Business Funding Edition
The most frequent request from businesses contacting the Growth Hub is related to raising finance. This is a very complex area and so this newsletter focuses on some, but by no means all, of the options available to businesses.
Funding for Starting a Business
New business owners often approach friends, family or their bank for funding to get started. For many, this is not a viable option, so the government-backed Start-Up loans were established.
With a fixed interest rate of 6% and the ability to borrow between £500 and £25,000, Start-Up Loans offer an affordable source of finance to help new and early-stage business owners get their business to market. The loans also offer up to 12 months mentoring.
Funding for Export
UK Export Finance (UKEF), the UK’s export credit agency, representing a new partnership with 5 major high street banks to encourage small businesses to access millions of pounds in government-backed trade finance directly from their bank.
UKEF, as part of the Department of International Trade, provides financial support to help UK companies sell to international customers.
UKEF provides guarantees to banks to help businesses access bank finance, even where they’ve reached their credit limit or if the deal is considered too risky for the banks to take on alone – opening up emerging global markets to UK suppliers.
Alternative Funding – Equity Crowdfunding
All businesses need additional funding at some point to help their growth, and often overlooked alternative source is equity crowdfunding.
Equity crowdfunding is the process whereby investors pledge money to unlisted businesses in exchange for shares. In just 6 years, well over £600million has been raised in the UK.
Brighton based Growth Hub partner Shadow Foundr have put together some tips on how to choose the right project and platform.
Capital Grants for Rural Businesses
LEADER offers grants between £2,500 – £75,000, limited to a maximum of 40% of the project’s eligible costs for rural businesses. A higher support rate may be available for applications by not-for-profit organisations to support projects that are not intended to generate an economic gain.
Eligible project costs typically include capital items and associated costs such as the purchase of equipment or machinery, the costs of construction, conversion or improvements to premises, and intangible investments such as e-commerce systems.
Productivity grants for CapEx
In exceptional circumstances, high growth business that can evidence not being able to attract other finance may be able to apply for capital grants of up to 40% of project spend up to £170,000.
This highly selective will be given to businesses that are achieving 20% per year growth, seeking to invest in capital projects to improve their productivity.
Funding Growth Businesses
The Coast to Capital LEP has allocated £5million to create a funding escalator comprising a loan scheme and an equity fund managed by The FSE Group.
If you are an established, ambitious SME (less than 250 employees) based in the Coast to Capital area with the potential to deliver high growth and employment opportunities, you may be eligible to apply for between £50,000 – £500,000 debt finance or up to £200,000 equity finance.
This loan is suitable for those seeking finance for expansion and scaling up activities that will deliver a substantial growth impact. The equity funds would be allocated to businesses whom can show creditable financial projections that clearly show the findings impact as well as a realistic exit strategy. To find more on the eligibility for this funding, click the link below.
Innovate UK and the Knowledge Transfer Network are launching innovation loans that will offer affordable, patient, flexible, interest-bearing and repayable – funding for later-stage R&D projects with a clear route to commercial success.
They will offer loans to growth-oriented SMEs through competitions to make sure that they are completely focused on innovation and growth. This is a new funding opportunity and so Innovate UK is undertaking a series of launch events.
Funding for Apprenticeships
Funding is available from the government to pay for apprenticeship training, the amount of which depends on whether the business pays the apprenticeship levy or not. Find out more about the apprenticeship levy here.
The Government is willing to fund up to 90% of the costs of training and assessing your apprentice, paid directly to the training organisation. Additionally, you may be eligible for extra funding depending on both you and your apprentice’s circumstances.
Find more on apprenticeship funding here
Further funding queries can be answered by the Growth Hub Team on 01403 333840
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