Government business grants for small businesses: what's available and the alternatives

Government business grants are funding from central government, devolved governments or local councils that you don't usually have to repay. In the UK, they're mostly aimed at specific goals, such as innovation, hiring apprentices, going green or growing in a particular region. They're not general-purpose funding, and most are competitive, with set eligibility rules and application deadlines.

This guide explains the main types of government grants for small businesses, where to find them, how to apply, and what to consider if a grant isn't the right fit or you need funding sooner.

What is a government business grant?

A government business grant is a sum of money given to a business to support a specific activity or outcome. Unlike a loan, you usually don't pay it back, as long as you use it for the agreed purpose and meet the grant's conditions.

Grants come from several places:

• Central government departments and agencies, such as Innovate UK

• Devolved governments in Scotland, Wales and Northern Ireland

• Local councils and combined authorities, often using regional growth funding

• Government-backed programmes delivered by partners, such as universities or industry bodies

Our guide to business grants vs business loans explains the differences between the two in more detail.

Are government grants for small businesses really free?

Grants don't usually need to be repaid, but they do come with conditions, and they're rarely free money in the everyday sense.

• Match funding. Many grants cover only part of a project's cost so you'll need to fund the rest yourself.

• Payment in arrears. Some grants are paid after you've spent the money and submitted evidence, so you need the cash upfront.

• Restrictions on use. You can only spend grant money on the agreed project and eligible costs.

• Reporting. You may need to show how you spent the money and what it achieved.

• Clawback. If you don't meet the conditions, you could be asked to repay some or all of it.

Grants can also affect your tax position, so speak to your accountant about how any grant you receive should be treated.

Types of government grants for small businesses

Grants change often, so availability and eligibility depends on when you're looking and where your business is based. These are some of the main areas where UK government support is offered.

Innovation and research grants

Innovate UK, part of UK Research and Innovation, funds businesses developing new products, processes and technologies. Funding is offered through competitions, each with its own focus, eligibility and deadlines, which are listed on the Innovation Funding Service. Competitions are usually open to businesses of any size, but they're competitive and typically need a detailed project plan. Our guide on how to get research grants or funding covers this in more depth.

Apprenticeship and hiring incentives

The government funds apprenticeship training and offers payments to employers who take on young apprentices in England. For example:

• For employers that don't pay the apprenticeship levy, the government funds all training and assessment costs for apprentices aged 16 to 24, up to the funding band maximum.

• From October 2026, smaller firms will receive a £2,000 hiring payment for taking on apprentices under 25. 

Local and regional grants

Many grants for small businesses are run locally by councils, combined authorities and regional development bodies. These often support things like premises improvements, energy efficiency, digital tools or hiring in a particular area. What's available varies a lot by postcode, so it's worth checking your local council's business pages and your local Growth Hub in England.

Sector-specific grants

Some schemes target particular industries. For example, the Made Smarter adoption programme supports manufacturers in England adopting digital technologies, with match-funded grants alongside expert advice. Agriculture, creative industries and clean energy also have their own schemes from time to time.

Grants in Scotland, Wales and Northern Ireland

Devolved governments run their own business support and grant schemes:

• Scotland: Find Business Support lists funding and support across Scotland.

• Wales: Business Wales offers support and signposts to funding.

• Northern Ireland: Invest Northern Ireland provides support and funding for businesses.

How to find government grants for your business

The most reliable place to start is gov.uk's finance and support for your business tool. It lists over 100 government-backed schemes, including grants, loans, equity and advice, and lets you filter by business stage, sector, size and region.

You can also check:

• your local council and combined authority's business support pages

• your local Growth Hub (England) or the devolved support services above

• the Innovation Funding Service for open innovation competitions

• industry bodies and trade associations in your sector

How to apply for a government business grant

Every grant has its own process, but most follow a similar pattern.

1. Check eligibility carefully. Look at business size, location, sector, trading history and what the money can be spent on. Applying for a grant you don't qualify for wastes time.

2. Read the guidance and deadlines. Many grants open for a limited window, and some close early once funding runs out.

3. Plan your project. Set out what you'll do, what it will cost, the timeline and the results you expect.

4. Prepare your match funding. If the grant only covers part of the cost, show how you'll fund the rest.

5. Write a clear application. Explain how your project meets the grant's aims, with evidence where you can.

6. Gather supporting documents. These may include accounts, quotes, business plans and cash flow forecasts.

7. Submit and wait for a decision. Assessment can take weeks or months, depending on the scheme.

If you're successful, you'll usually sign a grant agreement setting out the conditions, how the money will be paid and what you need to report.

