15% to 35%.

These SFI Grants are available to any SME looking to invest in new plant and machinery, relocate to a new location, where the net outcome is beneficial for the company’s profit performance, productivity and its impact on the employment of additional people in the area.

Research and Development Grants are available to companies which are developing Intellectual Property Rights (IPR) leading to Patents and Global possibilities for the products or processes involved. Research Grants will meet up to 60% of the cost of the research; Development Grants leading to the prototype product or process will offer 35% of the related costs, up to £200,000, whilst the small company may just need a Micro Grant which pays out 50% of the costs up to £20,000 award.

Special Development Projects can qualify for grants of up to £500,000 where the outcome is considered to be of sufficient global significance and have a major impact on the performance of UK PLC.

As with all quests for funding the planning has to begin well in advance of the need; money cannot be conjured up within a few days!!

People who have their own money to invest will want to protect it, quite naturally and will examine the proposition in depth seeking to find the holes in the business case before investing, and to make sure that they can work with the SME team.

So it is with Grants. The money is coming from Public Funds and it has to be applied in a deliberate and beneficial way to those cases which will show the best return. Therefore the process can seem long and arduous, but it need not be. The awarding body simply has to make sure that they have fully explored the case and have ensured that there is matching funding and that the concept is viable and with a high probability of succeeding.

If the case is not well presented it may be dismissed at an early stage, and the speed of response to any questions raised is equally important, as long delays in response give rise to the view that the applicant is complacent and not treating the application sufficiently seriously, and that can jeopardise the outcome.

With the Grant awarded the willingness of banks, and other funders, to advance the matching funding is greatly improved. Grants therefore bring with them more than just an inflow of money, they bring a degree of credibility which is very useful to the company in its efforts to obtain further funding.

We have been assisting SMEs obtain funding for the past 10 years. Our team consists of former Managing Directors of large businesses, and former Directors of start-ups that have had to seek funding themselves. We therefore have experience of what the SME Managing Director has to go through in order to get funding.

Should you want to learn more about Grants and the possibility of getting a Grant for your particular project please contact us today on 0845 838 0936 or drop us an email.