Public Sector Grants

The eligibility factors to be considered for a grant are as follows:

• Sectors: Unless specified, UK Innovate smart grants are open to all sectors.
• Size of business: This is call-specific.
• Business stage: Some calls prefer more established businesses but in most cases, there are no restrictions.

The application process for business grants is highly competitive.

Many businesses apply for a limited pool of funds, so it's crucial to submit a strong and well-prepared application.

Below are ways to improve your chances of success:

• Understand the Criteria: Ensure that you fully understand the criteria specifically required for the grant you are choosing to apply for.
• Provide a detailed Project Plan: A clear, detailed project plan outlining objectives, timelines, and expected outcomes.
• Strong Business Case: Present a compelling business case, showing the potential for innovation, market demand, and commercial viability.
• Demonstrate Impact: Showcase the expertise and experience of your team, emphasising their ability to deliver the project successfully.
• Correct planning: Provide a robust financial plan, including detailed budgets and funding requirements.
• Compliance and Documentation: Ensure all required documentation is complete and accurate.
• Seek Support: Utilise resources from Innovate UK and other support organisations to refine your proposal.
• Early Preparation: Start preparing your application well in advance of the deadline. 

This is call-specific. At a high level, the typical requirements would be a project description, project delivery plan and project financial plan.

There are 4 parts to the application process:

• Business and financial information: This includes a link from the Innovation Funding Service to questions, in the format of a survey, that you must answer about your business and to a spreadsheet template that you must fill in to provide financial information about your business for the full period of your loan request.
• Project questions: These are questions that you must answer about your proposed innovation project.
• Project finances: This is information about the costs of your proposed innovation project. 
• Before you start: You will need to create an Innovation Funding Service account before you can apply for an UK Innovate smart grant.

For more information, visit our Innovate UK Smart Grants page. 

The grant should be used in line with the project's financial plan.

Below are the requirements you must bear in mind when using a grant.  

• Purpose-Specific Usage: Grant funds generally need to be used for the purposes outlined in your grant application and as approved by the grant provider. For example, if the grant is for research and development (R&D), the funds cannot be diverted to marketing or unrelated business activities.
• Compliance with Grant Terms: You must comply with all terms and conditions set by the grant provider, which may include specific guidelines on how the funds should be allocated.
• Reporting and Documentation: Regular reporting on the use of funds is typically required, including financial statements, progress reports, and impact assessments. For example, you might need to submit quarterly reports detailing how the funds have been spent and the progress made towards project goals.
• Timeframe for Use: There is usually a specified timeframe within which the grant funds must be used. For example, funds might need to be spent within 12 months of receiving the grant, and any unspent funds may need to be returned.
• Matching Funds Requirement: Some grants require matching funds from the business, meaning you must invest a certain amount of your own money in conjunction with the grant. For example, if a grant requires a 50% match and you receive £50,000, you must also invest £50,000 of your own funds.
• Intellectual Property (IP) Rights: There may be specific conditions related to the ownership and commercialisation of intellectual property developed with grant funds. For example, the grant provider may retain certain rights to use the IP or require you to share revenue generated from it. 

Typically, calls for business grants are open for 2-3 months, and clients will be notified on the success of their application generally within 3 months.

The advantages of grants in business as opposed to other business finance options are as follows:

• Non-Repayable: Unlike loans, grants do not need to be repaid, which helps preserve your business’s cash flow and reduces financial risk.
• Equity Retention: Grants do not require you to give up equity or ownership in your business, unlike venture capital start-up funding or angel investors for small businesses.
• Validation and Credibility: Receiving a grant can enhance your business’s credibility and validate your project, making it easier to attract additional funding and partnerships.
• Focused Funding: Grants are often targeted at specific industries, innovations, or social impacts, providing tailored support that aligns with your business goals.
• Support and Resources: Grant providers, such as Innovate UK for UK Innovate smart grants, often offer additional support, mentoring, and networking opportunities to help you succeed.

The disadvantages of grants in business as opposed to other business finance options are as follows:

• Highly Competitive: The grant application process is highly competitive, with many applicants contending for a limited pool of funds.
• Time-consuming: Preparing a grant application can be time-consuming and resource-intensive, requiring detailed project plans, budgets, and impact assessments.
• Strict Requirements and Conditions: Grants often come with strict requirements, reporting obligations, and conditions that must be met, which can add administrative burden and limit flexibility.
• Specific Use of Funds: Grant funds are typically earmarked for specific purposes and cannot be used for other business needs, which may limit flexibility in how the money is spent.
• Uncertain Continuity: Grants are usually one-off or short-term funding solutions, which means you may need to seek additional funding to sustain your project in the long term.

There is an advisor service offered by Innovate UK Business Growth. They offer general support in identifying suitable grants, providing market information, partnering opportunities and preparing submissions. However, they do not write bids.

Below are some of the ways in which a business grant affects your financial statement:

• Income: Grants related to revenue are recognised as income when the related costs are incurred. Grants for assets are spread over the asset's useful life.
• Balance Sheet: Revenue-related grants may appear as deferred income until conditions are met. Asset-related grants increase asset value but are offset by deferred income. There are also tax implications to receiving a grant:
• Corporation Tax: Revenue-related grants are generally taxable and included in your taxable income. Asset-related grants reduce the asset’s depreciable base for tax purposes.
• VAT: Most grants are outside the scope of VAT, but it's important to verify the specifics of the grant you receive.