But innovation usually comes at a cost and additional funding may be required to finance this.  Whilst many businesses are funded by a mixture of share capital and loans, it is important not to forget that there are other sources of funding available to businesses.

With Brexit potentially removing some of the previously available EU funding, and the general uncertainty about the post-Brexit economy, it is becoming harder for nascent and developing businesses to get the funding they need from banks and other financial institutions.

Businesses are looking for other ways to finance their businesses and might not be aware of the availability of grant funding.

There are three main types of grant: government-backed grants; regional grants and local grants, and many of these are specifically aimed at innovative businesses.

1. Government backed grants

In January 2017, following the Brexit referendum, the government issued a green paper titled, 'Building our Industrial Strategy'. The aim of the paper was to set out a plan for post Brexit Britain. It recognised that innovation is at the very heart of creating well paid sustainable jobs and driving future economic growth and acknowledged that more than 95% of all global development and innovation (by spend) takes place outside of the UK.

With this in mind, the government set up the Industrial Strategy Challenge Fund (ISCF).  It will provide £4.7 billionn of grant, loan funding and other support to finance investment into research and innovation over the next four years and will top up the core budget previously managed by Innovate UK (a non-departmental government body) and research councils (which will merge with the Research England to form a new body, UK Research and Innovation in April 2018).

Core funding

Prior to the setting up of the ISCF, the core funding targeted mainly small and medium sized enterprises (SMEs) wanting to invest in any of the following fiour sectors or the ‘open programme’:

• Emerging and enabling technologies including high-potential technologies just emerging from university or other research, and cross-cutting technologies and capabilities such as digital, satellite application, sensors, robotics and design.
• Health and life sciences including health and care technologies, agriculture, food and biosciences.
• Infrastructure systems including connected transport, energy systems and supply and urban living.
• Manufacturing and materials including new manufacturing and materials technologies, processes, business models and systems, resource efficiency and exploitation of digital approaches.

The 'open programme' target innovative businesses that either do not fall in to any of the above sectors or have high-potential ideas that are so new that no-one else is working on them.

Additional funding from the Industrial Strategy Challenge Fund

The ISCF was set up to target the following six key areas:

• clean and flexible energy technologies including the development, design and manufacture of batteries that will power the next generation of electric vehicles.
• First-in-kind technologies for the manufacture of medicines that will speed up patient access to new drugs and treatments.
• the development of artificial intelligence and robotic systems that can be deployed in extreme environments.
• the next generation of artificial intelligence and control systems for use in driver less cars.
• the next generation of affordable lightweight composite materials for aerospace, automotive and other advanced manufacturing sectors.
• satellite test facility supporting new launch technologies and the manufacturing and testing capabilities that will allow the UK to construct future satellites and deliver payloads into orbit.

How can businesses access these grants?

Businesses can apply for a share of the available funding in a competitive application process. Apply via the application forms for live funding competitions.

Businesses wishing to apply for a grant should ensure that their proposal document includes the following information:

• what are the global opportunities of the business?
• what are the unique strengths that the UK brings to those opportunities/
• is the timing right?
• why is public sector investment required?

The proposals are reviewed after the close date of the competition and grants offered to businesses that submit the best proposals.

2. Regional grants

In addition to the government backed grants there are also a number of regional grants that may be available. The three largest regional grants are from the Welsh government, Scottish Enterprise and Invest Northern Ireland. Each grant provider has its own application process.

3. Local grants

There are also a number of local grants available to businesses. These include funding from 'local enterprise partnerships' 'university enterprise zones' and the 'Regional Growth Fund'.

The network of ‘local enterprise partnerships’ (LEPs) provide not only finance to local businesses, but also advice and support to businesses bidding for government funding.

There is also funding from ‘university enterprise zones’ which aims to provide funding to local innovative high-tech businesses.

And finally, there are some government funded grants available from the Regional Growth Fund.

The advantage of sourcing grants locally is that these tend to be smaller in value and better suited to start-up companies and SMEs who are only seeking low levels of funding.  Also, there is likely to be less competition for the funding and so these can be easier to obtain.

Conclusion

Businesses should not forget that grant funding may be available to provide finance, especially to innovative businesses is often either matched partly or totally to the actual innovation spend.  Also, unlike loan finance grant funding is not repayable and effectively ‘free money’ to the business.

Contact us

If you would like to know more about whether there are any grants that you can apply for, to or help with a grant application, contact us.