Grant Money Definition
Grants are a type of funding awarded to a recipient or organisation, provided by the government, local councils and some private organisations. They are one of the government’s tools for funding projects and ideas that provide services to the public, stimulate the economy and are in the public’s best interest. As grants are a form of restrictive funding, they must be spent on a specific activity or an agreed set of resources.
Grant Agreement Definition
Subject to the size of the grant, you may need to provide a detailed budget plan to the funder, on top of evidence of expenditure, a programme evaluation and frequent progress updates. Signing a grant agreement or contract is often required and in general you don’t have to repay a grant.
Endowment Grant Definition
An endowment is a donation of money to a non-profit organisation or property that is used for a specific purpose.
An endowment fund is an ‘investment fund established by a foundation that makes consistent withdrawals from an invested capital’. The capital, often used by non-profit organisations, churches, hospitals and universities, is, in general, utilised to further the organisation’s potential. Endowment funds are usually funded entirely by donations.
Financial endowments are usually structured so the initial investment amount stays intact, while income made from interest payments can be used for immediate funding support to keep a non-profit company up and running. Other endowments are structured so a portion of the capital is released each year, meaning the donation has a greater impact over a larger time period.
What are grants available for?
Grants are subsidies; therefore, they often support organisations running projects that have a real impact on people who can’t generate enough income to cover their necessary spending. Grants can be implemented for many different purposes, usually to support research and development, help build capacity or establish and develop new activities which could become self-financing. Grants often support businesses that will create jobs in the community, or develop new services, products or markets.
You will need to apply for the grant before the project has started and grants should only be used as an additional funding source - not to fund the whole project.
The grants on offer to help your business will be based on:
- The type of business idea you have, or the sector your business is in.
- The potential of your business model.
- How the grant is expected to be spent.
- Where the business is based.
Key Things to Consider Before Applying for a Grant:
- Grant funding is usually a short-term option, so from the get-go you will need to think about your exit strategy.
- Often funders have priorities for the type of activity they wish to provide funding for.
- Funders may implement terms and conditions into the agreement.
- The application process can be lengthy - each funder has their own priorities, criteria and processes which makes how they deal with every application unique. It could take them some time to make their mind up.
Understanding Your Funding Needs and Options
What kind of funding do you need?
It can be tempting to concentrate on the funding needs that are the most urgent, rather than evaluating the long-term financial needs of your project or business venture. Ensure that you find time to explore different income streams or types of funding - this is fundamental in establishing an optimised, sustainable income strategy.
Does your funding have the ‘S Factor’?
Only you can determine the type of funding you need to make your project a success. However, there are three main ‘S Factors’ to consider when evaluating your funding position:
- Stable - with funding priorities and sources always changing, it is crucial to have a mixed economy, receiving income from at least two sources. Therefore, if one stops, it doesn’t threaten your ability to work successfully.
- Suitable - with there being such a large variety of funding opportunities, you must choose the most appropriate one and at the right time. This translates to finding out what the different types of funding offer and their implications.
- Sufficient - considering how much funding you need for a project allows you to make informed decisions about what type of funding you request.
Whether you’re a small business owner or an ambitious entrepreneur, finance is likely to be one of your business concerns. One of the most desirable finance sources is the small business grant but confirming one can be a complicated process. Luckily, there are numerous schemes - each with their own different set of criteria - that you can apply for.
Grants can range from hundreds of pounds to thousands, based on the type of scheme. Often you won’t have to pay any interest, give away equity, or pay it back at all, making grants a fantastic option for start-up entrepreneurs.
What types of grant scheme are available for start-ups?
Direct grants - direct grants are cash awards given to businesses so they can carry out a certain project. Most schemes will want you to match the grant amount with money you raise on your own. Therefore, in essence you will contribute 50 percent of the cost of the project.
Resource and training grants - often entrepreneurs are unable to afford the necessary resources, expertise, skill sets or facilities at the start. Fortunately, initiatives are put in place to provide access to faculties all over the UK. These include innovation vouchers, local advice and support, business support networks and best practice initiatives, and business support helplines.
Tax relief - the costs associated with paying taxes can be daunting to start-ups, therefore, the government has initiated numerous schemes that can help reduce them, including business rates relief, Employment Allowance and Corporation Tax relief.
Soft loans - this special type of finance is where the terms and conditions of repayment are more lenient than they would be for standard financial circumstances.
What business grants are available to entrepreneurs?
- Business grants for women
- Grants for young people starting a business
- Business start-up grants for over 30s
- Business grants for entrepreneurs
- Business start-up grants for unemployed entrepreneurs
- Business grants for bad credit