Business Grants: Advantages and Disadvantages
As a start-up or small business owner wishing to turn your great idea into a thriving business venture, acquiring the necessary funds to achieve this vision can be frustrating. Your size may limit your ability to qualify for traditional forms of business lending, making it all too easy to assume that the capital your business requires lies beyond your reach. But before you decide to look inwards and remove funds from your own savings, you could explore what fundraising opportunities exist in your local area, including Business Grants. However, using a Business Grant has both advantages and disadvantages that need to be acknowledged in order for you to make an informed decision as to whether this is a suitable path for your business or not.
Advantages of Business Grants
Business Grants offer a variety of advantages to businesses, but these vary depending on the scheme. They are so popular because any funding your business receives doesn’t need to be repaid. As such, you could say that grant money is free money. You also aren’t required to provide shares either, so could receive funding without losing control of your business. In addition, you’ll gain the confidence of knowing that your venture has been publicly endorsed by the scheme’s operator (which could be anyone from a government body, growth hub, industry-specific associate or even a large corporate entity) and use it as a promotional tool.
Disadvantages of Business Grants
Nevertheless, there are disadvantages to Business Grants which must also be taken into account. For one, every Business Grant scheme operates differently, so you must read through all entry requirements for each scheme thoroughly to see if you’re eligible, which can take time. That said, some of the most common factors that such schemes take into account can range from sector, niche, location, business plan and financial situation to turnover - highlighting the need for careful planning and research.
Also, different Business Grant schemes may be intended to fund different aspects of your business, so you need to make sure that your goals align with the purpose of the scheme you are considering. Yet even if your goals are suitable, you should also check how much capital your business might receive, since such schemes tend to impose limits on how much they’re will provide, based on either a set limit or a percentage. This could result in only a portion of your requirement being met, with your business having to pay out for the rest.
In addition, one of the biggest disadvantages of applying for a Business Grant is how popular they are, meaning that you’ll be facing a lot of competition from rival businesses. So even if you manage to meet every entry requirement and present a great pitch, gaining access to additional capital this way could still prove a struggle. However, rather than waste precious time, you may want to seek out other alternatives.
Although Business Grants are a useful tool, there are other ways of raising the funds your business needs to develop and succeed. Thanks to the Alternative Finance Industry, more and more small businesses are gaining access to a wide range of business finance solutions. Whether you’re looking to support growth or maintain reliable day-to-day operations, just some of the products on offer to you include Secured business loans, Invoice Finance, Overdraft Replacement or even Merchant Cash Advance. So if you’re looking to raise capital but can’t afford to wait around for a Business Grant, all you need to do is source a suitable finance solution from a lender you can trust, which is where speaking with a qualified business finance professional could help.
Need help sourcing a suitable finance agreement?
As a small business owner, exploring the UK lending landscape can feel intimidating. Although Business Grants can be useful during the early stages of your development, being accepted isn’t an easy feat to achieve. But with the Alternative Finance Industry opening the doors to a new generation of lenders and business finance products, there are many other ways in which you can ensure the success of your vision - providing you know where to look. Fortunately, that’s where we can help.
At Rangewell, we’re an Access to Finance specialist who’s mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. So if you’re looking to raise money for your business, apply for a Small Business Loan today or find out more with Rangewell.