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What Are Capital Investment Grants?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 13 September 2016
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Capital investment grants are grants that are used to fund the growth of industry within a specific geographical area. The general idea behind these type of investment grants is to enhance the economic condition of the area by helping existing companies undertake modernization efforts that help those businesses be more productive and competitive. In many nations, capital investment grants are also awarded to companies willing to move into a community that is considered to be somewhat disadvantaged in terms of work opportunities. The end result is improvement in the circumstances of residents, wider diversification in the job market, and a boost to the local economy that benefits everyone concerned.

The administration of capital investment grants is typically managed by a government agency. As part of the process, the agency determines the qualifications that must be met in order to receive one of these funding grants. Companies who do meet the basic criteria are often encouraged to prepare what is known as a grant proposal, a document that essentially provides information that makes it easier to assess the impact on the community in terms of increasing the local economy and creating more jobs for local citizens. It is not unusual for guidelines to be issued by the agency that help business owners to address all relevant matters in the body of the proposal, which in turn increases the possibility of being awarded the grant.

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One of the more important aspects of capital investment grants is that this type of funding option can sometimes motivate companies to establish a presence in areas that would otherwise be overlooked. While those areas may have sufficient population to supply employees and even buy some of the products produced, the area may be undergoing challenges due to failure of older industries that left little opportunities within the area. Capital investment grants are ideally suited for aiding in the revitalization of communities that have fallen on hard times and seen employers pull out of the area, since bringing in new businesses means new jobs and more money spent in the local economy.

Even in relatively stable areas, capital investment grants can aid in the task of bringing in new companies that expand the range of employment options within the area. For example, a small town that is mainly dependent on the continuing operation of a textile plant may find that with the aid of a capital investment grant, the community can become home to telecommunications providers, construction companies, or other types of manufacturing plants that help to diversify the employment options and make the town less vulnerable to the loss of any one employer. This means greater financial stability for the community as well as better chances of holding onto its young people, since the need to go elsewhere to obtain employment or build a career is lessened.

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