The UK government is keen to support British businesses, especially small and new businesses, and when paired with the wide range of private lenders they create a vibrant and accessible funding landscape. Here are the main programs currently running in the UK, that may benefit your business:
Start Up Loan
Government-backed loans for £500 to £25,000 are available to new and small UK-based businesses that have been trading for less than 36 months. Technically, a Start Up Loan is not a business loan, but an unsecured personal loan, so the person applying will be credit checked. Repayment periods can be anything from one to five years, and all loans are charged a fixed interest rate of 6%. There are no fees, and recipients of the loan also get free mentoring via the program. This program has proven enormously popular among new enterprises, as the program is specifically intended for set up and growth (although loan funds can be used for almost any legitimate business expense).
Growth Guarantee Scheme
The Growth Guarantee Scheme is the successor to the Recovery Loan Scheme, and it aims to help small businesses access a wide range of financing products offered by private lenders, by providing a 70% government-backed guarantee. To qualify a business must be UK based, generate more than 50% of its profit from UK trading, and have a turnover of less than £45 million. Amounts of £1,000 to £2 million are in theory available, with different products (e.g. term loans, overdrafts, invoice financing etc.) offering different limits, as well as different term lengths and fees.
This program essentially means working with a private lender, with the government simply providing backing for the financing rather than administering it themselves. Only certain lenders participate in the program, so it’s important to find one that does if you’re interested in this program.
Innovate UK
UK Research and Innovation offers a range of funding programs, several of which are open to for-profit businesses. Their bread-and-butter is technology, healthcare and research, but that doesn’t mean a business has to be in one of these sectors to qualify. Both grants and loans are available in a range of sizes, with specific eligibility criteria and terms dependent on the program being targeted. Generally though, this is a great place to look for funding if your business is engaged in innovation of any kind.
Seed Enterprise Investment Scheme
For businesses looking to raise money from investors as it begins to trade, the Seed Enterprise Investment Scheme is worth a look. Businesses must be newly trading, UK-based, with gross assets of less than £350,000 and fewer than 25 full-time equivalent employees. Up to £250,000 is available, but the rules around the program – both for the business itself and investors – are quite strict, so it’s worth reading them in full before pursuing an application.
Funding Circle UK
Not all government-backed programs involve traditional mainstream lenders. Some, like Funding Circle, are peer-to-peer lenders. This means that the money for their funding program comes not from a bank’s coffers, but from other enterprises just like yours. At the moment Funding Circle is offering small to medium sized businesses with at least two years of trading history unsecured loans of up to £350,000, and secured loans of up to £1 million, with terms ranging from six months to five years.
Region-Specific Programs
Although there are several UK-wide programs, such as those mentioned above, the majority of government funding programs in the UK are region-specific. Some of these are extremely specific (i.e. for businesses in one specific city or county), while others are more general. For example, Scottish businesses have access to a range of specialised programs, including:
- Scottish Growth Scheme
- Scottish Venture Capital Fund
- Business Energy Scotland SME Loan Scheme
- A multitude of other programs from Scottish Enterprise
While businesses in Wales can apply to the Business Development Bank of Wales, and those in Ireland have multiple options via Enterprise Ireland.
You can find a full list of government funding programs online; this list is updated regularly, and it’s well worth a search for programs in your specific area and sector. Almost every industry and city have their own programs.
Or, if you’re struggling to find a grant or government-backed funding option that works for your business, you might want to consider other forms of business financing. Private lenders can offer large borrowing amounts and attractive interest rates, as well as flexible eligibility requirements and terms. For more information, speak to Swiftfund, or take a look at our blog for more general information.