If you are considering making your business more environmentally responsible, there are a variety of grants, loans and government-sponsored initiatives can help you. The support on offer can range from funding towards new energy-efficient equipment to free business advice and awards that you can use to boost your marketing efforts.
The availability of support depends on your location and type of business, the project you are planning, its intended benefits and the environmental impact. Finding and applying for funding may appear daunting, but a methodical approach can help you navigate through the process and increase your chances of success.
The government is calling on every small business in the UK to take small, practical steps to cut their carbon emissions as part of the UK’s journey to Net Zero by 2050. The Together for our Planet campaign is a drive to encourage small and micro-businesses to commit to cutting their emissions in half by 2030 and to Net Zero by 2050 or sooner through the UK Business Climate Hub.
Small businesses can use the hub to find practical tools, resources and advice to understand their carbon emissions and develop a plan to tackle them, as well as providing ideas for steps they can take.
1. Environmental support basics
Scope your project
- Clearly define what you are looking to achieve and how you wish to achieve it. For example, you may be considering development of a new environmentally-friendly product or exchanging your plant for more energy-efficient equipment.
- The nature of your project will affect which type of support you may be eligible for.
Choose the most effective method of support
- Usually, grants are most effective for projects that have defined goals that can be measured as they progress.
- If you receive a grant, stage payments may be dependent on you reaching targets. In some cases, funding may be withdrawn if targets aren't met, so measurability is essential.
- If you're looking to invest in assets such as plant and machinery, loans are usually the most effective form of support.
- Avoid loans for ongoing costs wherever possible.
Establish the environmental benefit of your project
- Try to quantify the environmental benefits of your project. For example, what sort of carbon-dioxide reduction could it lead to? How much could your energy costs be reduced? Can you measure the potential waste reductions?
- This data will form an essential part of any proposals and applications you make for grants or specialist environmental loans at favourable interest rates.
Cost the project
- You will need to provide detailed proposals covering how you intend to spend any grant or loan you are applying for.
- If cost savings are also expected as a result of the project, build these into your draft budgets too.
Update your business plan
- You usually need to present your business plan when applying for grants or loans.
- Be sure to make clear the business benefits of the potential funding as well as the environmental upsides.
2. Finding a grant
Use specialist grant search websites
- Specialist sites such as Grants Online offer searchable databases of local, regional, national and EU-wide schemes. You can also subscribe to regular email alerts which will keep you up to date with relevant grants and schemes.
- It's a good idea to use these services as schemes are launched, revised and closed frequently. Keeping an eye on your potential source of funding will save you from wasting time on an application for a scheme that has been amended or closed.
- You can search the GOV.UK business finance and support finder for grants (and other forms of support).
Make the most of your networking contacts
- Ask around for information on sources of finance and support. Suppliers, customers and other businesses in your sector may have used similar schemes or have knowledge of them.
- Don't automatically rule yourself out of schemes because they don't sound a perfect fit with your business. Some schemes close without distributing their full financial quota and can be more flexible than you may initially think. Ask before you start the application process.
3. What can I get a grant for?
- Support is available for a range of projects, from small adaptations to your premises to make them more energy-efficient through to revising your production processes and plant to save energy.
- Grants are available from local authorities, business support organisations, central government and specialist agencies. As many of the smaller grants are administered and awarded locally, the grants available will vary according to where your business is located.
Capital investment in equipment
- If changing your processes or replacing your plant and equipment will have a positive environmental impact, you may be able to get a grant to finance part of the cost.
- You will have to clearly prove the benefits and sometimes funding is dependent on buying specific types of equipment.
- Smaller amounts of funding are available from many local authorities. For larger projects, it's best to look for central government schemes and those run by specialist bodies.
- Enhanced Capital Allowances are no longer available for purchases of approved equipment. You can still use the Energy Technology List to help identify energy efficient equipment.
Sustainable development initiatives
- You will need to prove the expected environmental impact.
- Local authorities run schemes that can provide small grants, often called a sustainable business growth grant or similar. Larger grants are available at a national level.
- If you're developing new products or services, find out if you're eligible for Research and Development (R&D) tax relief.
- If you're working with other businesses on the project, you may be able to get some funding from the collaborative R&D scheme run by Innovate UK.
