smallbusiness.co.uk: Helping your business think big

There are millions of pounds in funding available for technology and communications companies in the UK from funding providers such as the Government and the European Union.

Government grants

There are a number of specific initiatives such as the SMART (Small Firms Merit Award for Research and Technology) Awards, which are grants from the DTI to help individuals and small businesses in the UK to develop innovative new products and processes. You will have to compete for the grant along with other applicants.

“The SMART award is available for technology companies but they do have to have real innovation that moves thinking forward on a particular subject,” says Nigel Lander, an adviser for Business Link.

SMART awards are given for different types of projects such as the pre-production prototype stage of a new product or process, and project costs are awarded up to a maximum of Ł450,000.

The R&D tax credit, introduced in 2000, is to help small- and medium-sized companies undertake research and development (R&D), either for the first time or to encourage them to do even more. It is not available to individuals or partnerships. To find out more, visit the DTI site by clicking here.

Funds available from the EU

The EU’s Sixth Framework programme has an overall budget of €17.5 billion and encourages R&D. To find out more about it and how to apply for available funds, read our article on smallbusiness.co.uk.

“Probably the best-known examples of EU funding are the structural funds that are generally allocated by location. The largest amounts go to the designated Objective 1 areas that have a GDP of 75% or less than the European average, such as Merseyside,” says Brian Ibbetson, a consultant with j4b, which provides a comprehensive database of grants and loans that are available in the UK.

However, he adds that businesses are not encouraged to apply direct for most of these funds, which are intended for public sector bodies to bid for in partnership with other public sector bodies or specific private sector organisations. Successful partnerships then set up schemes to benefit end users, including businesses.

J4b can help assist you with applications for grants, and you can contact Innovation Counsellors at your nearest Business Link who will be able to guide you through application processes.

Consider loans

Grants aren’t the only option available. Investment funds that are operated on a local basis could be another funding route to consider. For example, Merton Investment Fund, which helps businesses in the Merton, London area, offers unsecured loans of between Ł1,000 to Ł25,000 for businesses who are unable to raise the required finance from traditional sources. It is a top-up fund as well as a lender of last resort.

“We’re not specifically geared at technology businesses, but of course we will consider them. The loan can last for up to four years, and is at 1% above the base rate. It can only be used for tangible capital expenditure, such as equipment or premises renovation,” says Freda Owusu, loan fund manager.

(13/3/03)