---

Business Grants - An Overview

---

For the United Kingdom there are some 850 different grants provided by UK national organisations or European Union sources. In addition, there are some 3,000 "grants" provided by local councils, economic development units, enterprise agencies and other specific local bodies.

The amount of grant depends upon the purpose for which it is given. The main purposes are as follows: -

CAPITAL GRANTS FOR INVESTMENT
In reality these grants are more concerned with the protection or creation of employment. Grant levels range between 5% and 25% of overall project costs, alternatively, between £2,500 and £7,000 per job created.

TRAINING GRANTS
Grants and soft loans cover both design and delivery of training. Soft loans of up to 80% of training costs may be obtained by SME’s and other grants of between 20% and 50% of training costs are available in specific instances whereby engineering training is particularly favoured.

RESEARCH AND DEVELOPMENT GRANTS
R&D grants run at between 30% to 50% of the total project cost. Costs may include salaries, consumables, related capital expenditure, consultancy, IPR protection and a substantial contribution towards overheads.

• Feasibility Studies into innovative technology will provide a grant of up to 75% of eligible project costs to a maximum of £45,000. Eligible costs to be at least £30,000 and project duration 6 - 18 months for SME’s with less than 50 employees.
• Development Projects up to pre-production prototype stage of new products and processes involving a significant technological advance. This will produce a grant of up to 30% of eligible project costs to a maximum of ECU 200,000 (including any grant already received for a feasibility study). Eligible costs to be at least £60,000 and project duration 6 - 36 months. Open to SME’s with less than 250 employees.

On the face of it there is little change from the old SPUR/SMART system, however all awards are considered on a competitive or challenge basis.

INFRASTRUCTURE PROJECTS
These grants target specific areas which have suffered industrial or sectoral decline e.g. textile, fishing or defence industry locations.

EXPORT GRANTS
These may subsidise the cost of setting up export activities, or provide joint venture finance. Joint venture support may run at 50% of feasibility studies or a substantial 20% to 50% of joint venture set-up costs.

ADVISORY SERVICES
Free or subsidised consultancy or provision of specialist information. Consultancy grants for specific tasks will run at up to 50% of consultancy fees. Specialist information services, access to databases etc is free or requires a nominal contribution.

MISCELLANEOUS GRANTS
e.g. assistance for museums, the disabled, rail and water freight projects, craft industries and rural development.

The key point is that grants and soft loans will always only meet a percentage of the total cost. The applicant will invariably have to demonstrate that the balance of funding to see the project through to completion is readily available.

Why use a grant consultant?

Where capital grants or substantial grants for research and development are concerned, and some others, the application procedure and forms are complex. More importantly, the decision-making criteria with which civil servants both in the UK and the EU work are not in the public domain. It is thus difficult for outsiders to know or understand exactly what points would favour their application as opposed to those which would condemn it.

Grant bodies are invariably striving to give the minimum grant necessary, in their opinion, to assist the project. whereas the consultant acting, on behalf of the client, will be striving to maximise the grant obtained.

Consultants can help senior management, which invariably has many other priorities, by saving time and effort by carrying out the application procedures on their behalf.

Consultants are most valuable where grants are issued on a "challenge" or competitive basis. Almost all EU R&D grants are issued on a competitive basis, i.e. applications are submitted, ranked in order of merit and only those deemed the most deserving will receive funds.

The UK has been moving strongly towards "challenge" grant awarding. In these instances the use of a consultant is imperative.

Article kindly provided for Bytestart readers by:

Strategy Consulting Limited

Tel: 0845 8380936

Email: info@strategyconsultinglimited.co.uk

Web: www.strategyconsultinglimited.co.uk

Posted December 8, 2005