Best Small Business and Start-Up Grants and Loans in the UK
Starting or growing a business takes more than determination – it takes funding. Many small businesses and start-ups delay applying for financial support because they assume they won’t qualify, or they simply don’t know what’s available. But registering for schemes can take as little as two minutes, and the right grant or loan could be the springboard your enterprise needs.
This guide explores the best grants and loans for small businesses and start-ups in the UK. We’ll cover government-backed schemes, private lenders, social enterprise support, and the role of financial advisers in helping you secure funding.
Key Takeaways
- UK small businesses can access grants and loans to secure funding for growth and development.
- Grants are non-repayable, though they come with conditions. Loans require repayment with interest, but often with flexible terms.
- Start-ups can access tailored funding like The Do It Awards, The Eureka Eurostars scheme, and the Government-backed Start Up Loan.
- Financial specialists and accountants can improve your chances of approval and help you manage repayments.
Small Business Grants
For small businesses needing a boost, grants are an attractive option. Unlike loans, you don’t repay the money, though you must meet strict eligibility criteria. Grant amounts vary widely – from £1,000 up to £100,000 – and they are often sector-specific.
1. Seed Enterprise Investment Scheme (SEIS)
This scheme encourages investors to back new ventures by offering them generous tax relief. While technically an investor tax incentive, SEIS helps small businesses by making them more attractive to investors. Through SEIS, companies can raise up to £250,000.
Best for: Early-stage companies seeking equity investment.
2. Gigabit Broadband Voucher Scheme
If your business is in a rural or hard-to-reach area, you could be eligible for up to £4,500 towards the cost of installing faster broadband.
Best for: Rural businesses needing reliable internet to operate effectively.
3. Arts Council National Lottery Project Grants
Creative organisations – including theatres, museums and galleries – can apply for Arts Council grants to fund cultural projects.
Best for: SMEs in the creative industries.
4. CRACK-IT Challenges
This innovative programme invites SMEs to partner with academics to solve real-world scientific and technological problems. Successful applicants can secure contracts of up to three years.
Best for: Tech and science-focused SMEs with a collaborative mindset.
Small Business Loans
If you’re not eligible for a grant, loans are another way to secure funding. While loans require repayment, many UK banks and alternative lenders offer flexible terms.
NatWest Small Business Loan
- Borrow: £1,000 to £100,000
- Repayment: Up to 7 years
- Security: May be required
HSBC Small Business Loan
- Borrow: £1,000 to £25,000
- Fixed interest rates
- 3–6 month repayment holiday available
- Repayment: 12 months to 10 years
RBS Small Business Loan
- Borrow: £1,000 to £100,000
- Repayment: 1–7 years
- Fixed interest rates
Lloyds Business Loans
- Borrow: £1,000 to £50,000
- Eligibility: Businesses with turnover under £3 million
Starling Business Loan
- Borrow: £25,001 to £250,000
- Repayment: 1–6 years
- One-off 4% fee but no penalties for early repayment
Funding Circle Business Loan
- Borrow: £10,000 to £750,000
- Requirement: Must have traded for at least one year
Fredericks Foundation Loans
- Borrow: £10,000 to £50,000
- Target: Social enterprises
- Flexible repayments based on revenue share – lower payments if revenue falls
Start-Up Grants
Grants designed for early-stage businesses can help transform an idea into a viable venture.
The Do It Awards
Run by UnLtd, this award provides up to £8,000 for entrepreneurs tackling social issues.
Best for: Social entrepreneurs looking to scale community-focused ventures.
The Eureka Eurostars Scheme
Part of the largest international funding programme for SMEs in research and development. It provides not only funding but also access to expert support networks.
Best for: R&D-intensive start-ups with international ambitions.
Start-Up Loans
If you’re at the very beginning of your journey, government and private lenders offer tailored loans to help get you started.
The Start Up Loan (Government-Backed)
- Borrow: Up to £25,000
- Interest: Fixed 6%
- Repayment: Up to 5 years
- Includes: 1 year of free business mentoring
The Prince’s Trust Enterprise Award
In partnership with the Start Up Loans Company, The Prince’s Trust provides funding to 18–30 year-olds planning to start a business.
The Virgin Start Up Loan
- Borrow: £500 to £25,000
- Interest: Fixed 6%
- Repayment: 1–5 years
- No set-up fees or early repayment penalties
How an Accountant or Adviser Can Help
Applying for a grant or loan is about more than filling in forms – you need a strong business case. Financial specialists can:
- Identify the best scheme for your business sector and stage.
- Assess your repayment capabilities for loans.
- Help prepare a business plan and financial forecasts.
- Improve your chances of approval by spotting weaknesses in your application.
Legal and Practical Considerations
Before applying, consider:
- Eligibility criteria: Some schemes are restricted to regions, industries, or turnover thresholds.
- Terms and conditions: Grants may require reporting on outcomes; loans may include personal guarantees.
- Tax implications: Some funding may be taxable, and SEIS/EIS schemes involve investor relief rather than direct grants.
- Consumer protection: If you take out a regulated loan, you’ll have rights under the Consumer Credit Act.
Seeking independent legal advice can help you understand your obligations before committing.
Conclusion
The UK offers a broad range of grants and loans to support small businesses and start-ups – from social enterprise awards and creative grants to flexible bank loans and government-backed schemes. Choosing the right option depends on your business model, sector, and growth stage.
Don’t let funding opportunities pass you by. With the right preparation, you could secure the financial support to launch, grow, or transform your business.
Need advice on business funding?
Parachute Law works with accountants and financial advisers who specialise in helping start-ups and SMEs secure grants and loans. Get in touch today for tailored guidance on your application.
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