Waste management and reduction
- If you're considering measures that will reduce waste, WRAP may provide support for the costs involved.
4. Making the application
Find help from awarding bodies
- The organisation which runs the scheme and pays the grant will provide advice on the application process.
- If you have any queries on the application process, however small they may be, it's a good idea to check these. Application criteria are demanding and if you have misunderstood a question or omitted some essential information, it's unlikely you'll qualify.
Use business support organisations
- Your trade association or local business support organisation can provide general advice on applying for the most suitable grants.
- In some cases, their advisers can help with the application process.
Consult your accountant
- If the application is complex (as many are), it may be a good idea to involve your accountant. Many grant applications demand detailed financial information and it's essential to get this right.
- If your accountant doesn't carry out this kind of work, you may be able to find another accountant that specialises in this type of work to help you specifically on the application.
Spread the load
- Most grant applications are detailed and time-consuming. While it's possible for you to do all the work yourself, it's a good idea to get any relevant staff involved too.
- Sharing the workload around will also minimise the risk of errors if more than one person is checking all the details on your application.
- When you are applying for a grant, you need to be patient. Remember that the application process can often take more than a year from start to finish.
5. Your financial contribution
Look out for high-value grants
- In the overwhelming majority of cases, you will have to contribute some of your business' own money. Grants that meet 100% of the costs of a project are exceptional.
- When you're looking for grants, always keep an eye on the maximum awards available and the maximum percentage of the costs it will pay. For example, a grant might stipulate a maximum of 20% of the costs to a maximum award of £5,000.
Understand match funding
- Many grants work on a process called 'match funding'. This is where the rules of the scheme mean that businesses are obliged to make a contribution.
- In some cases, this will mean the grant will pay up to half the approved costs. However, 'match funding' does not always mean half - it can mean as little as 15%. Always check what the percentage available is if the grant says it will offer match funding.
6. Environmental loans
Understand the benefits of loans
- While you don't have to repay or refund a grant and loans must be repaid, there are circumstances where a loan will be a more suitable option.
- Loans can be much faster to arrange. You may also find a little more flexibility in how you use some loans, whereas grants are nearly always for a specific purpose and you must prove you have carried out exactly what you promised.
- Loans are often most suitable for projects where you will get benefits from the investment over a long period of time, allowing you financial space for the repayments. This includes investment in assets such as energy-efficient equipment.
Match the loan to the need
- Depending on how you wish to spend the money, you may be able to find a loan with a favourable interest rate if your project meets the environmental aims of the loan provider.
- As with a grant application, spend some time looking at the options to find an environmental loan scheme that matches the aims of your project.
Consider an energy efficiency and waste reduction loan
- Loans to finance measures for energy efficiency and waste reduction are the most common.
- You can use the money to update or replace equipment and premises and pay for any consultancy required to find the best options.
- Loans of varying sizes are available from local and regional authorities. Larger loans may be available from government-funded organisations.
Choose your lender
- Local government authorities or business support agencies may provide loans, sometimes on favourable terms.
- Specialist lenders such as Triodos Bank focus on lending to support environmental projects.
7. Environmental awards
Find an appropriate environmental award
- As environmental issues become more high profile, the number of awards schemes and competitions has grown.
- Awards are run on a global, national, regional and local basis, as well as those tailored for specific business types, sizes and sectors.
- If you've been working on your business' environmental efficiency, it's increasingly likely that you can find an award you can enter.
- Keep up to date with trade associations and magazines in your sector to find out about newly-launched awards. Your local press is a good source of information for awards schemes run on a regional basis.
Reflect the success in your marketing
- If you win an environmental award, it's a very good idea to promote the fact as much as you can. Buying decisions are increasingly being made on environmental credentials and winning an award from an external body can be a powerful tool.
- Consider featuring it on your website, your company stationery and advertising. If you have a certificate, it may be worth putting in a prominent place in your premises.
- Also check with the organisers of the award - they are often very willing to help recent winners gain press coverage (local, national or business press) which would be beneficial for both parties.
Maximise your financial benefits
- For many awards, the largest benefit gained by many winners is the marketing push it provides. However, there are some awards that have prizes, such as cash or free equipment.
- It's always worth checking the competition criteria to see if there are prizes on offer.