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What Is Purchasing Equipment Funding?
Purchasing equipment grants can help fund enterprises of all sizes who want to cover capital costs of acquiring machinery, tools or other items to run a business, such as purchasing long term assets, ICT equipment and upgrading older obsolete machinery with newer equipment. As a general rule there are also a few loans available, particularly from regional investment funds and banks to carry out capital purchasing activities, sometimes at an interest free or favourable low interest rate.
A purchasing equipment funding injection can help businesses purchase equipment faster than with their own regular financial means or make bigger purchases that would previously not have been accessible to them. More often than not these purchasing equipment grants and loans come from a Government source, or in many cases local authorities who want to boost the economic activity of businesses in their area.
Who Are the Main Funding Providers?
Grant providers
In terms of national funding, the UK Government has outsourced many purchasing equipment funding opportunities to local authorities via the UK Shared Prosperity Grant and the Rural England Prosperity Fund schemes or sector specific funding from DEFRA or the Forestry Commission. The Scottish Enterprise, Welsh Government and Invest Northern Ireland also provide funding for businesses looking to carry out activities within their regions.
For localised and regional funding, local authorities make up the bulk of grant providers for purchasing equipment activity where they can identify specific needs for expansion activities for local businesses and communities. As mentioned above, a large amount of this funding is allocated from the UK Shared Prosperity Fund which allows local authorities to provide funding for purchasing equipment activities across supporting local businesses, communities and place and people and skills activities.
Loan providers
In terms of loans available at a national and regional level, there is debt funding available for purchasing equipment activities from organisations such as British Business Bank, Development Bank of Wales and The Highlands and Islands Enterprise. The FSE Group has specific regional loan investment funds, including for Yorkshire, Cornwall, Thames Valley and the South East of England.
What Do You Get The Funds For?
Businesses may seek grants or loans to pay towards a range of different purchasing equipment activities, which are briefly outlined below.
- Asset Purchase: Funding specifically allocated for the acquisition of long-term, high-value equipment that becomes a permanent asset of the organisation. This equipment is expected to contribute directly to improved operational efficiency, increased productivity, and long-term cost savings.
- Purchase New Machinery: Funding to replace outdated or inadequate machinery with newer, more efficient models. This often focuses on upgrading production capacity, introducing new capabilities, or meeting safety and compliance standards.
- Capital Expenditure: A broader term encompassing significant investments in equipment that contribute to the organisation’s long-term growth and strategic goals. This could include both the purchase of new assets and upgrades to existing infrastructure.
- Hiring Capital Equipment: Funding to lease or rent equipment instead of purchasing it outright. This is often preferred for short-term or seasonal needs, avoiding unnecessary capital expenditure while optimising resource allocation and maintaining flexibility.
- Purchasing ICT Equipment: Funding to acquire Information and Communication Technology (ICT) equipment such as hardware, software, and IT infrastructure. This is intended to improve data management, communication, cybersecurity, and overall operational efficiency through automation and digitalisation.
What Grants Are On Offer?
Here are some examples of grant funding types available:
- Business Growth and Development Grants – An allowable funding sub-purpose of this type of business expansion funding is to purchase eligible capital equipment in order to carry out new revenue generating activities or to carry out existing tasks more quickly and efficiently.
- Digital Development Funding – Funding that allows the purchase of ICT and technical equipment to transform business operations and go digital and stay competitive and up to date with other businesses in the sector.
- Business Productivity Grant – Funding that allows businesses to boost productivity of core business functions or activities aimed at a specific sector where allowable expenses include the purchasing of equipment that can help update activities and make them more efficient.
- Capital Grants – This is general funding for the purchase of fixed physical assets that can also include the purchase of equipment for a business aimed at boosting revenue generation over a long period of time.
- Vehicle Grants – Funding specifically aimed at the purchase of vehicles and related transport equipment in order to increase the efficiency and operation of vehicle fleets for a business or an individual vehicle for a single person operation, such as a taxi driver.
