Every year the Australian Government offers more than $20 billion through over 600 different grant programs to assist businesses. Unfortunately some of these funds are never claimed. Many businesses are simply not aware of them, do not know how to claim them, or do not claim their maximum entitlement.
Business grants fall into two main categories. They are either industry related or activity focused. The specific industries can vary depending on the government’s focus.
Current industry grants include steel, motor vehicles, textile clothing and footwear, tourism, agriculture, health, arts, film and television.
Activities currently supported include exporting, research and development, commercialisation of technology, reducing the carbon footprint, employment, regional development, equity fundraising and training.
Entitlement grants
Very few grants are guaranteed. However, the Research and Development Tax Incentive and Export Market Development Grant (EMDG) are entitlement grants. By complying with the grant requirements and knowing your rights, you can be sure you will be paid.
The Research and Development Tax Incentive
The Research and Development Tax Incentive pays a cash benefit to companies of up to 45% of their eligible R&D spend on creating innovative technologies. Companies with tax losses receive the maximum benefit, which can assist finance their development process when most needed. Eligible projects must be conducted primarily in Australia and involve both innovation and technical risk.
Some successful claims include creating new products, software development, improvements to manufacturing equipment, security devices, online trading platforms and environmental products. Claims must be lodged within 10 months of the end of each financial year and prior to lodging the company tax return.
Export Market Development Grants
The EMDG scheme provides exporters and potential exporters with a 50% reimbursement of eligible expenses capped at $150,000 per claim.
Exports could broadly be defined as any transaction that will secure foreign-sources income. That would include sales concluded overseas or sales in Australia to tourists.
Successful claims include creating new products, software development, improvements to manufacturing equipment, security devices, online trading platforms and environmental products.
No sales are required for the first two claims with the first claim covering two financial years.
Eligible expenses include international patents and trademarks, overseas trips, representatives, agents, subsidiary costs, samples, website development and hosting, advertising, communication, entertainment, trade shows and Australian consultants.
Competitive grants
The majority of other grants are competitive.
That is, your application must offer a better outcome than the others submitted. Remember they are government grants, so the desired outcome is the benefit to the Australian economy. This could be increased employment, profits that will attract company tax, exports, import replacements, reduction in government spending, increased knowledge, efficiencies, increased competitiveness or benefits to ancillary or support businesses.
Whether for an entitlement or competitive grant, all successful grant applications have the same requirements.
Tips for success
So what are the common mistakes you can avoid to increase your chance of lodging a successful grant application?
You only get one chance to make a first impression so you need to know the full requirements of the scheme. This can take time to research, but in the long run your application will provide the information needed to have it assessed. Incomplete or incorrect applications rarely succeed. If the application is audited you need to know your entitlements and rights. Auditors can disallow eligible expenses, not fully understand the application or technology, or may have a preconceived opinion.
The quality of the information and presentation is also important. The larger the grant sought, the more professional the application required. Well-presented applications stand out from the crowd. The reviewers will relate the quality of the application with the quality of the work to be conducted.
Speaking with the grant administrators can be invaluable. It can develop a relationship that changes an application from being new to one that is more familiar. The information they provide is often not included in the Legislation or guidelines and can give your application the edge.
Ensure your application is optimistic. In most cases the reviewer will discount any projections provided, assuming they are best-case scenarios. If you have already discounted, then your application is likely to fail. What happens if your projects are wrong? Whether the result is better or worse it is still only a projection, which is your best estimate at the time.
The application form usually details the information required. It is provided to assist you to present enough detail for a proper assessment of your application, so it is wise to ensure you provide everything that is requested. Incomplete applications will usually stand out in the wrong way.
Ensure your grammar, spelling and punctuation are correct. A sloppy application does not present your proposal in the best light. It is useful to have someone not involved in the application review it for you before you lodge it. Being close to the business, many people will assume a level of knowledge that is not possessed by the reader and leave them floundering. It is sometimes necessary to explain what may seem to be basic information to ensure the reader can fully understand the situation.
Other important steps
An important step often overlooked is advising how the project fits into the current business operations. Application for grants that support activities that are not currently part of your core business will fail if it is not adequately explained. Without this, the reviewer could consider you are just chasing money and will not deliver the intent of the scheme.
Grants programs usually run for several years. Where a grant has been running for a while there may be other businesses that have already been successful. As the government is spending public funds they are required to disclose to whom the grants were paid.
This information is invaluable. Review the details of these successful recipients. Take into account their industry, the project funded, size of grant, history of recipient, status in industry, the benefits they could provide and their location. Also look at how much money is available for distribution from the scheme. If you feel it is appropriate, give them a call and congratulate them and tell them you are considering preparing an application. This can open a conversation that could be the difference in a successful grant application.
For the best chance of securing your grant, you should consider engaging a professional grants consultant. When choosing a consultant in this specialised area, ensure that securing grants is their core business and they are not an accountant or lawyer doing it as an ancillary activity. This can be quickly ascertained from their website. Check they have extensive years of experience and they are not a one-man band, but a team of experienced people. Avoid choosing someone who previously worked as a public servant, compared to an executive from industry.
Finally, choose a consultant who has confidence in their ability and your project and will work for a success fee. That is a win, win, win scenario.
You are now ready to take your business to the next level with support from the Government. Show me the money!
Bruce Patten, Pattens Group
