Understanding what types of funding are available and appropriate for your business is a valuable first step towards securing a future for your current projects. Part one of our funding series looks at the different types of funding available, their pros and cons, and the types of organisations that might best benefit.
What is Grant Funding?
Grant funding is managed and awarded by government bodies or charitable organisations. There are different grant funding categories: Research & Development (R&D or R&I), Capital, Business Support, Development and Charitable. In order to apply for grant funding, you will need to complete an application form that will be submitted to the awarding body for assessment. There is generally a stated deadline for applications and the process is competitive.
Pros of grant funding
- Non-dilutive funding
- Broad range of funding available – from €10k to €15m
- Some grants give a decision in six weeks from application
- Securing a grant is seen positively by other investors (Angel and VC)
- Strong external affirmation of the business from experts in the sector
Cons of grant funding
- Grant funders will support a certain percentage of total project costs ranging from 25% to 100% (depending on the project) called the ‘intervention rate’
- Some grants have a long decision timeframe of up to six months
- Grants are generally paid out in arrears so consider the cash flow of the venture
- There are some hidden costs like administration and financial compliance reporting
Research & Development Grants (R&D or R&I)
R&D grants are designed to support the research and development of cutting-edge technology and game-changing innovations. Funding can be used to pay for staff wages, equipment & materials, subcontractors, external advisors, market research and project management (including travel).
Funding amounts: €25,000 to €15m
Intervention rates: 45% to 100%
Decision Time: 6 to 24 weeks
Capital grants are designed to support capacity building for businesses, not-for-profits and public organisations. Applicants need to demonstrate their capacity to grow turnover and staff numbers. Funding can be used to pay for tangible assets including buildings, building extensions, fit-outs, machines, vehicles, installations, etc.
Funding Amounts: €50k to €15m+
Intervention Rates: 10% to 50%
Decision Time: 8 to 16 weeks
Business Support Grants
Business Support Grants are designed to provide high-growth potential businesses with expert coaching and advice to support launching and scaling ventures. Funding is generally provided in the form of paid support, for example, 12 hours of business coaching or market research from an experienced mentor or team. Funding could also be used to secure Intellectual Property Rights (IPR).
Funding Amounts: €300 to €2500
Intervention Rate: 100%
Decision Time: 1 to 2 weeks
Development Grants are designed to support not-for-profit organisations with their work in emerging market economies. Funding can be used to support staff wages, capital items, travel, operational costs, and other items required to deliver development projects.
Funding Amount: €100k to €multi-millions
Intervention Rates: 25% to 100%
Decision Time: 12 to 24 weeks
Charitable Grants are managed and awarded by charitable trusts and support the work of other charities, not-for-profits and social enterprises. Funding can be used to support activities that make a positive impact on the lives of disadvantaged people, local communities and the environment. Eligible costs are broad and the funding is more flexible, with an eye to meeting the charitable aims of the funder. The application process is usually less formal compared to government grants but this can also mean less transparency on selection criteria.
Funding Amount: €10k to €500k
Intervention Rates: 25% to 100%
Decision Time: 8 to 24 weeks
The Funding Process
Grant funding can take between 6 and 24 weeks to secure once the application is prepared and submitted for assessment.
|EU Guide to Grants||A comprehensive guide to grant funding from the EU|
|Search for an EU Grant||EU grant search engine|
|Horizon Europe Video||Introduction to the new EU funding framework from 2021|
|R&D Grant Overview Video||From Innovate UK – the UKs leading R&D funder|
Related Content and Comments
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ABOUT THE AUTHOR
Alex has over 15 years experience in founding and running businesses, the most recent company having raised over £50m in funding for businesses based across the globe. He has a thorough knowledge of business funding options and can draw on many successful consultancy engagements to bring impetus to venturing. Alex has now set his focus to working with entrepreneurial teams looking to make a positive impact on the climate crisis and the broader UN Sustainable Development Goals.