Australia’s best government grants

If there’s one thing businesses like more than winning a new deal, it’s free money. Countless SMEs have been able to accelerate their growth plans, enter new markets and develop new products by accessing much-needed government grants and support programs.

But despite the hundreds of grants available for small businesses, many entrepreneurs are not even aware these sources of funding exist, and those that do know are often wary to apply.

But while the amount of paperwork needed for one application is high, grant experts say that’s the wrong approach.

“What we find is that businesses don’t have a strategy for finding grants,” GrantReady managing director Adrian Spencer says.

“Grants are actually an income stream, just like a capital raising or any other product, and businesses really have to use a strategic view for getting this funding.”

Spencer says the most common complaint he encounters is that applying for grants is just too difficult. However, he says that when businesses actually hear how much money they are eligible for, they quickly change their mind.

“Many businesses know there are government grants out there, and some even feel guilty they aren’t doing enough, but they don’t know how to go about it. They assume it’s too hard.”

“But when we tell these businesses how much money they can actually receive, they get interested. The perception is that the system is bureaucratic, but it’s not like that at all.”

Not only is it good to keep an eye out for grants that could help your business, it’s actually more necessary than you might think. Governments change nearly every year and budgets are often revised, so the grants on offer usually change from year to year and eligibility criteria are often updated as well.

Ivan Kaye, chief executive of BSI, says SMEs especially need to pay attention to what new grants are available.

“Government grants for SMEs are like mana from heaven. An SME burns through cash quickly, and where else are they going to find this type of money? If you don’t apply, you are missing out on some huge benefits for your company.”

To help small businesses know where to start, here are 10 of the best Federal Government grants and a few state grants to get started.

Federal

R&D Tax Credit

How much? Differs from case to case.

Who is eligible? Businesses undertaking legitimate research and development for product commercialisation.

First of all, it needs to be pointed out that the R&D tax credit is still up in the air. The legislation didn’t make it before Parliament in time, and innovation minister Kim Carr might even delay the legislation for another 12 months.

The proposed system will provide a 45% refundable tax credit for eligible entities with turnover of less than $20 million, and a non-refundable 40% tax credit for all other eligible entities.

R&D activities need to be “”experimental activities whose outcome cannot be known or determined in advance”, must use a “systematic progression of work that is based on principles of established science” and must be “conducted for the purpose of generating new knowledge”.

But with the legislation yet to make it before Canberra, businesses shouldn’t worry about applying for this just yet.

Commercialisation Australia

How much? Up to $250,000.

Who is eligible? Businesses with turnover less than $10 million per year for the three years before an application, although that changes to $20 million for some grants.

The Commercialisation Australia project is actually divided into four parts:

• Skills and Knowledge
• Experienced Executives
• Proof of Concept
• Early Stage Commercialisation

The Skills and Knowledge grants provide up to $50,000 to access specialist advice and services. Companies need to have turnover of under $10 million to apply for these grants.

The Experienced Executives program provides up to $200,000 over two years, up to $100,000 per year, to engage an experienced CEO or other executive to help develop the commercialisation of a product.

Proof of Concept grants provide between $50,000 and $250,000 to assist with the testing of commercial viability of the business model or idea for a product or service. Revenue needs to be under $10 million for these grants as well.

The Early Stage Commercialisation program provides repayable grants of between $250,000 and $2 million to develop a new product or service to a point where it can go to market. Revenue must be under $20 million.

Businesses need to be aware of the different funding requirements, especially for ESC grants which are repayable. After a company achieves $100,000 or more in accumulated sales, it must pay 5% of sales back to the government.

Additionally, companies need to provide they have a need for funding, the plan for commercialisation and potential for the product, specify a market opportunity, explain your management capability and describe how the product will improve Australia’s “participation and competitiveness in the global economy”.

To read more, click here.

Textile, Clothing and Footwear Small Business Program

How much? Minimum of $250,000.

Who is eligible? Businesses in the textile, clothing or footwear industries.

The Textile, Clothing and Footwear Strategic Capability program offers grants to businesses that boost innovative capability. Grants must be matched on a dollar for dollar basis.

As part of the 2010 budget, the Government introduced a further $5 million in funding, and lowered the eligible project funding point from $1 million to $500,000. This would include any government contribution.

Funds can be spent on products that foster innovation, market access, business improvement and “ethical practices”.

To read more, click here.

Export Market Development Grant

How much? 50% of expenses above $20,000 with a maximum of $150,000.

Who is eligible? Businesses incurring eligible export expenses above $10,000 over two years.

The EMDG is one of the most popular grants available to exporters, and for many businesses, the most necessary. Grants are actually provided for the previous year, so applications for 2009-10 are already being accepted.

Businesses need to have revenue below $50 million in the grant year, and must have promoted the export of goods, delivery of services outside Australia, inbound tourism or the export of intellectual property.

Businesses will need to submit an application form, and will need to identify that their export expenses were eligible. Eligible expenditures cover: overseas representatives, marketing consultants, marketing visits, communications, free samples, trade fairs and seminars, promotional literature, overseas buyers and registration costs.

To read more, click here.

Capability and Technology Demonstrator

How much? Up to $100,000.

Who is eligible? Small and medium businesses designing technology for the defence force.

The CTD program assists SMEs in demonstrating different technologies to the defence force that will provide “capability advantages”. It doesn’t work like a traditional grant system, but works as a program of collaborative development, where costs are shared between the two parties.

The costs can go towards seed funding for project proposals, project viability funding and concept definition funding. The government says the most successful proposals will be those using existing technology, but developed in different ways.

To read more, click here.