A UK Entrepreneur’s Guide to Government Schemes for Start-Ups

In this article, we’ll explore some of the top government schemes available to UK start-ups and explain how you can take advantage of them.

Jump to the following section:

• Start-Up Loans
• Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS)
• Innovate UK
• New Enterprise Allowance
• Business Incubators and Accelerators

Start-Up Loans

What are Start-Up Loans?

Start-Up Loans are a government-backed loan scheme designed to help new and early-stage businesses access the funding they need to get started. The loans can be used for a wide range of purposes, from purchasing equipment and inventory to marketing and advertising and are provided through a network of delivery partners responsible for administering the loans and providing support and guidance to borrowers.

How to Apply for Start-Up Loans?

To apply for Start Up Loans, you must submit an application through one of the delivery partners. The application process typically involves providing information about your business, including a business plan and financial projections. You’ll also need to provide personal information, such as your credit history and proof of identity.

Our partners at Swoop Funding can help you apply for a Startup Loan. You can register with Swoop here.

Who can apply for Start Up Loans?

Start-Up Loans are available to individuals starting or growing a business in the UK. You must be over 18 and have a viable business idea to be eligible. You’ll also need evidence of your ability to repay the loan, such as a good credit score or a guarantor.

How much can you borrow?

Loan amounts vary depending on your business’s needs and your personal circumstances – ranging from £500 to £25,000, with the average loan size being around £6,000. Loans come with fixed interest rates and repayment terms of up to five years.

Interest Rates and Repayment Terms

The interest rates for Start Up Loans are fixed at 6% per year. This means that the interest rate will not change over the life of the loan, making it easier to plan for and manage your repayments. Repayment terms range from one to five years, with no penalties for early repayment.

Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS)

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are two government-backed investment schemes designed to encourage investment in small and growing UK companies.

The EIS is aimed at businesses beyond the start-up phase and looking to raise up to £12 million, while the SEIS is designed for very early-stage start-ups that are raising up to £250,000. Both schemes offer a range of tax incentives to investors, which can make investing in your business more attractive.

These tax incentives include income tax relief of up to 30% for EIS investors and up to 50% for SEIS investors. In addition, both schemes offer capital gains tax relief, which means that investors can reduce their capital gains tax bill if they sell their shares in your business at a profit. Should your business fail, investors also get an additional ‘loss relief’.

EIS and SEIS are great for businesses struggling to secure funding from traditional sources such as loans or grants. By offering investors tax incentives, these schemes make investing in high-risk businesses very attractive as they will keep 100% of the benefits from any returns while only having a small proportion of the total capital they invest at risk.

The schemes can help you provide a much-needed injection of cash to grow and expand your business and can be used to invest in new products or services, develop your team, or increase your marketing and advertising efforts.

READ: SEIS versus EIS explained: what every investable entrepreneur needs to know

Innovate UK

Innovate UK is another government-funded program, this time providing support and funding to businesses focused on innovation. The program aims to help companies to develop new ideas and bring them to market by providing financial support and access to a network of experts and mentors.

It is open to all UK-based businesses, regardless of their size or sector – so start-ups, SMEs and larger companies can all apply for funding and support through the Innovate UK program.

Innovate UK provides various types of funding and support, depending on the needs of each business, including grants, loans, and support for research and development. The initiative also runs various competitions and challenges designed to encourage companies to innovate and develop new ideas.

The program can help businesses in many different ways. For example:

• Develop new products and services
• Improve existing products and services
• Access new markets and customers
• Increase their competitiveness in their industry
• Create new jobs and opportunities.

In addition to funding and support, Innovate UK also provides access to a network of experts and mentors who can provide advice and guidance on everything from product development to marketing and sales.

New Enterprise Allowance

The New Enterprise Allowance (NEA) is a UK government program designed to support unemployed individuals who want to start their own businesses. The program provides a range of support and financial assistance to help individuals turn their business ideas into reality.

The program is available to individuals currently receiving certain benefits, such as Jobseeker’s Allowance, Employment and Support Allowance or Income Support. To be eligible, individuals must have a viable business idea and be committed to launching and growing their business.

NEA provides a mentor who will work with individuals to develop a business plan and provide ongoing support and advice throughout the early stages of their business. Participants can also access a weekly allowance of up to £1,274 over 26 weeks and a loan of up to £25,000 to help get their business up and running.

The program can help businesses in several different ways, including:

• Accessing financial assistance to help launch and grow the business
• Receiving support and guidance from an experienced mentor
• Developing a viable business plan and identifying the critical steps to success
• Accessing a range of resources and training programs to help build key skills.

Business Incubators and Accelerators

Business incubators and accelerators are programs designed to help start-ups and early-stage businesses grow and develop. These programs offer a range of resources and support services to enable enterprises to overcome the challenges of starting and scaling a new business.

Incubators typically provide office space, mentorship and access to resources such as funding, legal and accounting services, and networking opportunities. These programs are usually focused on helping businesses develop a viable product or service, build a team and establish a solid business model.

On the other hand, accelerator programs are focused on helping businesses scale quickly and achieve rapid growth. These programs typically provide a more intensive and structured approach, with a set time frame and specific milestones that companies must meet. Accelerators often provide funding, mentorship and access to investors, as well as other resources designed to help businesses grow rapidly.

The programs are open to many businesses, including start-ups, early-stage companies, and established businesses looking to launch new products or services. Programs are typically competitive, with businesses applying for a place in the program and undergoing a rigorous selection process.

Participating in a business incubator or accelerator program can help businesses in several ways, including:

• Access to funding and other resources
• Mentorship and guidance from experienced entrepreneurs and business leaders
• Opportunities to network with other companies and investors
• Access to training and development programs to build key skills
• Increased visibility and credibility in the industry.

You can read the UK government’s paper: Business Incubators And Accelerators: The National Picture.

You can also claim a free copy of our bestselling book Investable Entrepreneur – which provides a complete roadmap to raising investment.