Best small business and start-up grants and loans in the UK

You have a revolutionary business idea and launched your start-up business. But to make your fledgling start-up a full-scale company, you need funds. Finding the best funding options among loans, grants, investors, and angels can be challenging for new entrepreneurs.

Regardless of the financing option you choose, having a solid business plan is the foundation of a successful business in the UK. Additionally, get a clear outline of where your money will go and then decide whether to select equity investments or business loans.

This guide will tell new entrepreneurs about some of the UK’s best small business and start-up grants and loans. We’ll cover the following:

How to start funding your business start-up?
What is start-up business grants?
Loans Vs. Grants
Finding the best small business and start-up loan and grant
Wrapping up

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How to start funding your business start-up?

When looking for business start-up funds, there are two options: Debt financing and equity investments.

  • Equity investments

Equity investors fund a business in exchange for ownership of the company. Anyone can be an equity investor, say your family members or friends, angel investors or venture capitalists.

  • Debt financing

Debt financing is borrowing money from individuals or financial institutions and paying it back within a fixed repayment period. The lender asks for financial statements of the business to understand your business scenario before granting a loan.

The best solution is using personal money as it has the lowest risk. However, all entrepreneurs can’t use their funds for business expenses, and therefore learn about different small businesses and start-up business grants UK.

What is start-up business grants?

The business start-up grants are generally publicly funded schemes. Under certain conditions, the government, charitable organizations, or trustees award these grants to small businesses. It helps organizations that carry out business to promote a social cause, meet their immediate money requirement, and helps to grow and develop business.

What are the types of business start-up grants?

1. Direct Grants: Funds available to businesses for a specific project.

2. Resource and Training Grants: Funds available for skill development, access to different resources and expert guidance. These can be innovation vouchers, local business support, business support networks, and business support helplines.

3. Tax relief: There are specific government schemes that allow tax relief for new entrepreneurs to lower their tax burden. These are National Insurance relief, Business rates relief, Employment Allowance, and Corporation Tax relief.

Loans Vs. Grants

There is a difference between business loans and grants. You need to repay the loan amount within a fixed period and pay interest. But, you don’t need to pay back grants.

Loans are repayable, and grants are not

When a private lender and the government generally offer loans, Grants are usually public-funded schemes from the government or trusts.

Finding the best small business and start-up loan and grant

Business start-up loans

  • Government-backed Start Up Loan

It is the most well-known start-up loan available in the UK for entrepreneurs to develop their businesses. Here, individuals can apply for £25,000 – £100,000 per business and repay the loan amount within five years from the approval date at a 6% fixed interest rate.

  • The Prince’s Trust Enterprise Award

The company collabs with the Start-Up Loans Company and offers funding of £500 – £5,000 to business owners between 18 years and 30 years of age. The interest rate on the loan amount is 6.2% annually.

  • The Virgin StartUp Loan

This loan scheme by Virgin provides funding of £500 to £25,000 to new entrepreneurs, with a repayment period of 1 to 5 years and a 6% fixed interest rate.

Business start-up grants

  • The Plug-In Van Grant

A new start-up may require transportation vehicles, and under the Plug-In Van Grant can take advantage of the government’s electric van grant. Entrepreneurs receive funds that cover up to 20% of the cost of a low emission van, which rises to £8,000. If you need a car for business, the funds they offer will cover 35% cost of the car up to £3,000.

  • The New Enterprise Allowance

The government takes a significant step to collaborate expert advisers with new entrepreneurs, review their business ideas, and grant a weekly allowance of £1,274 for 26 weeks on meeting eligibility criteria.

  • The Do It Awards

Entrepreneurs working on social issues come under the scheme from UnLtd and grants funding of £5,000 to develop a thriving business. They offer high-quality training opportunities, allocates expert managers to small businesses, and arranges different industry events.

  • The Eureka Eurostars Scheme

Eureka’s biggest International funding program is the Eureka Eurostars Scheme for SMEs working in the research and development domain. The scheme covers up to 60% of the project costs, and this value can rise to €360,000. Under the plan, you get an opportunity to join the international network of SMEs and different research institutions.

Small business loans

  • The NatWest Small Business Loan

Loan amount: £1000 – £50,000
Contract period: Up to 10 years
You need to provide security against the fund you are collecting from the lender.

  • The Royal Bank of Scotland Small Business Loan

Fund amount: £1,000 – £50,000. There is a fixed rate of interest on the fund amount.
Repayment period: 1 – 10 years

  • The Enterprise Finance Guarantee

The Enterprise Finance Guarantee is a government-backed loan scheme introduced by the British Business Bank.
Loan amount: £25,000 – £1.2 million
However, your business must be UK-based with less than £41 million annual turnovers.

  • The HSBC Small Business Loan

Loan amount: £1,000 – £25,000
Repayment period: First three months of the contract is a repayment holiday. The repayment period is between 1 – 10 years.
Rate of interest: Fixed

  • Lloyds Business Loan

Loan amount: £1000 – £25,000. More than £25,000 for businesses with annual turnover up to £25 million.
Repayment period: up to 25 years
Rate of interest: Fixed and variable
Other small business loans are Funding Circle Business Loan, The Greater London Investment Fund Loan, and the Fredericks Foundation Loans.

Small business grants

  • Grow It

Organizations working on different social projects that support the local community come under that Grow It awards scheme that provides a fund of £15,000 along with expert advice.

  • The Seed Enterprise Investment Scheme

This scheme encourages investors to put their money into small businesses. The Seed Enterprise Investment Scheme offers tax relief to investors who buy shares in such companies. Additionally, these small businesses receive a maximum fund of £150,000.

  • Arts Council National Lottery Project Grants

The scheme offers support to organizations that focus on creative initiatives like theatres and art galleries, which ranges from £1,000 to £100,000.

  • The Gigabit Broadband Voucher Scheme

It helps small businesses running at rural locations and offers a  maximum fund of £3,500 for up-gradation to a high-speed broadband connection.

  • The Tradeshow Access Programme

If your organization is working internationally, under this program, you get a grant of between £500 and £2,500. It allows SMS to carry out promotional campaigns and helps them attend different trade shows arranged in foreign countries. They can also use the fund to build foreign export contracts, do market research, and access expert guidance from International business personnel.

  • CRACK-IT Challenges

This scheme encourages small businesses to collab with academics and invites SMEs to use scientific or technological processes and create a new brand product. The applicants can secure a contract up to £1 million for three years on being successful.

Hire an Accountant For Small Business

Work with UK-based Experts for tax, audit, accounting, payroll, & EIS/ SEIS needs.

Have a question? Call us on
0203 983 8100
Monday to Friday 9am – 4:30pm

Wrapping up

There are several small business grants UK 2022 to combat the after-effects of the Coronavirus outbreak in the country. You can consult with an accountant to develop a suitable funding scheme for your business.

Small business grants are available for start-ups, young entrepreneurs, businesses with apprentices, especially women entrepreneurs. Before applying for either loans or grants, make sure you research them and understand how they meet your requirements.

Experlu Editorial Team
The editorial team at Experlu is comprised of seasoned financial professionals dedicated to providing high-quality content on accounting and finance. With a wealth of experience and diverse expertise, the team produces insightful articles that have established the Experlu blog as the UK's leading financial and accounting resource. The team includes accountants, auditors, and business advisors who stay updated with the latest industry developments. Their commitment to excellence ensures that Experlu remains a trusted source of information, helping readers stay informed about audit, business, finance, and tax matters.