Working Capital Funding Opportunities For UK Businesses

What Is Working Capital Funding?

Working capital grants can help businesses who need a cash injection to assist them in the day to day running of their operations, such as pay for stock, cover seasonal shortfalls or pay key bills, including rent.

A working capital funding injection can help businesses carry out their day to day operations without having to make any sacrifices, such as delaying payment of bills or not ordering in sufficient stock, compared with if they were relying on their own existing financial resources. More often than not these working capital funds come from a Government source or from local authorities. In many cases, on a local level funding providers have an interest in allowing businesses to operate as normal during tough economic conditions, such as dealing with the rising cost of doing business or any economic downturns, due to the increase in cost of living and subsequent decreased consumer spend. There is also a vested interest in allowing less established businesses to receive a cash injection so they can run to their full capacity and thrive, to make sure that local economies remain strong.

Who Are the Main Funding Providers?

Grant Providers

Local authorities make up the bulk of grant providers for working capital where they can identify specific needs and challenges for businesses within their communities and help as many businesses keep operating usual business hours without struggling and making a loss or for more successful businesses to increase their volume of business by having a higher cash flow available to purchase stock. There are a few national grant schemes provided by Government agencies or other business enterprise or industry support organisations.

Loan Providers

There is also regional loan funding available from providers such as FW Capital, Mercia Asset Management, Maven Capital and SWIG Finance who run schemes for different areas, such as Teesside, the North of England, Midlands and the South West. This funding can be used for eligible costs towards working capital activities, such as financing daily operations.

There are many cases where loans are offered by Government and other providers where previously a business interested in using funding for working capital has been turned down for funding by a private commercial lender, such as a bank or they have not been offered a sufficiently large enough amount to make a meaningful impact to the day to day financial situation to make operations viable moving forward.

What Do You Get The Funds For?

Businesses may seek grants or loans to pay towards a range of different working capital activities, which are briefly outlined below.

• Manage Cash Flow – Funding to improve the flow of money in and out of your business, smoothing out fluctuations and ensuring operational stability. This might involve implementing financial management systems, optimising billing and payment cycles, or accessing revolving credit lines.

•  Bridge Delayed Payments – Funding to cover temporary gaps in cash flow when customer payments are delayed or take longer than anticipated. This prevents disruption to operations and avoids costly penalties for late payments.

•  Fund Important Purchases –  Funding to acquire essential equipment, inventory, or materials crucial for business operations but not feasible to purchase solely with available cash. This can avoid hindering growth and productivity due to financial constraints.

• Repairs, Updates and Upgrades – Funding to cover the cost of necessary repairs, maintenance, or upgrades to existing equipment, technology, or infrastructure. This ensures continued smooth operation, avoids costly breakdowns, and potentially improves efficiency.

• Cover Seasonal Shortfalls – Funding to bridge periods of lower income or increased expenses experienced by businesses with seasonal fluctuations. This prevents cash flow depletion and ensures consistent operation throughout the year.

• Unexpected Expenses and Business Emergencies –  Funding to provide a safety net for unforeseen events, accidents, or urgent repairs that could otherwise significantly impact business operations and finances. This promotes resilience and protects the business from financial disruptions.

• Expansion Purposes – Funding to support planned expansion initiatives like hiring new staff, opening new locations, or launching new product lines. This provides the additional resources needed to accelerate growth and reach new markets.

• Sufficient Inventory – Funding to maintain adequate inventory levels to meet customer demand and avoid lost sales opportunities. This can optimise operational efficiency and prevents stock shortages that could harm customer satisfaction.

• Payables – Funding to ensure timely payment of outstanding invoices and supplier debts. This maintains good relationships with vendors, avoids late payment penalties, and protects your business credit score.

• Finance Daily Operations – Funding to cover ongoing operational costs like salaries, rent, utilities, and other recurring expenses. This ensures consistent business function and avoids falling behind on essential payments.

What Grants Are On Offer?

Here are some examples of grant funding types available

• Business Growth and Development Grants – Many general business growth and development grants offer allowable expenses to include activities that fall under working capital.

• Business Recovery Grants – Funding available that allows businesses to recover from an adverse or emergency incident, sometimes including damage from flooding or extreme weather include allowable expenses that cover working capital costs.

• Digital Grants – Funding available that includes allowable expenses towards working capital costs relating to carrying out business activities online.

• Tourism and Events Grants – Funding available to expand tourism or put on events to attract visitors to local areas include allowable expenses towards working capital costs.

• Town Centre Grants – Funding aimed at revitalising and supporting service businesses and retailers in the main central business area of a town include allowable expenses towards working capital costs.

• Rural Grants – Funding aimed at supporting the development and growth of businesses in rural areas and villages includes allowable expenses towards working capital costs.

• UK Shared Prosperity Fund  – A large number of the schemes supporting local businesses, people and skills and communities and places activities administered by this flagship levelling up fund in local areas includes allowable expenses towards working capital costs.

How Much Funding For Project Costs Is Typically Available? 

Every single scheme is different, for many lower cost working capital grants it is possible to get up to 100% of the costs covered. Other higher costing working capital requirements can see businesses expected to provide a contribution of funding from other sources, ranging from 40% of costs covered by the grant up to about 80% of the working capital costs covered. In many cases this is to ensure that the grant applicant is otherwise financially solvent and serious about continuing their business as a going concern long-term and willing to take on some of the financial risk themselves. 

From the current set of grants available in the UK for working capital, a total amount awarded as a grant ranges from under £500 for basic working capital costs up to over £100,000 for larger scale working capital needs

Who can apply?

Sole traders are able to apply for both loans and grant funding for working capital activities, up through small to medium sized businesses and large corporations.

How do you apply? 

As the criteria and requirements of working capital funding is complex and varies on individual business needs, some grant and loan providers in this area often invite those interested to submit an initial enquiry and then have a discussion based on needs for their day to day working capital needs and viable business plan over the next 12 months or longer, rather than provide a generic application form online to fill out and submit straight away. 

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 typical cases of funding applications 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. 

In some cases, funding has been made available to improve the overall economic viability in local areas on a longer term basis and that means that these working capital funds stay open far longer than others, in many cases for years to ensure businesses can stay solvent or carry out growth activities by receiving a positive cash flow injection.

When it comes to the actual stage in the working capital needs process for a business you would typically apply for the funding before any working capital costs have been spent. The reason for this is because most funding providers will only pay for ongoing working capital costs that have been approved by them and not for old working capital liabilities from the past.

Want the Full Set of Working Capital Funding Schemes?

If you want the full set of working capital 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.