Business grants can come from a variety of sources and be based locally, regionally or nationally.
Part of the success in obtaining funding in the form of a grant is to be aware of its existence as some financing bodies do not widely advertise the fact that money is available.
Thus, in addition to the main sources from the various governmental business and enterprise type agencies, bodies such as the local council and other organisations with a specific interest in the company’s locality should be reviewed to see what finance might be available.
Advantages of Grants
A frequent factor which exists when a grant is provided is that provided the conditions for it award are adhered to, there is not usually a requirement to repay it in the future.
The cash advantage for a new company can be very welcome, particularly when compared to the risks and financing costs of a bank loan.
Disadvantages of Grants
Due to the nature of grants and their inherent benefits, the application procedures could be very detailed and time-consuming exercises, without the guarantee that an award will eventually be forthcoming.
In addition, the competition for such sources of finance is likely to be fierce as many organisations take the view that the costs of applying are far less than the costs of interest associated with alternative forms of funding.
Unlike other sources of external funding, grants might be distributed on a piecemeal basis instead of all together and this is turn might cause financial hardship for the company.
There may be a mismatch in funding whereby the business requires £20,000 for a new machine for example and is awarded a grant of £20,000 based on the promise that it will recruit and train five people in the forthcoming year.
Until the machine is purchased, the company has no requirement for five new employees, but it can not be awarded the grant until all five trainees have been hired and have been working for a period of say three months.
