Don’t miss out on small-business grants
Small and medium-sized enterprises should take advantage of these funding sources, as well as non-financial help, says David Prosser.
Take advantage of these funding sources, as well as non-financial help.
If you run a small business that hopes to apply artificial-intelligence technologies in the accountancy, insurance or legal services sectors, a new funding scheme could be perfect for you. The government-backed UK Research and Innovation (UKRI) agency announced this week that it is offering a £12m fund of grants to businesses involved in this work.
In fact, the UKRI initiative is just one of myriad schemes offering grants to small and medium-sized enterprises (SMEs) throughout the UK. Many growing businesses know nothing about these schemes, but they could be a crucial source of funding and don't come with all the baggage associated with bank lending. (Most obviously, grants don't have to be repaid.)
The best place to begin looking for such support is the government's business finance support website. This allows you to search for grants for which you might be eligible according to where your business is based, how big it is and which industry you're active in. This site is updated regularly, so keep an eye out.
Support comes in many shapes and sizes
However, this is only the start. In England, each of the 38 local enterprise networks (see LEPNetwork.net to find your most relevant agency) can help you identify further sources of support. For businesses based in Wales, Scotland and Northern Ireland, the Development Bank of Wales, Scottish Enterprise and Invest Northern Ireland offer similar assistance.
Moreover, don't overlook the private sector. Big business is increasingly keen to collaborate with innovative smaller firms, with many blue-chip names prepared to invest in partnerships. That might be direct investment or through an incubator or accelerator scheme, and the support could be financial or access to valuable resources such as office space or marketing assistance.
Nesta, the innovation body, publishes an excellent directory of incubators and accelerators on its website. Bear in mind, too, that your business may need support other than hard cash. Many entrepreneurs get huge benefits from mentoring, networking opportunities and informal advice. Several of the agencies offering access to grant cash can also help you explore these resources.
To have the best chances of securing support, financial or otherwise, you'll need to be well-prepared. You should be able to provide a simple, clear and concise business plan that articulates what you hope to achieve and how you plan to get there.
Make sure you also have financial data available, including forecasts for spending, revenues and cash flow any body offering financial support will expect to be able to scrutinise this data. Equally, however, there's nothing wrong with asking for support. Many of the agencies offering grants bill their initiatives as competitions, but they're usually happy to give advice on how to make the best possible application.
Lending to SMEs remains sluggish
Britain's banks insist they are keen to lend more to smaller businesses, often making eye-catching announcements of new amounts of funding for such loans. Royal Bank of Scotland, for example, recently made headlines with the announcement of a £1bn small and medium-sized enterprise (SME) lending fund.
In practice, however, the Bank of England's statistics, published last week, show there has been no growth at all in lending to SMEs this year, with smaller businesses repaying more debt than they're taking on. By contrast, lending to larger businesses is up by £900m over the past six months. Looking further back, over the 12 months to April, lending to larger businesses was up by 3.1%, with no change in lending to SMEs.
Banks' own figures tell a similar story. Lending to SMEs was flat overall last year, and the £5.6bn lent during the final quarter was 11% down on the same period in 2016, says industry group UK Finance.
The banks themselves say the static lending figures represent a lack of demand for finance from smaller businesses and that loan approval rates are running at 80%. However, a Treasury Select Committee inquiry into how SMEs are treated by their banks has received submissions suggesting that lenders remain reluctant to offer funding.