Amid high inflation, high energy costs and climbing interest rates, small and medium-sized enterprises (SMEs) face a mixed economic picture.

While almost half remain optimistic about their growth prospects, according to the Federation of Small Businesses, more than a tenth (14.7%) fear they may have to downsize or even shut down.

The range of challenges on the horizon makes it more vital than ever for small businesses to save money where they can. And that’s where government grants and support schemes can play their part.

From the full expensing and Help to Grow initiatives through to the Seed Enterprise Investment Scheme and beyond, there’s plenty of targeted support for SMEs. But they may need help finding it. As Lombard managing director Ian Isaac points out: “The biggest issue is awareness of grant availability – how to access them and what terms apply.”

With that in mind, we’ve put together this helpful guide to the main grants and schemes that could help propel your growth. Read on to discover what each involves – and the potential pros and cons.

The 2023 Budget saw the launch of a major tax incentive scheme to encourage businesses to invest in plant and machinery. Known as full expensing, this capital allowance lets companies deduct 100% of qualifying investments from their taxable profits.

Here are the main features and benefits to remember:

• The full expensing scheme will initially run from April 2023 until March 31, 2026.
• It means businesses can effectively write off the cost of their investment all at once, with their taxes falling by up to 25p for each pound invested.
• The allowance applies to the year when the investment is made.
• Only those who pay corporation tax are eligible for the scheme.
• Full expensing covers ‘main rate’ plant and machinery investments, such as office equipment, machines, vehicles other than cars, and construction tools.

The aim of full expensing is to create a competitive capital allowances regime in the UK. It’s hoped it will drive business investments and, in turn, broader productivity rates.

Full expensing vs the super-deduction

Full expensing is the successor to the Government’s super-deduction – a separate tax incentive that ended in March 2023.

The schemes share many features, with the goal of supporting plant and machinery investments among businesses that pay corporation tax.

The main difference revolves around the generosity of the two initiatives. The super-deduction delivered a 130% capital allowance on plant and machinery assets, which could be offset against taxable profits. In comparison, full expensing offers a 100% allowance. It means the tax savings are likely to be lower for businesses.

Learn more about full expensing

The government-backed Help to Grow programme is split into two parts: Digital and Management. The aim is to enhance the software and skills of entrepreneurs, in turn boosting their profits.

Help to Grow: Digital

SMEs can apply for software discounts worth up to 50% under this part of the scheme. A range of tools and guidance are also available to support their take-up of digital technology.

Just be aware that various restrictions are in place:

• A limit of £5,000 applies to any software you buy.
• The software needs to be from an approved list.
• Your firm can only have one to 249 employees to qualify.
• You’ll need to have been actively trading for more than 12 months.

Help to Grow: Management

This part of the programme offers 12 weeks of learning to help small business leaders upskill. Other benefits include mentoring support. The Government covers 90% of the costs, leaving you with £750 to pay.

Around 2,500 firms had taken advantage of Help to Grow as of May 2022, according to reports. The Government’s original goal was for 30,000 to take part.

KTPs give businesses the opportunity to team up with academics. Together, they’ll gain the know-how and specialist skills to take innovative projects forward. With the help of grant funding, you’re able to cover some of the costs of bringing a graduate on board.

Around 800 firms are currently involved in these partnerships, according to the UK Research and Innovation agency. Typically lasting 12 to 36 months, companies of all sizes can take part.

Annual support worth £80,000 to £100,000 is generally delivered through a KTP. Micro, small and medium-sized companies can get 67% of their project costs covered. Just remember you’ll need to cover the remaining costs yourself.

The Power to Change charitable trust is a useful source of support for community businesses and social enterprises seeking to make a positive difference to their local area. From technology to financial management, it delivers a wide range of programmes.

More than 1,700 community businesses have been supported to date, while around 2,600 grants have been made. Overall, £102 million has been granted. Around two thirds (67%) of the organisation’s funding goes to the most deprived 30% of regions.

The North West, Yorkshire and the Humber, and South West lead the way when it comes to business take-up.

These electric vehicle grants are built into the sale price when purchasing specific vans or trucks for your business. You don’t need to apply. Instead, the dealer should automatically factor the discount in, saving you the paperwork. Certain vans may see a discount of 35%, with trucks potentially eligible for 20%.

However, the following maximum discounts are in place:

• £2,500 on some small vans.
• £5,000 on some large vans.
• £16,000 on some small trucks.
• £25,000 on some large trucks.

In the past decade, over 26,000 electric vans and heavy goods vehicles have been sold with grant support. And in the spring of 2022, the Government pledged to extend the plug-in van and truck schemes for another two years.

The SEIS offers a way to raise vital funds at the very beginning of your business journey. It works by giving tax reliefs to new investors when they purchase shares in your firm.

Investments worth up to £150,000 can be raised through the scheme. But there are plenty of restrictions to consider before you get going:

• Staff levels. Your full-time headcount needs to be less than 25. You can’t be a member of a partnership either.
• Asset limits. Your gross assets can’t exceed £200,000.
• Trading terms. You need to be UK-based and focused on a new qualifying trade.
• Stock exchange membership. You can’t have an existing presence on a recognised exchange.

Between 2012/13 and 2019/20, a total of 13,800 companies secured SEIS investments, worth around £1.4 billion. This increased further in 2020/21, with another 2,065 firms raising funds worth £175 million.

Those based in London and the South East led the way in 2020/21, attracting £120 million (or 68% of all investments).

As the name suggests, Innovate UK offers funding to SMEs with pioneering business ideas. This government agency supports the testing and development of fresh innovations.

Advanced manufacturing, digital, electronics and advanced computing are among the sectors and technologies it can assist with.

The scheme has detailed application criteria, which it’s worth preparing for in advance. But it’s awarded more than 43,800 grants since 2004, totalling £12.56 billion.

Creative SMEs have the chance to apply for National Lottery Project Grants from Arts Council England. This scheme supports a variety of cultural organisations. Funding of between £1,000 and £100,000 is potentially available.

Up until 2023, the organisation aims to invest £97.3 million through National Lottery Project Grants each year. Meanwhile, £407 million will be invested annually in its national portfolio, across 828 arts organisations, museums and libraries.

Launched by the Government to combat slow internet speeds, this support programme is available to both households and businesses in rural regions.

With up to £210 million pledged, companies can apply for vouchers worth £3,500 to help them access gigabit broadband. To qualify, you’ll need to:

• Be classed as an SME.
• Only have up to 249 staff members and an annual turnover within £36 million; and/or
• Have an annual balance sheet total within £18 million.

Note: You must also confirm your existing broadband speeds are below 100Mbps.

By August 2022, the scheme had helped to connect a total of 38,600 business premises to gigabit broadband. The South East (7,700) and North West (4,800) have seen the largest number of connections to premises.