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Introduction
According to Simply Business’s 2026 SME Insights Report, 47% of UK businesses are now using AI tools in their operations, up from 22% in 2025. An additional 13% of businesses surveyed are planning to start using AI over the next 12 months.
What Are The Main Ways SMEs Are Adopting AI?
The most popular ways that small businesses are using AI are for the purposes of innovation to help grow in challenging trading conditions:
- 63% are using it to create content for their business
- 53% carrying out problem solving
- 50% for the generation of new ideas
- 46% using AI to save time on admin tasks to streamline progress of innovative projects
What Are the Main Barriers For SMEs To The Adoption of AI?
Of the SMEs surveyed that have not yet adopted AI, a number of different concerns were cited:
- 44% have security and privacy concerns from AI software and services
- 39% are unsure how AI could be useful to their business activities
- 36% have concerns about the accuracy of AI
- 31% don’t understand how to use AI or are wary of integrating it into their work
Businesses can regularly check Government funding providers such as Innovate UK and other funding providers that fall under the UK Research and Innovation network to see if grants are available that align with specific research and development goals for their projects. There are also innovation grants available on a local level, typically issued by local authorities, business enterprise support agencies and universities. For international grants, businesses can explore funding available from the European Commission as part of the Horizon Programme.
What Are Some Of The Latest UK Business Innovation Funding Opportunities Available?
i) Innovation Vouchers
Anglia Ruskin University is providing funding to enable businesses to develop an innovative idea or learn more about diversifying their business through R&D activities. Businesses should provide 25% of in-kind activity to secure the voucher. Funding up to £5,000 is available.
Application Deadline: Applications are invited on an ongoing basis
ii) Engineering Biology Access to Infrastructure Pilot
Innovate UK and the Department for Business, Innovation, Science and Trade are running a competition that aims to support projects that enable scaling of lab proven engineering biology innovations by enabling SMEs to scale innovations to pilot or demonstration scale. Funding up to £525,000 is available.
Application Deadline: 21st October 2026
iii) National Materials Innovation Programme: CR&D Round 1
Innovate UK is running a competition that will support collaborative industrial research to speed the translation of advanced materials innovations in three prioritised high growth themes and one strategic opportunity theme. Funding up to £1 million is available.
Application Deadline: 28th October 2026
iv) Innovation Fund
The University of Essex is offering tailored funding to organisations collaborating with the University of Essex to develop projects that will, amongst other things, identify barriers to innovation, assess the potential of new ideas and solve immediate challenges while building for long-term success. Funding up to £15,000 is available.
Application Deadline: Applications are invited on an ongoing basis
v) Industry Impact Fund
The Construction Industry Training Board is providing funding to develop innovative solutions that will address key challenges faced by the UK workforce. Solutions should enhance productivity, equality, diversity, and inclusion. Activity must focus on an innovative skills and training solution for the industry that doesn’t already exist. Funding up to £500,000 is available.
Application Deadline: Applications are invited on an ongoing basis
vi) Accelerating Innovations Programme
Catapult Offshore Renewable Energy, NCC and National Manufacturing Institute Scotland are running a programme that will provide tailored in-kind funding support for up to 20 high-potential UK companies developing mission-aligned technologies, products and services for the offshore wind sector. Funding up to £100,000 is available.
Application Deadline: 5th October 2026
vii) Great Ideas
York and North Yorkshire Combined Authority is running a funded programme that aims to support businesses to innovate and grow, whether they are looking to launch a new product, improve their processes, or explore new technologies. The program provides practical guidance and expert support, as well as access to potential funding opportunities. Funding up to £60,000 is available.
Application Deadline: Applications are invited on an ongoing basis
viii) BIC Innovation Grant
The North East Business and Innovation Centre is providing funding, advice and guidance to SMEs who are trying to progress an innovative idea that contributes to business growth in the Sunderland region. Eligible projects must provide new to the business innovative processes, tech or automation or new to the marketplace and create jobs. Funding up to £10,000 is available
Application Deadline: Applications are invited on an ongoing basis
How To Apply For Business Innovation Funding Schemes
Full details about how to apply for schemes and the eligibility criteria is available on each individual scheme page on the relevant website. Any deadlines, who can apply and what eligible costs the grants will cover will also be outlined on these pages. Interested individuals and businesses can speak to innovation advisors based at each provider who can guide them through requirements and eligibility criteria to see if the relevant funding is a match with their needs and help them to apply. There are also application forms and other supporting guidance available on scheme pages as well.