Typically, you have two options when looking for financial support to start a small business, a grant or a loan. What is the difference and which one would be best for you?

The fundamental difference between a loan and a grant is that you are required to pay back a loan, usually with interest; therefore, loans are generally easier to obtain. Grants tend to only be made available for specific types of businesses, sectors or activities – so finding one you’re eligible for, especially as a start-up, will be more challenging.

Finding grants for small business start-ups

If you’re looking to see what grants are available to help you start a business the best place to look is your Local Enterprise Partnership (LEP). These are a network of 38 organisations throughout the UK, that support their local business with Growth Hubs; delivering government-funded advice, grants and initiatives.

Every Growth Hub will have different grants on offer depending on the government and local authority’s offering.

Grants that are on offer include:

Go Create

Go-Create Grants are offered as part of the Innovation Support for Business (ISfB) programme.

Oxfordshire Apprenticeship Grant Scheme

Grants for businesses to help remove barriers for potential Apprentices and to support them in their career development.

Unfortunately, none of the grants currently on offer are available for start-up businesses. Grants are usually made available to support very specific areas such as green tech or innovation – so you might find it hard to find a grant that you are eligible for in the very early stages of your business.

Engaging with your LEP will ensure you find out when different grants become available. Sign up for the newsletters and follow on social media to find out when different grants become available. OxLEP also has the OxLEP Business Support Tool that takes 5 minutes to complete. You will then receive a bespoke support plan that will recommend other support available for new businesses.


Finding a loan for small business start-ups

There are lots of organisations offering business startup loans. Rather than go with a private lender that may have higher interest rates, and require security, we recommend you apply for a UK Government start-up loan from the British Business Bank. These are government-backed, unsecured loans from £500 to £25,000 to start or grow your business.

Unlike a business loan, this is an unsecured personal loan, and you will get free support and guidance to help write your business plan plus 12 months of free mentoring for successful applicants. Start-Up Loans have a fixed interest rate of 6% per year and you can repay over 1 to 5 years. There’s no application fee and no early repayment fee.

Please note you can access government-backed Start Up loans from different brokers, not just the British Business Bank.

It is important you understand the terms of any loan you take out and what you are putting at risk (i.e., is the loan secured by your home) before you agree to anything.

If you are looking for advice on how best to start your new business, including where to find financial support, be it a loan or a grant, engaging with your LEP is a good first start. It is their role to support you and they will be able to offer you the free advice you need about loans and grants via one of their coaching, mentoring or advice services.

Get advice on financing your business

Knowing the best way to turn your business idea into reality is the first step to starting a lucrative side hustle or creating a break-through brand. But in order for a new venture to succeed there are some key decisions prospective business owners must make early on in the process.

In this talk, Matt Williams, MD and founder of Cypher outlines how to set off a new start-up business on the right track.

“Sign up for the newsletters and follow on social media to find out when different grants become available.”

Business Support Tool

Need further help with your business challenges or any other area of support? Speak to our experts!

Funding & Grants

Take a look at the full range of grants currently available to businesses.

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