UK Business Information / Grants for capital investment
This information, provided by the UKTI, summarises the key aspects of the main grant scheme to support capital investment in the UK.
OVERVIEW OF CAPITAL INVESTMENT GRANT SCHEME
The main discretionary incentive scheme to support capital investment in the UK is known as:
– In England: Grant for Business Investment,
– In Northern Ireland: Selective Financial Assistance,
– In Scotland: Regional Selective Assistance, and
– In Wales: the Single Investment Fund.
The scheme is designed to support domestic and overseas-owned companies considering opening a new facility, or expanding or modernising an existing facility within an Assisted Area of the UK.
GRANT LEVELS ACROSS THE UK
Grant support is negotiated on the basis of the minimum amount necessary to enable the proposed project to go ahead. There is no automatic formula for allocating assistance as each case is determined on its own merits.
The level of grant support is linked to the number of jobs created and/or safeguarded by the proposed project and the amount of capital investment committed. There are regional variations across the UK in the levels of grant available:
a) In England: the minimum level of grant available is £10,000 with no upper limit.
b) In Northern Ireland: there are particular arrangements for financial assistance which should be discussed directly with Invest Northern Ireland.
c) In Scotland: there is no minimum level of grant available and no upper limit.
d) In Wales: the minimum level of grant available is £5,001 with no upper limit.
Potential applicant businesses should make contact with the relevant regional government organisation to discuss the specific levels of assistance available in each area. More detailed information is also available from the Department for Business, Innovation & Skills.
KEY ELIGIBILITY CRITERIA
In order to qualify for support, companies must meet a number of key criteria, including:
a)The project must be located in an Assisted Area
The UK has a number of designated Assisted Areas in which capital grants are available. Assisted Areas are tightly defined around electoral ward boundaries. Companies should contact the relevant regional government organisation to check whether the location of their proposed project falls within an Assisted Area.
b)The project must create or safeguard jobs
A key aspect of the grant for capital investment scheme is the creation and/or safeguarding of jobs. Only permanent jobs (either full time or part time) directly employed by the company qualify. In the case of safeguarded jobs, there must be a real threat to existing employment if the proposed project is not implemented.
For grant applications of more than £100,000 a greater focus on the quality of jobs created and/or safeguarded is required. Job quality is measured by “Gross Value Added per Full-Time Equivalent” employee compared to the sector and national averages. In addition, the majority of jobs should be at NVQ Level 2 (or equivalent) and above.
c)The project must involve capital expenditure
The proposed project must include capital expenditure on fixed assets such as property, plant and machinery. These assets can be purchased outright or by using lease finance or hire purchase. Some property leases may also be eligible, as well as certain non-recurring costs such as patent rights and professional fees.
d)The project must be viable and provide national and regional economic benefits
The proposed project and the underlying business must be financially viable. The project must also contribute positive net benefits to both the national and regional economies. Applications are assessed for their impact on existing businesses, both within and outside the region of the proposed project.
e)The project must be mainly funded from the private sector
The majority of the proposed project’s funding should be provided by the applicant business itself or from other private sector sources. These could include bank borrowing, hire purchase, lease finance, equity or loan finance from existing or new shareholders in the business, as well as loans from other organisations and institutions.
f)The project must be in an eligible sector
The European Commission restricts aid to certain sectors such as iron and steel, coal, synthetic fibres, vehicles, agriculture and fisheries. For a full list of ineligible sectors, applicant businesses should contact the relevant regional government organisation.
g)The project must need grant assistance to proceed
The applicant business must clearly demonstrate that the proposed project requires public sector financial support in order for it to be implemented as planned. The applicant business must not, therefore, have made an irrevocable commitment to the proposed project prior to submitting an application.
In summary, there are a number of key criteria that must be met in order to succeed with an application for capital grants. Potential applicant businesses are strongly encouraged, therefore, to contact the relevant regional government organisation for detailed guidance.
THE APPLICATION PROCESS
In order to apply, businesses must submit a formal grant application accompanied by a comprehensive business plan. Applicant businesses are encouraged to contact the appropriate regional government organization to discuss their proposed project and to initiate the application process.
THE ASSESSMENT PROCESS
Grant applications are assessed as follows:
a)In England: applications for grants of up to £250,000 are dealt with by the local Regional Development Agency (RDA). Grant applications of between £250,000 and £2 million are appraised by local RDA officials and then submitted for approval to a monthly Regional Advisory Board.
Grant applications above £2 million are appraised and assessed for approval by the Department for Business, Innovation & Skills in London.
b)In Northern Ireland: applications for grants are dealt with locally by Invest Northern Ireland.
c)In Scotland and Wales: grants of up to £5 million are appraised and approved locally. Grant applications above £5 million are appraised and assessed for approval by the Department for Business, Innovation & Skills in London.
In each of the above locations, the capital grant is classified as State Aid, and approval by the European Commission may be required in certain circumstances.