Why a grant might not be the right fit

Grants can be valuable, but they don't suit every business or every need. You might look at other options if:

• You don't meet the criteria. Many grants are limited to certain sectors, regions, project types or business sizes.

• You need funding quickly. Grant applications and assessments can take weeks or months, which doesn't help with an opportunity or cash flow gap you need to act on now.

• You need flexible funding. Grants are tied to specific projects, so they can't usually be used for general working capital, stock or day-to-day costs.

• You can't cover the match funding or upfront costs. If a grant pays only part of the cost, or pays in arrears, you'll still need cash to get started.

• There's no grant open for what you need. Schemes open and close, and many are oversubscribed.

Alternatives to government grants

If a grant isn't available or isn't right for you, there are other ways to fund your business. Some are government-backed, and others are commercial finance you can arrange more quickly.

Government-backed loans

The government also supports lending to small businesses through the British Business Bank. Two of the main schemes are:

• The Growth Guarantee Scheme, which supports loans and other finance for established small businesses through accredited lenders. The government provides the lender with a guarantee, but your business remains fully liable for the debt.

• Start Up Loans, which offer personal loans for business purposes to people starting or in the early years of running a business, alongside free mentoring.

Business loans

A Funding Circle business loan gives you a lump sum you can use for certain business purposes, from hiring and marketing to new premises or equipment. You can borrow up to £750,000 and repay in fixed monthly instalments. There's no competition to enter and no project restrictions. If you qualify, you can get a decision in as little as 5 minutes. We also offer government-backed loans under the Growth Guarantee Scheme from £25,001 to £250,000, and have worked with the British Business Bank since 2013. However, these loans through the Government Growth Scheme are subject to eligibility. 

A loan can also help alongside a grant, for example to cover your share of match funding or to pay costs upfront while you wait for grant payments. Check your grant's terms first.

FlexiPay

FlexiPay is a cash flow companion, credit you can flex around your business. Use it to pay a supplier, a bill or a one-off cost upfront, then choose to repay over 1, 3, 6, 9 or 12 months for a flat fee per transaction. As you repay, your available credit tops back up for next time. Note, 1 month repayment terms may not be available on all accounts.

Cashback business credit card

For everyday spending, the Funding Circle Cashback business credit card turns spend into savings, with 2% cashback for the first 6 months or up to £2,000, whichever comes first, then 1% uncapped. You also get up to 42 days interest-free credit when you clear your balance in full each month.

Asset finance

If you need equipment, machinery or vehicles, asset finance spreads the cost with fixed repayments. Our marketplace works with a panel of specialist lenders to find deals that suit your business.

Getting funding through Funding Circle

If you need funding without waiting for a grant decision, Funding Circle can help.

• Borrow up to £750,000 with a business loan, with decisions in as little as 5 minutes

• No competitive application, no project restrictions and no match funding needed

• Check your eligibility without affecting your credit score if you're a limited company or LLP

• Use FlexiPay or the Cashback business credit card for ongoing costs and spending

To apply, your business needs to be a UK limited company or LLP. You'll need at least 1 year of trading history for business loans, FlexiPay and the Cashback business credit card. If you're not yet trading, or you're a sole trader or partnership, government schemes such as Start Up Loans may be a better place to start.

Check your eligibility

Government business grants FAQs

Are there free government grants for small businesses in the UK?

Yes, there are government grants that don't need to be repaid, but they're usually tied to specific projects, sectors or locations and often require match funding. They're also competitive, so not every application succeeds. 

How do I find government grants for my small business?

Start with gov.uk's finance and support for your business tool, which lets you filter schemes by sector, size, stage and region. Also check your local council, your local Growth Hub or devolved support services, and the Innovation Funding Service for innovation competitions.

How long does it take to get a government business grant?

It varies by scheme. Some local grants are decided in a few weeks, while larger competitions can take several months from application to payment. Some grants also pay out only after you've spent the money.

Can I get a government grant to start a business?

Start-up grants are limited and often local. Many new businesses look at the government-backed Start Up Loans scheme instead, which offers loans and mentoring to people starting a business.

Do government grants have to be paid back?

Usually not, as long as you meet the grant's conditions. If you don't use the money as agreed or don't meet the reporting requirements, you may have to repay some or all of it.

What can I do if I don't qualify for a government grant?

You could look at government-backed loans, such as those under the Growth Guarantee Scheme, or commercial finance such as a business loan, a flexible credit line or asset finance. These can be quicker to arrange and aren't tied to a specific project. The Government Growth Guarantee Scheme is subject to eligibility. 

Disclaimer

8/10/26 – While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial, tax or legal advice. Readers should seek independent tax advice from a qualified professional. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.