Grants and Loans
Grants offer financial assistance for specific projects, e.g. the production of promotional materials or the restoration of a shopfront. The obvious benefits of grants are:
- they don’t have to be repaid, unless you fall foul of the grant criteria
- they cover some of your project costs, so free up money to be spent in other areas of your business.
However, grants can have some downsides, such as being subject to specific criteria, for example the geographic location of the business or the specific project the money is for, and availability can be limited so competition is often fierce.
Before applying for a grant you should carefully weigh up your options. If you need working capital then perhaps it would be better to apply for an overdraft. If you need money for a variety of business purposes, e.g. stock, equipment, etc, then perhaps a loan will be better. If you need tens of thousands of pounds, then you may want to consider venture capital.
Loans are not only available from commercial sources, such as high street banks; they are also available from business support organisations such as enterprise and development agencies. It is advisable that you ‘shop around’ and look for the best deal for your business. You may want to consider:
- interest rates, and whether they’re fixed or not
- the amount of security the loan provider requires
- repayment periods; and
- repayment ‘holidays’
The advantages of loans are that:
- they are widely available
- they can be for large amounts
- they are not necessarily tied to a specific project on which the money must be spent.
The disadvantages of loans are that:
- they will only be offered to businesses that are seen as being viable in the eyes of the loan provider; and
- they have to be repaid!
Before applying for a loan you should look at the other options available to your business. If you need working capital then perhaps it would be better to apply for an overdraft. If you only need a small amount of money for a specific project, such as installing a security alarm, then you may be eligible for a grant. If you need tens of thousands of pounds and you are a limited company, then you may want to consider venture capital.
Apply For Funding
If you're looking for funding, take a look at our awards page where you can apply online for the chance to win £5,000 for your business.