18 June 2014
The budget has brought huge changes to small business grants. With fewer grants and a smaller pool of money, it’s more important than ever to do your homework.
Principal of grants consultancy Bulletpoint, Ben Cusack, says that as well as reducing the pool of funds, the new programs have slashed the cap on funding.
“Individual SMEs used to be able to get up to $2 million to take a new product, service or process to market and [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][the new program] only provides matched funding of up to $250,000,” Cusack says.
The key change after the budget is the abolition of Commercialisation Australia and the introduction of the Entrepreneurs’ Infrastructure Programme, offering $484 million over five years to help entrepreneurs commercialise ideas, lift business capability and improve access to business management skills.
With the tightening of funds available for commercialising products and services, Cusack recommends small businesses explore other opportunities, such as the Research and Development Tax Incentive rebate, which has only been reduced from 45 per cent to 43.5 per cent, in line with a tax reduction of 1.5 per cent.
“[This] is one of the most overlooked grant programs that the government provides. I meet great companies almost daily that have missed out on years of claiming the R&D tax incentive because they have been focused on developing new products, not realising that there is money available to them,” he says.
One grant boosted by the budget with an extra $50 million in funds is the Export Market Development Grant, which gives rebates for expenditure on overseas marketing for businesses expanding their exports.
“Austrade will now reimburse up to 50 per cent of eligible export promotion expenses above $5000, which is down from $10,000. This grant is a great way for SMEs to begin exporting or expanding to countries overseas.”
Other changes include the introduction of an Industry Skills Fund with $476 million over four years to support small business training needs; a $50 million Manufacturing Transition Grants program to help Australian manufacturers move up to higher value or niche activities; and $304 million for the Restart Programme to boost wage subsidies to employers who hire job seekers aged over 50.
Discontinued programs include a series of apprenticeship access and mentoring grants, as well as the Industry Innovation Councils, Enterprise Connect and Enterprise Solutions.
Head of grants consultancy Insight Business, Martin Reed, says the changes introduced by the tight budget will force small business owners to become more focused and strategic when applying for grants.
The best way for a business to have success when applying for a grant is to demonstrate success, Reed says.
“The [grant] reviewer is much more likely to give money to a company which has a clear path to success. We call it the grant paradox: if you really need the money too much, you probably won’t get it,” he says.
“Remember the goal of business is to have a successful, profitable business, so don’t be reliant on grants. Think of a grant as a bonus for a company on a pathway to success, rather than something that must be relied upon.”
Here are Reed’s tips for applying for a small business grant.
- Do your research and find the right grant for your business;
- Ensure you write your application with the reviewer in mind;
- Before starting your grant application, make sure you have a well articulated business plan and a clear idea of where you’re going both strategically and financially;
- Demonstrate that you have a clear pathway to commercialisation. The reviewer has to see why this is a good company or application to support;
- Substantiation is important. For example, if you’re saying your technology is novel, you need some market research to demonstrate this;
- Make sure your business is incorporated and has a good business structure, the reviewer isn’t likely to back a sole trader;
- Have a strong commercialisation and export strategy;
- Remember everyone thinks their product is the best. Your goal is to convince the reviewer that your grant is worthwhile; and
- Ask yourself, “Is it worth me writing this grant application or should I be focusing on my product, commercialistion or innovation and use an expert to help?”.