What is Match Funding?

Match funding is where you provide a percentage of your project costs from your own resources to unlock grant funding. It’s a bit like a joint investment from your side and the grant provider.

Most UK business grants attach this condition, but the ratio can vary. Some providers ask for a 50:50 split, others expect you to contribute 30%, with them providing 70%. The bigger your business is, the more the provider usually asks you to contribute.

How does match funding work?

Let’s say you need £100,000 for a research and development project. You apply for an Innovate UK grant, which offers to fund 70%. That means:

• Grant funding would be £70,000 (70%)
• Your match funding is £30,000 (30%)
• Making the total project cost £100,000

So, in this matching funds example, you have to find £30,000 to contribute. And the provider will want proof that you can access these funds before they approve the grant. And they won’t release funds until you secure your contribution.

Some grant schemes release funds by milestone, meaning you don’t get the money as a lump sum. This can cause some cash flow problems. But that’s where you can use your contribution freely. While grant payments come in over the project lifetime, you can spend on essential project costs like raw materials or project-specific third-party software immediately with your contribution.

How can company match funding impact your ability to get a business grant?

To get a grant, you need to demonstrate you can provide your share. This creates a financial barrier, particularly for smaller businesses and startups, who have to generate a sometimes sizeable contribution before they can access funds.

And although there are providers who are happy to accept funding contributions from external sources, like a business loan, or other alternative funding options, some don’t. They want to see funds coming from earned income or cash reserves, which is why it’s so important to compare grant providers and study their requirements carefully.

Having said that, match funding gives the provider security; it shows you believe in the project enough to show genuine financial commitment. Typically, match-funded projects have higher completion rates.

How to get match funding

You have a few options for raising your match funding contribution. Remember, each provider has different requirements, so check those before choosing one of these options.

1. Company cash reserves

Using your retained earnings is the quickest and easiest option. It’s your company’s money, so there are no interest payments, and no one can tell you not to use it. Using your own money also shows providers you’re strongly committed to the project.

But, let’s be honest, who has a sizeable lump sum sat in the bank? So this isn't necessarily a realistic option for small businesses or startups.

2. Business loans

Applying for a business loan can cover your match funding requirement. This is a popular way to access grant opportunities that they couldn’t otherwise afford. Choosing the right business loan is essential, though, because you need to find one that’s comfortably affordable. You don’t want loan repayments to put strain on your cash flow while waiting for your grant payments.

Unsecured business loans are one of the quickest types of business loans you can get. You can apply for up to £500,000, you don’t need a company asset, and you can see funds in your account in 48 hours after approval.

3. Private investors

Angel investors or venture capitalists can provide you with funds to help you secure the grant, in exchange for equity in your business. So, if you’re happy to dilute control of your business decisions, you might find this option useful.

4. Crowdfunding

Crowdfunding is a great way to raise funds from multiple people. You can tell people all about your project on dedicated crowdfunding platforms like Crowdfunder and raise your money publicly.

If you think your project has a strong public appeal, crowdfunding could be for you.

5. Director’s loan

One of your directors could always lend money to your business, called a director’s loan, to match funds for your grant. This is a great way to keep money in-house. If you do this, make sure you’ve got an official director’s loan agreement.

Ready to access the funding your business needs?

If a business loan makes the most sense for your match funding strategy, we can help you compare UK lenders instantly. Our comparison tool is free to use, you’re under no obligation to accept any quote, and getting a quote won’t affect your credit score. Find and compare business loans.