Government Grants, All About

Types of Support

Support for business comes in a very wide variety of forms. Perhaps the most obvious is the direct (cash) grant but other forms of assistance are also numerous. The main types are:

a) Direct Grant

This is a cash item, which may be offered for activities such as Training, Employment, Export Development, Recruitment or Capital Investment projects.

It is rare nowadays to obtain 100% grant funding. Most schemes require the recipient company to put up a proportion of the cost, with a figure 50% being typical. Some schemes state maximum amounts in absolute terms, others have no limits.

b) Repayable Grant

This is where cash funding is offered for a project with the intention that the sums are repaid out of future revenues. The grant is not repayable in the event the project fails.

c) Soft Loan

This is a loan where the terms and conditions of repayment are more generous (or softer) than those, which would prevail if the loan were made available under normal commercial terms.

The interest rate may be less than the on-going commercial rate for a similar loan and/or the repayment term may be longer. Sometimes the loan may be interest-free.

d) Equity Finance

Here a capital sum is injected into the business where the provider does not expect interest or repayment of the loan itself. Rather, the provider of funds takes an equity share of the business, in the hope/expectation that the value of the stake will appreciate at some time in the future, enabling a sale of the stake facilitating a return on the original investment.

Unlike a venture capitalist, who would work in exactly the same way, the expectations and requirements of providers of public funds are less demanding in terms of the eventual return required from the investment, and this is reflected in the terms and conditions and the criteria, which the proposed project must meet.

e) Free or Subsidised Consultancy

Often it is the lack of a particular skill or skills which a company needs – this is particularly so in the case of start-ups and new companies. Some schemes, in recognition of this fact, offer to provide these skills directly via the utilisation, at free or subsidised rates, of consultancy services.

This is achieved by paying, in whole or in part, the fees of accredited or approved consultants who possess the skills the organisation lacks.

f) Access to Resources

It is sometimes the case that small or medium sized organisations do not possess the physical resources or facilities they need in order to develop particular projects. This can be the case particularly in manufacturing or research and development projects, where access to specialised testing equipment can be a drawback.

A number of schemes recognise this problem and provide access to publicly owned facilities (e.g. research facilities operated by the Ministry of Defence).

g) Technology Transfer

New technological advances and practices are sometimes developed by small or medium sized organisations but more usually come from larger organisations in the commercial, academic or public sectors.

The transferring of technology to a wider sphere can be a difficult and costly process. It can also, in the ordinary course of events, take a long time to achieve. A number of schemes tackle this problem with a variety of means to help the faster achievement of transfer.

h) Best Practice Transfer

There are now a number of well-established quality and best practice initiatives. Some, like Investors in People and ISO 9000 apply throughout industry and commerce regardless of sector. Others such as the Lexcel scheme, which applies to the legal profession, are sector specific.

The transfer of best practice procedures from one organisation to another can often be achieved to the benefit of the recipient organisation and, for that reason, is encouraged by business support networks.

i) Shared Cost Contract

The costs of research and development programmes can be prohibitive for companies and organisations acting alone. This applies even to large companies.

Sharing the costs of such programmes with others, whereby all participants share in the costs and the consequent resulting know-how, can be a solution. Such arrangements are often brokered, and sometimes part financed, by public bodies or institutions.

j) Subsidies

Some awarding bodies, whilst not always advancing direct cash grants, will subsidise the costs of approved products or services used by small firms.

k) Advice and Information

Researching the essential information required to develop products, services and markets can be time-consuming and costly for smaller enterprises. A significant input by public bodies therefore goes to the provision of advisory and information services and a number of schemes are of this type.

l) Packaged Assistance

The types of schemes identified above are not always delivered singly and to the exclusion of others. Often a scheme will consist of a number of separately identified types, each becoming one element of a package designed specifically for the recipient organisation. Such schemes offer flexibility to meet the sometimes-diverse needs an organisation has for help and assistance in respect of a particular project.

m) Competitive Awards Schemes

Companies have considerable opportunities to attain industry recognition at national or even international level for outstanding performance through participation in one or more of the great variety of competitive awards schemes that operate, usually, on an annual basis. Often sponsored by government departments, lead-bodies, even Banks, these schemes offer the chance to earn major PR results from the wide publicity generated. Many schemes also offer significant cash prizes or benefits in kind at category or overall winner level.

Note – Relocation Grants

Grants are not normally available for relocation within one of the home countries – the logic being that there is no overall advantage to the country in subsidising the move of a company from A to B.

However, there are incentives to attract companies to relocate from overseas to the UK or to set up operations here. There are also incentives to move from one of the home countries to another.

In addition, there are a number of differently defined “special areas” throughout the UK. Within these areas a number of incentives are offered to resident organisations. Such incentives are also available to those considering relocating to a special area or developing a project there.

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