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What Funding Is Available For UK Startups?

Finding the right funding for your business isn’t always easy, especially if you don’t have any savings of your own. But don’t let a lack of pennies put you off – there are hundreds of funding options for small businesses in the UK, you just have to know where to look. If you’re completely new to the business world, it can be overwhelming going through your options, which is why this article will list some of the most popular ways to fund your business.

Posted: 8th October 2021 by Finance Monthly
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While every option on this list is a great way to get the extra money you need, they won’t all work for your unique circumstances. It’s important to carefully research what each method of funding involves, who’s eligible and whether there are any consequences further down the line. For some startups, bank loans will be a perfect choice, but other entrepreneurs might be more interested in grants for UK small businesses. Take some time to explore the below before making your final decision:

Government Loans And Grants

The UK government has a range of different loans and grants on offer for small businesses and startups. It can take some time to sift through all the options available, but there are all kinds of funding available to suit individual circumstances. For example, if you’ve been rejected by the bank for a small business loan, you may be eligible for something like a BCRS Business Loan. While this particular option is limited to the West Midlands, it’s worth reaching out to your local council to find out what’s on offer closer to home.

If you’re more interested in applying for a grant, you might be able to make use of start-up and small business growth grants. These are again usually location-specific, so be sure to check if your postcode is eligible for funding. Alternatively, if you’re interested in making your business more energy-efficient, you can look into applying for an Energy Efficiency Grant to support your project.

Grants can be incredibly competitive, which is why it’s worth paying close attention to specific criteria that could apply to your venture. You’ll be able to find grants for things like tourism boosting initiatives and businesses that support local artists.

Bank Loans

If you’ve been unsuccessful in finding government funding in your area, traditional bank loans are always an option for startups in the UK. While many loans will require you to have a good credit rating, some lending schemes are specially geared up to support first-time business owners, which could make them more understanding in some circumstances.

Securing funding from a bank is typically an easier process than applying for a grant, but that doesn’t stop many entrepreneurs from being rejected. If your financial history is riddled with debt or missed payments on your mortgage, you can struggle to get the fresh start you want for your business. Consider taking out a secured loan if your bank doubts your ability to make payments on what you owe. This means that the bank will be able to claim your property or other assets as payment if you fail to uphold your end.

If you do want to pursue bank loans as an option, remember that there’s no one-size-fits-all solution. Before taking out a large, long-term loan, consider whether a bridging or short-term loan could suit your needs better.

Bad Credit Loans

If you’ve tried to secure funding from a High Street bank and aren’t eligible for government grants, there are alternative loans available for people with bad credit. Some of these providers will be available exclusively online, while others will have offices you can visit in person. Remember to be careful when taking out a bad credit loan, as interest can be much higher than on more traditional business loans. Companies like Capify have options available for entrepreneurs with a low credit score, while Liberis Finance may offer merchant cash advances to those in need of capital.

Non-Government Grants

If you had your heart set on a grant but the government couldn’t deliver, don’t lose hope just yet. There are many other organisations that help budding entrepreneurs to get their ideas off the ground if they meet certain requirements. For example, The National Lottery is committed to funding startups and voluntary organisations all across the country. Often designed to help businesses looking to improve their communities, their grants are always worth a look.

Aimed at young people, The Prince’s Trust can be particularly helpful if you’re aged between 18 to 30 and are trying to start your own business. Not only can they help you financially, but they also offer advice and mentoring to support you on your journey. This is particularly valuable for people who are new to business and don’t have any previous skills or experience in starting their own company.

Remember that while you won’t have to pay grants back, you should always ask for a realistic amount in your application. Organisations expect you to fully support your request for a grant with in-depth reasoning and possibly even a copy of your long-term strategy and goals. It’s best to work this out yourself before putting your business forwards for consideration, otherwise, you could be setting yourself up for failure.

How Long Does It Take To Secure Small Business Funding In The UK?

The process of getting the funds you need can vary and often depends on the kind of funding you’re looking for. Getting hold of a traditional bank loan will take considerably less time than applying for a specific grant from your local council. But the main thing that puts off entrepreneurs is getting rejected. It’s understandable to be disheartened after your applications aren’t accepted, but it’s important to keep going. Because there are so many options out there, eventually you’re bound to find something that works for you.

To increase your chances of getting accepted for a loan or grant, speak to an accountant or financial advisor. They can help you find the right opportunities and hone your application to perfection. 

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