A Small Business Guide to Administering Grants

Business grants can be a vital source of funding for small businesses. If you’re a start-up they can help you get your business off the ground, and grants can also support business growth for a more established business to reach new markets.

There are many small business grants available, you’ll find some sources below. We’re going to focus on what happens once you’ve been given the grant, the time involved in administering it, and in reporting back to the Grantor.?We’ll explain from what, and where grants can be available through to sharing our top tips for successful grant administration.

Where do small business grants come from?

Small businesses can access grants from a wide range of sources.

• Governments (UK and overseas):direct from Govt department via an administrative agency e.g. Innovate UK via industrial consortia
• Foundations, Charities, Trusts e.g. Wellcome Trust
• Local Governments
• Quangos e.g. Chambers of Commerce, Business Initiatives
• Other businesses e.g. financial institutions, bigger companies
• Consortia of interested parties (usually means increased complexity!)
• Residual EU grants.

Where you can source grants: Simply Business list of grants for small businesses and British Business Bank cover Government Start-Up Grants and Small Business Grants. Technology/science based businesses should get on the mailing list of the UK Research Councils and Innovate UK.

What are UK based R&D grants?

R&D grants are grant applications for anything ‘new’ which hasn’t been done before. It could be a product, process, or software for example.

• You’re usually invited to respond to specific ‘calls’ and each call will have its own eligibility criteria, area of interest and rules.
• Many are administered via Innovate UK using their IFS platform BUT rules within that can still vary.
• You usually claim paid costs net of VAT in arrears, although some grants allow you to claim in advance.
• Government grants are equally as varied, depending on the department awarding them and the ‘call’:
• Some are called grants but are really contracts for services – in which case your claimed amounts will be gross of VAT.
• Some only pay claims against completed Work Packages/Milestones, rather than against time periods – Excel is your friend in tracking work done and goods purchased against specific tasks.
• Some grants have specific requirements around subcontractor costs so watch our for these when make your application; some require UK based subcontractors only and there are a few grants where subcontractor costs claimable are capped.
• Charity grants usually have a tighter stakeholder group which can make things easier to administer.

Overseas Business Grants

• EU grants are getting less common, and they can be full of red tape, rules and arranged marriages.

RoW: as above but with the additional challenges of:

• Claiming and receiving funds in currency (don’t get stung on exchange rates)
• Audit requirements that don’t have relevance or equivalents in the UK
• Dealing with institutions that don’t play by the same rules – someone else’s red tape is always so much worse than your own.

Sometimes you may come across Grants that have US Federal or NIH rules lurking in the small print which may mean additional administration to comply with the rules and certainly extra costs to meet the audit and/or reporting requirements.

Is It Worth It?

We would always recommend you do a cost/benefit analysis, and consider if a small business grant could cost more than you can afford in your cashflow.

• Some business grants are right fiddly and will take a real chunk of admin time, – VERY few grants cover admin costs (i.e. your time).
• The time factor can be even worse if your company is leading a consortium – you’re responsible for coordinating all of the claim, ensuring all the participants submit paperwork and reports on time and that their claims are correct.
• Many grants require matching funding and/or only pay a percentage of your actual costs (typically 70-85% so the company has to have available funds to cover the unrecoverable costs.
• Remember you can usually only claim after you have spent the money so you have to have the first 2-3 months cashflow before you start.
• Most grants will only make a nominal contribution to the ‘overhead’ costs of running a project – the golden goose is FEC. Innovate UK gives 20% of labour costs?to cover everything.
• The company will have to meet the costs of audits and any required independent reports.

Top Tips to Grant Administration

Sarah is our expert grant administrator in The Smart Virtual Finance Team. We’re delighted she is sharing her top tips for grant administration which she has gained over many years of experience helping businesses in Oxfordshire with their grant administration.?You need to ensure that you are getting maximum value from your hard-won grant, so let us help you!

Here are her top 8 tips to consider:

1. Read and be familiar with the Grant Offer Letters and any associated documents; these contain the ‘overt’ rules.

2. Get on friendly terms with your Monitoring Officer, or equivalent; pick their brains, keep them informed and convince them of your general ”good eggness” because:

• They are the initial gatekeepers of claim payment.
• If you need a concession, or a favourable clarification of ‘covert’ rules, they will be the first point of contact and escalation.

3. Also cultivate a relationship with the relevant senior person in the granting body because if it’s a bigger ask, you’ll need their help.

4. You absolutely need to keep on top of tracking grant costs otherwise claims are a nightmare.

5. Claiming R&D tax credits requires even more detailed tracking, justification and evidence. So keep on top of this and make sure your accounting system can identify the different categories.? You will also need a fairly detailed description of the project focussing on why your work is new research, so leave time for your project leader(s) to generate these.? HMRC has tightened up enormously on the scrutiny of claims and as of 2024 now requires a lot more information.

6. Look ahead and monitor actual v budget v forecast ?so you can take appropriate action in time.

7. Keep talking to your principal investigator (PI):

• To head off problems, e.g. is a Project Cash Request (PCR) needed?
• To be aware of changes to work/timing/costs

8. If you think you need a PCR, start the conversation with the Monitoring Officer/grantor asap and submit asap – they can take ages to get approved.

What Grantors Want

Grantors don’t always think closely about the detailed logistics of grant administration, but they do care a lot about accountability and evidence, so you will need total coverage of documentation for costs and changes.

Nevertheless, at the end of the day, they want you to succeed and to claim the money (otherwise it messes with their budgets and goals), so if you need to alter the conditions a little, ask!

Need Help to Manage your Business Grant?

You’ve made a successful grant application, but how do you administer it? We can help you with the claiming process, reporting back and putting together the final claim evidence pack.

Message Tracy Smart or book a call to discuss.

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