Business grants, loans and government support in the UK: where the start-up money is and what it costs

Searching for a “business start-up grant” in the UK mostly lands you on intermediaries who promise, for a fee, to find you free money. So let us start with the bad news: there is no single national scheme that hands out cash simply because you are starting a business. What does exist is a set of working instruments — a fixed-rate government loan, local grants, tax reliefs worth more than most grants, and free advice. Here is all of it from primary sources, with amounts and conditions as of 4 October 2026.

Is there a UK grant just for starting a business?

No — there is exactly one national start-up instrument, and it is a loan, not a gift. The official GOV.UK support catalogue listed 129 schemes on 4 October 2026: 45 of them grants and 34 loans. Filter by the “not yet trading” stage and 59 schemes remain, of which only 18 are grants — almost all local or sector-specific. London looks much the same: 45 schemes in total, 15 grants, 17 open to businesses that have not started trading. The conclusion is simple: grants exist, but you look for them by your area and your sector, not by country.

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What is a Start Up Loan and who gets one?

A government-backed personal loan of £500 to £25,000 at a fixed 7.5% a year, repaid over 1 to 5 years. There is no application fee and no early repayment fee. Understand what it is: not a company loan but an unsecured personal loan, and the credit check is on you personally. There are three conditions: you live in the UK, you are 18 or over, and your UK-based business has been fully trading for less than 5 years — or you only plan to start it. Citizenship is not required. The package includes free help writing a business plan, and successful applicants get up to 12 months of free mentoring. A blank UK credit file is the main barrier here — start with our guide to building credit history in Britain.

Where do you look for grants without paying a middleman?

In the official GOV.UK catalogue, which is free and filterable. The address is gov.uk/business-finance-support, with filters by type of support (grant, loan, equity, expertise), business stage, industry, number of employees and region. The second official address is business.gov.uk, the government portal for free local support for starting and growing a UK business. The third is your own council’s website: boroughs and combined authorities are where start-up money actually sits, and they almost always require the business to be registered in their area. Anything offering to “find you a grant” for a fee duplicates these three free sources.

Who actually gets non-repayable money to start?

The most generous open scheme in the country is for the young: the King’s Trust Enterprise programme. Conditions: aged 18 to 30, the right to work in the UK, an idea you intend to launch within the next 12 months, and ownership of at least 50% of the business. You cannot apply if you have been actively trading for over a year. What is inside: a Test My Business Grant of up to £500 to test the idea, a start-up package of a grant up to £5,000 plus loan funding between £500 and £25,000, access to start-up funding of up to £30,000 in total (nothing is guaranteed — it depends on viability and affordability), a mentor, help with the business and cashflow plan, and up to three years of post-launch support. For those over thirty there is no national equivalent of that generosity — what remains is local funds and sector competitions.

What if yours is a technology project?

Then your door is Innovate UK, where the sums run to millions — but not for opening a café. On 4 October 2026 the innovation funding service listed 28 competitions. Current examples: a share of up to £1.66 million for experimental validation of prototype AI systems (open 12 October to 18 November), a share of up to £3.1 million for frontier AI feasibility studies (closing 11 November), and a share of up to £8 million for engineering biology products. The key condition in almost all of them is being a UK-registered micro, small or medium-sized enterprise. These are research and development grants awarded by competition with a written application and expert assessment, not working capital.

What is there for a business already trading?

Two government schemes, neither of which hands over money — they open access to money and to know-how. The Growth Guarantee Scheme: the government, through the British Business Bank, guarantees part of the lender’s risk, up to £2 million per business group, in any form — term loan, overdraft, asset finance, invoice finance. Conditions: trading in the UK, turnover no more than £45 million, more than 50% of turnover from trading activity, a viable business not in insolvency proceedings; only accredited lenders participate. Help to Grow: Management is a training programme run by university business schools: 50 hours of structured learning, one-to-one mentoring, peer learning and a growth plan, for a £750 joining fee with the rest funded by government. Requirements: 5 to 249 employees, trading for more than a year, and the attendee must be a decision maker. Charities are not eligible.

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What help does not look like help but is worth more than a grant?

Tax reliefs — that is where the largest sums for a micro business sit. Check these first. Small business rate relief: if your property’s rateable value is £12,000 or less and it is the only property your business uses, you pay no business rates at all; between £12,001 and £15,000 the relief tapers from 100% to zero. If you take a second property you keep relief on the main one for 12 months — or 36 months if you got the second property on or after 27 November 2025. Employment Allowance: once you employ people, your annual employers’ National Insurance liability is reduced by up to £10,500. The trading allowance: the first £1,000 of gross self-employment income a year is tax-exempt, and while you stay under it you do not need to tell HMRC — a legal way to test an idea without paperwork. SEIS: a young company can raise up to £250,000 from private investors who get tax relief for it, a figure that includes any other minimal state aid over three years. And separately: if you are on Universal Credit, starting your own business can earn you a 12-month start up period during which the minimum income floor does not apply and your payment is based on actual earnings; you get one such period, and another only after 5 years and only for a completely different kind of self-employment.

Are there interest-free business loans?

There is no national 0% scheme in the UK — worth remembering before you talk to any “consultant”. The government start-up loan costs 7.5% a year, as stated on GOV.UK. Interest-free and soft money turns up in two places: local funds, and community lenders (CDFIs and credit unions) that work with people banks have turned down — those schemes are in the GOV.UK catalogue too, 34 of them under the “loan” filter. Anything else promising an “interest-free UK business loan arranged for a commission” is a reason to close the tab.

What do you need to do in the first few weeks?

Five steps that close off the formal part of starting up. One: choose your structure — sole trader (free to register, simpler reporting) or limited company; registering a company with Companies House costs £100 online and usually completes within 24 hours, but first you must verify your identity through GOV.UK One Login and get a personal code, and every director needs one. Two: register with HMRC and do not miss the Self Assessment registration deadline. Three: watch the VAT threshold — registration is compulsory at £90,000 of turnover. Four: write a business plan — without one you get neither a Start Up Loan nor a local grant, and help writing it is free. Five: book a free advice session in your area through business.gov.uk or your council — the same expertise intermediaries charge for. We cover each step separately: registering a company, sole trader tax, the £90,000 VAT threshold and registering for Self Assessment.

Which conditions sink grant applications most often?

Four, all of them in the small print. First, the subsidy ceiling: under the subsidy control rules one recipient may take no more than £315,000 of minimal financial assistance across the current and two preceding financial years, and everything counts towards it, reliefs included. Second, match funding: a typical local grant covers only part of the cost, and you put in the rest and prove you have it. Third, restricted purpose and payment in arrears: money is given for a specific purchase and is often reimbursed against paid invoices rather than advanced. Fourth, territory: a council grant almost always requires the business to be registered and operating in that area, checked against the Companies House address. If you fail one of these, do not spend weeks on the application — find a scheme you fit.

Where do you start today?

With two free actions that take an evening. Open gov.uk/business-finance-support, set three filters — your region, your stage (“not yet trading” or “start-ups, 1–2 years”) and support type “grant” — and write down everything left: in London that is 17 schemes for businesses not yet trading. In parallel, go to business.gov.uk and your council’s site and book a free advice session. Only then does it make sense to do the loan arithmetic: £10,000 at 7.5% over three years costs roughly £1,200 in interest, and that figure should be compared not with a dream of a grant but with what you will earn in those same three years.