What Financial Help Is Available In The UK For Entrepreneurs?

You’ve got the perfect business idea, completed all your planning, and now you’re just itching to get on with your new venture. But there’s just one small thing still to sort out – funding.

For SMEs and start-ups in particular, having the right funding in place early on can really make the difference between success and failure. Not only that, but it can help your company grow and develop, not just in the immediate term but for investing in the future too. So what are your options?

If you’re over 18 and live in the UK, we’ve put together some handy funding ideas that will hopefully mean a huge step forward in getting your plans off the ground.

Start-up loans

If you’re interested in starting or building a new business, you could qualify for a government-backed personal loan called a Start-up Loan.

Applicants each have a personal mentor who will work with them on their business plan before it is then pitched to a panel for consideration. Anyone who owns or is partnered in a business can apply individually for up to £25,000 each up to a maximum of £100,000 per business available. The average loan is in the region of £5,000 and must be repaid in five years or sooner. It’s unsecured as well, so there’s no requirement to have a guarantor or any assets.

The Prince’s Trust

If you’re setting up a new business and you’re aged between 18 and 30, The Prince’s Trust offers various loans and grants to help. Worth £1000 to £5000 if you’re currently not working, or are working under 16 hours a week, they’re ideal for school leavers in particular. However, funding is not available to anyone who is on a gap year or who has received an undergraduate degree in the last six months. Additionally, you must not already have a professional qualification or postgraduate degree.

Seed Enterprise Investment Scheme

The Seed Enterprise Investment Scheme (SEIS) means that business investors can claim a sizeable tax relief on funding up to a maximum of £100,000 per year. To be eligible, you must be a new business that’s been trading for under two years.

Been in business for more than two years and looking to invest in growth and innovation? More established companies could well be eligible for R&D Tax Credits that will help with the costs.

New Enterprise Allowance

The New Enterprise Allowance (NEA) was launched for people who have been unemployed for a long period. The idea is that they get back into the world of work by starting their own business. If this applies to you, and you’ve got a well-constructed, workable business plan, you may be able to receive the services of a personal business mentor plus a weekly allowance worth up to £1,274 across 26 weeks.

At present, the government stipulates that to be able to obtain NEA assistance you must be aged 18 or over and be in receipt of one of the following benefits:

  • Employment and Support Allowance (either you or your partner can receive it)
  • Jobseeker’s Allowance (either you or your partner can receive it)
  • Income Support because you’re a lone parent, or due to illness or disability

You may also qualify if you’re in receipt of Universal Credit, including if you’re self-employed already.

Venture capital investment

Venture capital is achieved via venture capitalist (VC) firms, which are essentially streams of income that are managed by a trust or a limited partnership. The people who own these firms are incredibly wealthy, so if it’s a serious injection of funds you’re after then this could be a good place to start.

VCs usually invest on average anywhere between £300,000 and £3 million, but £20 million or more is not unheard of. Of course, they expect an awful lot for their money and don’t tend to get out of bed for rates of return less than 40% a year. They usually also ask for a substantial chunk of equity alongside it too. Be careful, as once you’ve handed over more than 50% equity, you risk having less control of your own company.

Traditional bank loans

Since the financial crash of 2008, banks have understandably become very wary about who they loan money to, and how much. This is the case not just for personal finance such as mortgages but for business loans too. Unfortunately, the chances of being awarded a business loan from a high street bank in particular are unpredictable at best, which is why it’s so important that your application stands out as exceptional. You must be able to provide a well written, clear business plan that explains exactly what you intend to use the money for. Not only will this help put you in a good light with the bank, it will also help you work out more accurately what a sensible amount would be to ask for.

Shop around though. Just because one bank has refused your application, it doesn’t mean that the next one will. They all tend to judge on slightly different criteria, although a good credit rating is always essential.

R&D Grants

Once your business is established, you’ll need to think about growing it, which is where Research & Development grants can be very useful. Perfect for SMEs that are looking to extend their development programmes or technological research, R&D grants can help by:

  • Making you look less risky to other investors
  • Speeding up the product/service development process
  • Acting as fundraising leverage

There are several UK and EU funding programmes available, but which one to choose and how to apply effectively can be a very tough challenge for any company and success is by no means guaranteed.

The criteria for receiving an R&D grant is rather tricky in nature, with lots of evidence and paperwork required. Indeed, sometimes it can feel rather like a lottery. That’s why it’s so important that you talk to R&D grants experts like ourselves because we can guide you through every part of the process so you stand the best chance of being accepted.

How can the Tax Cloud calculator help?

Tax Cloud UK is part of Myriad Associates, an expert team of experienced R&D tax consultants. We will be pleased to answer any questions you may have, allay any fears and work with you to facilitate your R&D Tax Credit application to give you the best chance of a success and maximising your claim.

Sign up to Tax Cloud to today to begin your R&D claim. With separate service offerings for both businesses and accountants, using Tax Cloud is a fast and accurate way of claiming R&D tax credits in 2019.

To discuss anything further, call us on 0207 118 6045 or use our contact page for excellent quality, professional advice.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
Start your Tax Cloud claim now Discover if you qualify and ensure your R&D tax claim is maximised. Get started
Powered by Myriad Logo

Myriad are the creators of Tax Cloud, we help enterprises navigate, apply and secure tax incentives and grants. We specialise in R&D Tax Credits, Creative Tax Reliefs, Innovate UK grants, Horizon Europe grants, and R&D Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • Strong track record spanning 20+ years delivering R&D tax credit claims
  • Over £70m claimed and counting
  • Industry leading specialists
  • We employ technical, costing and tax experts and tax experts
  • Confident of delivering value to our clients, we offer our R&D tax services on a success fee-only basis.

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
Jillian Chambers Jillian Chambers Technical Analyst/Writer
Lauren Olson Lauren Olson Technical Analyst Manager
Rabia Mohammad Rabia Mohammad Corporate Tax Associate