- Rural Grants – Funding aimed at purchasing equipment to support agricultural activities or rural enhancement, such as woodland activities. There are specific funding subsidies for UK based non-urban economic activities.
- UK Shared Prosperity Fund Capital Grants – The UKSPF at a local authority level offers capital funding grants that allows the purchase of equipment for specific projects aimed at enhancing individual businesses or allowing an operator to provide support for multiple local businesses.
What Loans Are On Offer?
- Investment and Development Loans – A number of development banks and loan specialists offer debt funding that specifically permits the use of finance to purchase capital equipment for business expansion projects. In some cases this will be aimed at businesses who are not eligible to receive regular commercial loans from conventional lenders and in many cases these loans are offered at a favourable rate of interest.
How Much Funding For Capital Purchases Is Typically Available?
Every single scheme is different, for some smaller capital purchasing grants it is possible to get up to 100% of the equipment costs covered. Other higher costing equipment can see businesses expected to provide a contribution of funding from other sources, ranging from 30% of costs covered by the grant up to 90% of the total item costs covered. In many cases this is to ensure that the grant applicant is financially solvent and serious about long term success and willing to take on some of the financial risk themselves. It also means that by receiving partial/matched funding, a business might be able to purchase a higher cost equipment than they would have done without the grant.
From the current set of grants and loans available in the UK for Purchasing Equipment, a total amount awarded or loaned ranges from under £1,000 for individual small item purchases, up to £2 million and above for larger scale strategic purchases.
Who can apply?
Sole trading business owners and start-ups, up through small to medium sized businesses and large corporations are all eligible to apply for purchasing equipment funding grants and loans, where funding is fully scalable based on requirements for physical items. Each scheme will have a specific criteria in their ‘How to Apply’ section on what is the ideal applicant profile and eligible costs.
How do you apply?
Most purchasing equipment grants and loans tend to have an online application process or a downloadable form that can be submitted to the provider. More often than not they come with a detailed questionnaire about the nature of capital equipment requirements and the applicant to be filled out as an initial feasibility check. It means it can help both businesses themselves and the funding provider determine whether or not the equipment purchase in question qualifies for the funding being provided. This ensures that neither party spends too much time on the funding process for a project that will not be a fit at all.
Prospective applicants can compare different funding provider options and filter based on their own needs by reading details of what each scheme will fund, what geographic location is covered and the eligibility criteria to apply.
Once both an applicant and funding provider are satisfied that their needs match up, then a more formal application process is issued and the usual financial due diligence checks are carried out and funding is either awarded or a decision not to fund comes with an explanation, so that businesses can take on board feedback against future applications.
When do you apply?
In most cases of funding applications for purchasing equipment there is usually a deadline that businesses must adhere to so that limited funding can be processed and applicants can then be considered to be awarded funding. Those who apply after the cut off point will not be considered for funding.
There are also capital funding pots that have been made available to local businesses and specific sectors in the UK on a longer term basis and that means that these funds stay open far longer than others. This means that applications can be made for purchasing equipment funding on an ongoing basis, as long as the fund states it is open for applications.
When it comes to the actual stage in the purchasing equipment process for a business, you would apply for the funding before any purchases have taken place. The reason for this is because most funding providers will only pay for capital equipment that has been approved by them and not previous purchases that may not meet their cost criteria or list of approved items that can be paid for using funding.
There are many cases where a funding provider will request an applicant get multiple written quotations from different vendors for the equipment they require to ensure the right amount of money is being asked for to acquire these goods and help the business determine which vendor provides the best purchasing options using the funding. It may not be the case that “cheapest quote” is best as a number of other factors will come into play, including the reliability of the items, the after sales service, guarantees or proposed maintenance contracts. A successful purchasing grant will ensure a business has the tools it needs to grow over a number of years rather than additional unexpected costs coming up further down the line.
Want the Full Set of Purchasing Equipment Funding Schemes?
If you want the full set of purchasing equipment grants available, you can use our Grants Matcher, or if you want to save yourself the time and effort then tell us about your project funding needs and let us do the work for you.
