With customers tightening up their spending, grants are an often overlooked source of capital for businesses that have ambitions to grow
We have begun the Chinese Year of the Rabbit, an animal with the reputation of being the luckiest in the Chinese zodiac.
As any motivational desk calendar will tell you, luck is where preparation meets opportunity. Having gone through a fair few grant applications in my time, that’s not a bad way of describing how to make a successful bid for funding.
Never mind the rabbit then, could this year be the year of the grant?
The majority of grants are funded by national, local and European governments to support deprived areas, to stimulate technological advance through R&D or to make a local or the national economy more competitive in a specific sector. Grant schemes vary in size and complexity with the amounts available ranging from as little as £500 to £10m.
There are many reasons why a business owner will prefer a grant over other forms of funding: you don’t have to pay it back, you’re not giving up a part of your business and winning a grant can be a nice bit of PR (I know we’ve used it at Swoop as an excuse to send out a puff piece).
There are three reasons why you might dismiss the idea of applying for a grant:
- Applications are time consuming and there is no guarantee you’ll be successful
- As grants are often paid in arrears upon completion of stages of a project, winning a grant may put you in the position of having to raise cash upfront. There are specialist lenders, but this is something to consider
- There may be strict criteria on how you can use the money
These are all legitimate concerns, but should they stop you from applying for grants? No. The benefits will almost certainly outweigh the challenges:
- You can increase the chance of a successful application by hiring an experienced professional grant writer. Studies also show that by involving your accountant in the process, you are also more likely to win a grant. In short, it’s not luck: what you do will increase your chances of success.
- While you may have to borrow money to match the grant funding you have won, for such a specific purpose, it is far easier to find a lender. Remember: you’re only paying a percentage of the cost of the project. The benefits you accrue on completion should make the exercise worthwhile.
- Finally, many loans stipulate the purpose for which they can be used, so grants are not unusual in this regard.
With all the objections dealt with, what are the upside of grant applications?
The important thing to remember is that a grant is used to underpin the ambitions of the awarding body.
Right now, the government wants the UK to become a hub for innovation and it seeks to lead on the environment. Unsurprisingly, then, grants in these areas have frequently been made available.
As businesses become increasingly aware of the importance of sustainability, many are looking for ways to reduce their environmental impact and become more competitive. Grant funding can be used to cover the costs of investing in more environmentally friendly practices, such as investing in renewable energy sources, implementing energy efficiency measures, or actioning green building practices.
Making changes such as swapping to energy-efficient lightbulbs, electric vehicles or installing solar panels have all been projects awarded grant money. These investments can help businesses reduce their carbon footprint and save money through reducing reliance on energy through the grid or from oil.
On the innovation front, grant funding can be used to fund research and development of novel products and services. This can help businesses stay competitive in the market and benefit from new technology. A grant may also attract experts in the specific field in which the innovation is happening.
The big benefit of grant funding is that it can provide businesses with access to resources they may not otherwise be able to afford. This can help businesses undertake research and development, cushioning the cost of experiments that don’t have an immediate commercial outcome. In the long run, businesses that can take risks will become more successful and profitable, more competitive and better placed to grow in the future.
Finally, a grant is a good thing to have if you seek to raise equity investment. Investors will know that important work has been done, and that a successful grant is almost an official endorsement of a company. Whether it is a small local grant you’ve taken advantage of or a large innovation grant, any funding that doesn’t have to be paid back is a major bonus’
Much equity investment happens between now and the end of the financial year on 31 March. If you haven’t started now, you may be setting your sights on 2024… and a grant award may be just a thing to raise the profile of your company allowing you to hop ahead of the competition.