It is puzzling to consider the fact that despite the publicity that has been released about them, small businesses in the UK still fail to take full advantage of the grants that are made available to them. The technical term that is used by the technocrats is the lack of “absorptive capacity”. In truth, it still remains the case that you can lead the giraffe to the water but making it drink is another matter altogether. Government grants are one of the ways of raising capital for your small business. This article explains to you why you need to take advantage of government grants for small businesses in the UK.
Reasons given for not taking up the grants
There are many explanations for the occasional lack of interest in government grants as follows:
- Lack of accurate, timely and relevant information about these schemes.
- Conservative thinking amongst entrepreneurs about accepting government aid.
- The fear that accepting the grants will mean a loss of control and independence.
- Difficulties of access that are primarily created by excessive bureaucracy on the part of the government.
All these reasons have solutions, but it is not clear that UK small businesses are covering all the bases. After all; government grants are an indirect expenditure of taxpayer money and small businesses are some of the biggest tax payers in the UK economy.
The benefits of accessing government grants and loans
These grants represent a very cost effective way of starting and growing your business. Sometimes they are offered as loans at below market interest rates and very generous repayment terms. At other times they are outright grants with no need for repayment, apart from a general accountability requirement. A case in point is the Regional Growth Fund (RGF) which currently supports over 9000 small businesses in the UK. The total individual grant can run up to nearly £1 million.
For those that have less-than-stellar credit, the government business grant can give them the push they need in order to engage in entrepreneurship. The high street banks will require important guarantees such as significant collateral before they will take on any new business, let alone one that is run by someone with a poor credit rating. An impressive example of the government intervening is the Start-Up-Loan scheme that offers planning support and up to £6000 per application.
It is through these grants that entrepreneurs with limited capital are able to penetrate those markets that are already established. Although the government can use regulation to fight oligopolies and monopolies; competition is the best safeguard against market abuse. That is why they offer schemes such as UK Export Finance program (UKEF) which can be used to underwrite loans for export sales. The small entrepreneur in the UK is given a chance to compete in an environment which would otherwise be completely closed off to them.
Do not let this chance pass by
There is a myriad of websites that provide specific guidance for applications. Allowing multiple applications is an added bonus because it means that failure on one occasion does not completely preclude future applications. These are funds that are available for new entrepreneurs and it is a shame that they do not get as much attention as they ought to.