Running a business is never simple; it’s even more complicated with start-ups. As a startup, you’re actively trying to learn the ropes of the industry while managing multiple financial and administrative challenges. Making use of all advantages is important to see through the moments of uncertainty.
Thankfully, there are government policies and schemes that are designed to ease business. Startups have been the major drivers of innovation and the UK government is not oblivious to that. Here are some government initiatives that UK startups can take advantage of:
● R&D Tax Credits:
As a way to encourage startups to focus on innovation, the UK government gives tax credits to businesses engaged in research and development. This policy is targeted at companies that invest in making new products, services and processes; or improving old ones. If you’re spending money on innovation, you can claim tax credits in terms of cashback or corporate tax reductions.
Companies can get up to 33p on £1 if they are loss-making organisations. You might even be able to claim up to £60,000. There are a number of conditions that are considered before R&D tax credits are given out, but it’s definitely worth looking into if you’re running a startup. What’s more, you can get tax credits in almost any industry.
● Loans and Loan instruments
The British government has a number of loans directed at startups. The loans are traditionally structured to be low-interest and easily payable. To have a good chance of getting most government-backed loans, you must have a well-detailed business plan which shows the scalability of your business model.
The Small Loans For Business Scheme is one of such loans, providing startups with access to around £25,000 in loans. The loans carry a reasonable 6% interest rate per annum and are structured for ease of payment.
The Enterprise Finance Guarantee is another very helpful loan program. It helps startups that have been denied access to loans because of a lack of collateral by providing a guarantee for the lenders on their behalf.
Unlike loans, grants do not have to be paid back. This makes them quite popular for startups. Alongside low-interest loans, there are also a couple of grants backed by the British government. A number of the grants are targeted at specific industries such as technology, green-energy, recycling etc. The grant amount is usually a factor of how big your project is. Some government-backed grants are:
- Grant For Business Investment (GBI): this grant is given out through Regional Development Agencies (RDA). It is usually given towards projects that help bring prosperity to economically deprived areas. The grant is available to startups and gives out a minimum of £10,000.
- National DTI Grant for Research and Development: Organisations involved in R&D also have access to grants through this scheme. There’s also “Framework 6” which is available to organisations involved in R&D in collaboration with other companies and universities around the EU.
- Export Credit Guarantee Department Scheme: This scheme helps startups with grants to participate in exhibitions outside the country.
As much as finance is a major challenge for startups, good administration is also a factor in helping businesses succeed. The UK government offers a number of initiatives to help startups and entrepreneurs cope with the administrative demands of their organisations.
Entrepreneur First is a scheme targeted at fresh graduates who have an eye for entrepreneurship. The program lasts for two years and provides participants with access to training, mentoring, funding, legal advice; all of which are necessary to run a successful company.
Other notable schemes include the UK business Incubation which runs various R&D centres open to businesses and Enterprise Enfield which provides startups with business advice and a platform to network with other organisations in the same industry.
The UK is reputed to be one of the best places in the world for startups. The government’s active involvement in making the business environment better for startups has set a precedent for other countries to follow. UK-based startup founders should look to take advantage of these schemes to stand a better chance of success.