Government Funding for SMEs
There is a wide range of government funding options available to small and medium sized enterprises (SMEs). When looking for funding it is best to focus on the below areas and to locate and identify which funding may be available to you.
- Sector specific
- Founder specific
- The above will give you a focus when looking for potential relevant funding for your business.
https://www.gov.uk/business-finance-support providing a great source of all funding available which can be filtered by investment type, stage of your business, the region and industry.
Innovate UK Grants
Innovate UK is part of UK research and Innovation, a non-departmental public body funded by a grant-in-aid from the UK government. Since 2007, Innovate UK has invested around £2.5bn to help businesses across the country innovate, with match funding from industry.
For some grants you will need to have secured an independent source of funding which the grant will match or work in partnership with other businesses.
We recommend looking at the Knowledge Transfer Network (https://ktn-uk.org), an organisation that promotes the uptake of Innovate UK grants. Along with listing the available grants they also have a vast array of information on how to apply.
EASME (EU Grants)
The Executive Agency for Small and Medium-sized Enterprises(EASME) has been set-up by the European Commission to manage on its behalf several EU programmes in the fields of SME support and innovation, environment, climate action, energy and maritime affairs.
How these grants will be delivered after Brexit is currently unknown and further information should be released over the coming months.
R&D Tax Credit
R&D tax credits aim to support companies that work on innovative projects in science and technology. They can be claimed on unsuccessful projects.
In order to qualify the R&D must be part of a specific project for advancement in science or technology, it must relate to your company’s trade either an existing one or one that you intend to start up based on the results of the R&D.
You can claim SME R&D relief id you’re an SME with:
- Less than 500 staff
- A turnover of under 100 million euros or a balance sheet total under 86 million euros
SME R&D relief allows companies to:
- Deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total230% deduction.
- Claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss.
It is important to note that R&D tax credits are paid retrospectively.
R&D Capital Allowance
This a scheme used to claim back money on assets which aid innovation. You will receive 100% tax relief on capital expenditure relating to innovation.
Innovate UK Loans
Innovate UK loans provide an alternative funding option which won’t dilute your equity.
They are developed to help with the commercialisation stage of developing new products.
Between £100,000 to £1,000,000 in loans can be provided.
They are one of the few lenders who will provide a loan to small businesses with a typical interest rate of 7.4% with a 5-10 year repayment schedule.
The patent box is designed to encourage companies to keep and commercialise intellectual property in the UK. It allows you to apply a lower rate of Corporation Tax (10%) to profits earned from its patented inventions.
If your company holds certain medicinal or botanic innovation rights it can also take advantage of patent box benefits.
You can use patent box if your company:
- Is liable for corporation tax
- Makes a profit from exploiting patented inventions
- Owns and has exclusively licensed the patents
- Has undertaken qualifying development on the patents
Coronavirus Specific Support
Coronavirus Business Interruption Loan Scheme (CBILS)
CBILS provides financial support to SMEs across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the Covid-19 outbreak. The scheme has been extended until 31 January 2021.
The scheme can be accessed via a range of accredited lenders. A lender can provide up to £5,000,000 in the form of term loans, overdrafts, invoice finance and asset finance.
If you are claiming for a period that ends on or before 31October 2020, you can only claim if you have previously furloughed your employee before 1st July 2020 and you have submitted a claim for this by 31st July 2020.
Furlough – Coronavirus Job Retention Scheme
Furlough has been brought in, so that in the event you cannot maintain your workforce because your operations have been affected by coronavirus you can furlough employees, and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.
The scheme has been extended until 31st March2021 and from the 1st November 2020 you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.
Coronavirus Job Retention Bonus Scheme
Originally scheduled to be paid in February 2021 but this has been extended to the end of March 2021 following the extension of theCoronavirus Job Retention Scheme.
This is a one off £1,000 taxable payment to the company, foreach eligible employee that your furloughed and kept continuously employed until 31st January 2021.
Bounce Back Loans
The bounce back loan scheme is designed to help SMEs to borrow between £2,000 and up to 25% of their turnover. With the maximum loan being £50,000. The government guarantees the loan and there won’t be any fees or interest to pay for the first 12 months. After the initial 12 months the interest rate will be 2.5% per year. The loan is for 6 years but can be replayed early without a fee.
The scheme is open for applications until the 31st January 2021.
If you already have a bounce back loan you can top it up to the maximum entitlement.
The Future Fund scheme is designed to issue convertible loans between £25,000 to £5,000,000 to innovative companies that face financial difficulties due to the coronavirus outbreak.
The funding provided is to be matched from private investors.
Applications run until 31st January 2021.
A business is eligible if:
- UK incorporated
- Raised at least £250,000 in equity investment from third party investors in the last 5 years.
- None of its shares are traded on a regulated market, multilateral trading facility or other listing venue.
- Company is incorporated on or before 31st December 2013
- It must have either half of employees UK based or half of revenues from UK sales.
Find out More and Apply Here:
Coronavirus Large Business Interruption Loan Scheme(CLBILS)
CLBILS helps medium and large sized businesses to access loans and other kinds of finance up to £200m. to be eligible the company must be UK based, with an annual turnover of over £45m and has not received support under the Bank of England’s Covid-19 Corporate Financing Facility.
The scheme is open until 31st January 2021. Find out more on the link below;
Coronavirus Credit Financing Facility “CCFF”
This scheme allows the Bank of England to buy short-term debt from large companies. This scheme will support your company if it’s been affected by a short-term funding squeeze, and allow you to finance short-term liabilities.
All companies and their financial subsidiaries that make a material contribution to the UK economy are able to participate.
The scheme can be accessed via a range of commercial lenders. Find out more here;