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First time small business grants – all you need to know about funding

Get up-to-date fast on first time small business grants with this handy summary. Get your business on the road with funding and more.

4 min read

One of the biggest challenges facing many small business owners and young entrepreneurs is getting the funding needed to turn their vision into reality. After all, with no – or little – financial history it may seem there’s little point even applying for a traditional business loan. But, if you’re just starting out, don’t lose heart. There are actually plenty of funding options available to young entrepreneurs.

Grants and loans exclusive to first time small businesses

For starters, there are business grants and small business loans available exclusively to young entrepreneurs and first time businesses. One of the best known is the Prince’s Trust Enterprise Charity Programme, which has helped over 85,000 young people start their own businesses since it started in 1983.

The programme allows you to apply for a business loan of up to £5,000, so long as you’re aged between 18 and 30 and not in full-time education. You get to repay this amount on favourable terms, and the Prince’s Trust provides successful candidates with access to a business mentor for two years. The Trust also offers small business grants to other young entrepreneurs in certain circumstances.

Specialised loans and schemes to make the world a better place

UnLtd is a network which provides financial and business support to young social entrepreneurs. So if your business involves tackling social problems, you may be eligible for a grant, award or business loan. Even if you’re studying full time you’re still eligible to apply, but you need to be under 21.

Alternatively, if you’ve got an idea that addresses sustainable living challenges, there’s another option. Shell Livewire is a private initiative providing a start-up grant of up to £5,000, as well as ongoing mentorship. It’s open to young entrepreneurs aged between 16 and 30.

What about the government? Do they offer any help?

The government’s New Enterprise Allowance Scheme provides a weekly allowance of up to £1,274 for 26 weeks. You can also apply for a loan to help with start-up costs, which you then pay back over 5 years. To be eligible you need to be receiving Jobseeker’s Allowance, Employment and Support allowance, or Income Support.

There’s also the government’s Start Up Loan Company, which lets new businesses borrow up to £25,000 at a fixed rate of 6%. You get a year off repayments to help you build the business, and then have between 1 and 5 years to pay back the loan.

There’s also crowdfunding

More and more first time small businesses are turning to crowdfunding. This works by spreading the risk of investing in their business across a lot of investors who contribute just a small amount each.

It sounds complicated - how does it work?

It’s quite straightforward. There are two main types of crowdfunding which may be helpful to you as a first time small business owner.

  • Debt crowdfunding draws together people to contribute to a loan

  • Equity crowdfunding lets you raise money by offering a stake in your business in return for investment.

Read more on the UK Crowdfunding Association website.

Is it worth asking the bank?

Finally, just because you’re a young entrepreneur, it doesn’t mean you should give up all hope of obtaining funding through a traditional bank loan. Many financial institutions may still loan you money, especially if you have a relative or close friend who’s willing to act as a guarantor.

Friends and family to the rescue

You may find that someone close to you is prepared to invest in your business. After all, according to Entrepreneur Magazine, more than 38% of start-ups receive private funding from family and friends. If you don’t ask, you don’t get.

Being a young entrepreneur isn’t always easy, but there’s no excuse for letting a lack of funding stop you from achieving your business goals. There’s more help out there than you think – you just need to take the plunge.

Do you feel better informed about first time small business grants? The QuickBooks Blog covers a wide range of business-related topics. It’s all part of the support we offer to small businesses in the UK.

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