Debts and loans

Usually the type of enterprise which is best received will fill a gap in the area, especially if it has a sound manufacturing basis. There tend to be plenty of second-hand car Sealers and mobile mechanics available, and although these would probably succeed in their own right if conducted well, they are unlikely to attract government grant money, mainly because they are not novel and are unlikely to reduce unemployment. At present the most likely way to attract small business grants is by reducing unemployment and bringing some kind of high technology and/or manufacturing to the area. This is not easy to do but it is worth considering if you have the ability.

Finally, a cautionary word on grants. When planning your enterprise, whether or not it is agricultural, it must not rely on grants for success; it must be viable in its own right, otherwise you may fall into the trap of thinking everything is all right until the grant money stops. Then there is only one way your business will go and that is down. However, if the grant is regarded as icing on the cake or insurance against a slow start-up or even a lull in sales after an initial rush, you will not go far wrong.

To obtain any grant you will need to provide certain basic information:

1. You must show that you have good general knowledge of

what you are talking about; for example, how to produce an

item and how to market it.

2. You must be able to prove that it is a viable proposition;

production cost and overheads must be covered by the

wholesale price and allow a good profit margin with a

realistic mark-up in the retail price.

3. You must produce a financial plan, showing that the

business will survive and so will you.

The most useful grant available is the Enterprise Allowance Scheme. This gives £40 per week for one year and also free consultation with business advisers and accountants. The requirements for acceptance on to the scheme are that you have been registered unemployed for at least eight weeks, are in receipt of benefit and can demonstrate that you have SI 000 available to put into the business. The requirement of £1000 does not mean that you must have it available in used notes - a bank letter agreeing an overdraft facility to that value is satisfactory. If you have done your homework and can give a confident and logical description of your planned enterprise, the bank manager will be pleased to offer you the overdraft facility because it will bring £2080 (£40) into your account over the year. You can improve your chances of getting the bank to agree by insinuating that you will not have to use the overdraft anyway and that it is just to bring in an extra £2000. If you use the overdraft to buy some piece(s) of equipment, it would be wise to repay the money during the first year as you do not want to enter your first year of non-grant-aided trading with your business account in the red. Not only is this bad business, but it is also very disheartening.

Now that farming is going through a difficult period there is a great deal of interest in diversification. This can embrace anything from holiday bed and breakfast, through traditional country baking to small engineering workshops. In some parts of the country there is a strong interest in encouraging diversification in rural areas. It is worth approaching the local councils in your chosen area(s) to gain information about grants/subsidies available for the type of thing you may have in mind.

Typically, the smallholder does not fare very well from agricultural grants because these are often geared to meet the needs of today's larger farms. Until recently the Agricultural Improvement Scheme (AIS) was the main source of grant money for improving the farm (as its title implies). This allowed percentage grants for various improvements to such things as fencing, and laid down three main prerequisites for anyone wishing to apply; these are that they must:

Earn at least half of his/her annual income from the agricultural business;

Spend at least 1100 hours per year working on the holding;

Either have been farming for at least five years or hold a suitable training certificate. (From form AIS 1(W))

The first two conditions may seem reasonably easy to deal with until one realises how the 1100 hours are estimated. There is a table of standard labour data which details most enterprises undertaken in agriculture and horticulture and how many man hours per year would typically be spent per unit, how many hours per year one person would spend on one sheep. The problem here is that the larger unit tends to be more efficient and as this is data obtained in the farmer's domain it leaves the smallholder wondering where all his time is going. The following are some typical extracts from this list.

So from the figures quoted above it appears that over 2000 breeding rabbits would take the same time as one acre of forced rhubarb. The AIS scheme has recently stopped operating and is soon to be replaced by a grant system designed to encourage conservation. This will probably still be bound by the same eligibility requirements.