Peter Kiddell, director of the Fespa UK Association, regularly carries out funding searches on behalf of members. Here’s his take on finding grants.
Yes it is a rich man’s world; and for the business owner still dreaming of reaching that position there’s the constant fight to source funds to help build the business. Investing their own money or borrowing from the bank are the obvious routes, but not everybody can do the first and sadly the latter can be punishingly expensive, if available at all. It is encouraging then that the Government has recognised the plight of SME’s, particularly in manufacturing, and is doing everything it can within its eye watering economic problems to support such operations.
The range of support discussed in this article is only part of what is available but it does show the areas that are being addressed. Up until recently Business Link offices were all over the country, staffed with business advisers and many support staff. In recent cost saving exercises these offices have been closed down and the advice available channelled to industry through the website http://www.businesslink.gov.uk, your first port of call (unless you are a member of Fespa UK Association in which case it is www.fespauk.com).
As an exercise I went through to the Business Link website and entered ‘funding support’ in the search box and the first search result was ‘support and funding for composting’ - a search engine with a sense of humour perhaps, but it does highlight the challenges of looking for financial support. The following may prove more helpful…
1. Define whether your business is an SME
To determine precisely which type of SME you are go to: http://ec.europa.eu/research/sme-techweb/index_en.cfm. The definition is:
Medium Fewer than 250 employees Turnover up to £50m
Small Fewer than 50 employeesTurnover up to £10m
Micro Fewer than 10 employeesTurnover up to £2m
Vision and viability check
Before you apply you must have checked that the project is viable and be able to see the finished project.
Don’t be a grant grabber
The purpose of a grant is to contribute to funding requirement to facilitate a project. It is very easy to be attracted to the idea of free money but the reality it is not free because it will take time to construct the case for it and unless this is part of creating a valid business case the cost of the time is likely to exceed the value of the grant. It can also distract you from your core business.
Finding the source
The three main sources for grant funding are your local council, central government and the EU - plus banks, multinationals and some charities.
Local councils are interested in supporting initiatives that will benefit the local economy by employing more people, attracting new business, developing a local area. They are highly unlikely to support the purchase of new equipment that will result in redundancies! Grant aid is likely to be less than £5000.00 per project but the decision makers are local to you.
Government grants are looking to benefit the national economy and can be hundreds of thousands of pounds but this is the exception. National government acts as a channel for EU funds for major projects. As a small business you are unlikely to deal directly with the EU unless it is transnational co-operation, particularly when it includes universities. There will still be a national contact point who will help you with the bureaucracy of the EU.
Get to know the right people
Before you fill in any paperwork make sure you speak to somebody in the decision mechanism. If possible speak to the person managing the process. They will be a mine of useful information. Remember they are tasked at giving away money and you need to make it as easy as possible for them to do so. If they can put a voice or face to an application form you have a much better chance of success. Don’t just rely on e-mails.
Have the information at hand
When it comes to applying for a grant you will have to supply a range of information.
- A detailed description of the project. This should include not just business data but the benefits that suit the needs of the grant provider.
- Know how you are going to explain the planning process (that is fully costed!).
- Emphasise your organisation’s abilities to achieve the aims of the project
- And remember - no matter how strong your business case, if it is late you are stuffed.
Filling in the forms
When you fill in an application you need to consider how it will be perceived by the grant provider. Their first consideration will be how it fits their criteria. What you are offering and how you will achieve your aims? Are you capable of delivering? Is it innovative or different?
Do you really need the money?
What are you bringing to the table?
Almost without exception a funder will want to see the contribution you are making to the project. Ideally this is finance; however, costed time, use of plant and equipment, can be used as “matched funding.” Funders, particularly national government, want to be able to quote private finance numbers as a result of their initiatives. It may be that you will have to contribute cash to the pot in which case it may be necessary to line up other sources in the form of investment or overdraft or your own money. Preliminary discussions will answer some of these questions.
Time is of the essence
Some grant providers run out of cash very quickly and others can be left with funds at the end of the period which are them much easier to obtain. Talk to the fund managers first.
As already mentioned, Business Link offices have been closed down and the advice available channelled to industry through the website http://www.businesslink.gov.uk. Fespa UK is a key contact for members too of course. Also try:
Playing the postcode lottery
Your postcode still has a significant effect on the likelihood of receiving a grant. Fespa UK has access to a database that is updated constantly which details all financial and business support available to all areas of the country. A search carried out whilst writing this article for the postcode RG19 4TT (Thatcham). A second search was then done on S75 1JL (Barnsley). The results through up 39 grant options for the first postcode and 80 for the second.
There are two key points that come out of these searches; the large number of results and the fact that even as prosperous an area as Thatcham in Berkshire still offered many funding opportunities. The reports provided as a result of the searches gave full details of the offerings and who to contact. The more specific you can be about the need the more focussed the results.
Getting research and development tax relief on corporation tax
As from April 2012 the tax relief and corporation tax for costs associated with research and development (R&D) has increased to 225%. If you go to http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htmthe detail on this scheme is fully explained.
At Fespa UK we are aware of members who have reclaimed in excess of £50,000 in corporation tax. It may be that your accountant has told you about the scheme but you felt it wasn't applicable to your business, but if you examine the work that you do it will be clear that elements of it can be put down to research and development.
For a definition on what is considered to be R&D go to http://www.hmrc.gov.uk/manuals/cirdmanual/cird81900.htm. Consider what your company does and which elements of its operation can fit into the definitions. Items likely to come within the R&D scheme include:
- Development of structures to satisfy customer needs.
- Work on determining the most suitable environmental management scheme for your company.
- Development of process specific ink systems.
- Developing an improved doming system for membrane switches.
- Making improvements to an MIS system so that it better suits your requirements.
- Establishing the most effective pre-treatment method for your substrates that I used in a difficult application.
- Designing and building special-purpose equipment particular applications.
Show you are innovative
The government has set up the Technology Strategy Board “to accelerate economic growth by stimulating and supporting business-led innovation.” It has created a range of different schemes, some new and others re-branded to be “a catalyst; by highlighting opportunities; by connecting partners and networks and by funding - helping businesses of every size to transform great ideas into the growth products and services of tomorrow.” Go to www.innovateuk.org for more information.