How to leverage government grants for business financing
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Government grants are a way for businesses to create funding without losing equity upfront. This government funding is very different from loans, equities and guarantees.
Today we’ll be talking about getting financial support for developing a business in the UK. Namely, we’ll discuss grants, whether it’s possible to get a grant for business development, and how to leverage it.
What is a government grant?
The UK provides many opportunities for talented and ambitious people. This is especially true for those planning to develop their businesses in the UK and work in the IT sector.
A grant is a financial contribution from the EU given or awarded to third-party beneficiaries. Direct grants from the Commission are provided on a project basis, usually following a public announcement known as a call for proposals within the framework of specific programs.
The EU does not finance projects up to 100%; part of the funding comes from the EU, and part from other sources. In addition, grants can’t be awarded retroactively for projects already completed.
Businesses or related organisations managing transnational projects are eligible for the grants. The call for proposals published on their website specifies detailed eligibility criteria.
There are three main types of EU funding channels:
- Direct funding
- Shared funding
- Indirect funding
Direct funding is straight from the institution, most often the European Commission.
Shared funding is from the national or regional governments based on ongoing projects and the objectives that the institutions set out. This is the biggest channel, with more than 80% of all funding being given out through this shared channel.
Last is the indirect channel, where regional and national governments give grants and subsidies to businesses for very specific projects. It’s mainly through five structural investment funds:
- European Regional Development Fund (ERDF)
- European Social Fund (ESF)
- Cohesion Fund (CF)
- European Agricultural Fund for Rural Development (EAFRD)
- European Maritime and Fisheries Fund (EMFF)
These main funds work together to support economic development across all EU countries in line with its objectives.
Types of funding
Again, there’s debate over whether those fundings are loans or grants. The answer is it depends. Most are subsidies and grants. For a grant, you get a specific amount of money to develop a specific project or your business in general.
Subsidies are grants you receive, but you have to put in a share of money from your own pocket as well. For example, it may be stated that you will get 1 million euros if you commit to putting 3 million euros from your own pocket to develop that specific project.
Then, we have loans. Often, projects offer you a loan at a very low interest rate to develop that specific idea you had in mind. Now, let’s define the concept of a grant compared to investment and lending.
When investing, you share ownership of your business. When lending, you receive money but then need to repay the loan. When receiving a grant, you can spend the money given on specific purposes and equipment without needing to pay it back.
Leveraging grants for your business
There is a common misconception that funding is only for citizens or businesses that were established and are growing in the EU. That is not true. Business only has to somehow benefit the European market or support European policies.
But you do not have to be a European citizen to apply, and your business does not require EU headquarters. It is important not to miss that opportunity whether you are an Asian business, a US-based business, a Canadian business, or even a UK-based business.
Now, you might be asking yourself, why is the EU giving up money basically for free? It’s simple. The EU is based on the values of strong economic cooperation.
Their goal is to strengthen economic cooperation and promote innovation, sustainability, and green economics. They aim to give companies the tools they need to create a pioneering, fast-growing European market that is competitive on a global scale.
How much can you get?
The grant or subsidy amount depends on your company’s size and the demands of your upcoming projects.
You can receive anything between €2 million and €100 million. Consider using financial platforms to efficiently manage your finances and ensure smooth transactions while accessing these funds.
Check out the Genome EU homepage to learn more about how it can support your financial operations and help you take advantage of these substantial funding opportunities.
Wrap up
Government grants are really large sums of money that can make or break your company’s expansion. This is why it’s so important to make sure you’re not missing out on those funding opportunities upon expansion and in general operations within the EU market.
This is a safe source of money, meaning the institutions are well-regulated and very transparent. The whole process is designed to be fair and easy to access. Examine whether your upcoming projects or the general profile of your company fits within any of the ongoing funding program objectives.
