COLUMN - Need more capital? Your wish may be "Granted"

Written by: Steve Goodman

Do you need money to start or help shore up your small business here on the Sunshine

Coast?
How would you like to receive funding for new equipment, construction, renovations, expanding human resources, even for advertising or marketing – that you never have to pay back? You could win the Gold Lotto, or you could apply for a government grant.

The truth is, the Australian government is very committed to supporting its small businesses and entrepreneurs, having set aside more than 20 billion dollars in funding programs for financing small businesses like yours. While a portion of that money is in low cost small business loans, a good deal of cash is available in free government grants to expand or improve your eligible businesses.

Business coach and consultant Mark Jones with TRAC Consulting has found great success with grant programs. “In general terms I can say that TRAC Consulting has won and partnered with other organisations in gaining well over $1.5 million dollars in government funding for various business development and training initiatives over the past five or six years,” he says. As with any government program the trick is to understand what programs your business qualifies for, and to be diligent in the application process. Mark says, “Our success has stemmed from fully understanding the process of tender writing and creating submissions that demonstrate high need, and an organisational capacity to deliver real results. The government is always looking at the value proposition and you must be able to deliver value for money as a key output in both your budgeting and program deliverables.”

Yvette Adams, with The Creative Collective adds, “I have the business philosophy across the board that you’ve, ‘got to be in to win,’ and that if you, ‘keep firing shots, you might hit a target’. Having said that, I think it is important to carefully read the criteria and obligations of the grant before you apply, and only apply for ones that are, ‘really up your alley.’ Those you are confident you have the best capacity to deliver on.”

Why Bother?

No question, it is certainly worth considering your businesses eligibility for a government grant. However as consultants such as Mark and Yvette point out, companies need to go into the process with their eyes open. A common mistake is that companies don’t consider their eligibility for grants early enough in their development. They find out too late that they could have received grant funds when they are already close to exhausting other sources of start up capital, and are on the brink of failure.

On the other hand, there are those companies that spend so much time tracking down and applying for grant funding, that they become distracted from running their business, and hedge too much of their future on the success or failure of obtaining the grant.  Finding the right balance is key. According to Yvette, “There must be a careful balance between your other core business activities that bring you immediate cash flow, and pitching towards things like grants, tenders and awards that are more long term business development strategies.”

Where to Begin

The process begins with knowing whether or not you can apply for a grant. While the criteria for grant eligibility varies by the specific program, the general parameters are:

Classification: The legal status of your business may determine your eligibility for what, if any funds are available to you.

Industry type: Certain grants are available only to specific industries. Often, government offices or regional development agencies may target specific industries in their area for support.

Location: Where your operation is located can influence your eligibility. Many grants are location specific. Some operate nationwide, while others are administered locally, or are available only for specific local construction or improvement projects.

Purpose: There are grants that are purpose specific, such as for investment in new hardware or software infrastructure, or for specific equipment or upgrades of technology.

Specific Projects: Funding may relate to a specific project or development, or implementation of a specific technology for the government.

Resources and Grant Sources

The GrantsLINK directory (www.grantslink.gov.au) has information about federal, state and local government funding programs that can help you fund ideas and get assistance in times of hardship. GrantsLINK provides links and contact details for funding programs so you can get more information directly from the funding agency.

Commercialisation Australia (www.commercialisationaustralia.gov.au) has funding of $244 million over the five years FY 2010 - 2014, with ongoing funding of $82 million a year thereafter. Specific program components include:

Skills and Knowledge Support: to help build the skills, knowledge and connections required to commercialise intellectual property, providing funding of up to $50,000 to pay for specialist advice and services. This funding is provided in the ratio of 20 percent contribution by the applicant to an 80 percent contribution from the grant, to a maximum grant amount of $50,000 (for example: $12,500 from the applicant and $50,000 from the grant).

Proof of Concept Grants: $50,000 to $250,000 is available to test the commercial viability of a new product, process or service. This assistance is provided on a 50:50 matching basis. Early Stage Commercialisation Repayable Grants: $250,000 to $2 million is on-hand to develop a new product, process or service to the stage where it can be taken to market. This assistance is provided on a 50:50 matching basis.

Tourism Queensland (www.qtic.com.au) The 2011 TQUAL grants are now open. The Department of Resources, Energy and Tourism has allocated $40 million over four years from July 1, 2011 for TQUAL Grants to stimulate sustainable economic growth in the Australian tourism industry by enhancing the supply of quality tourism products and experiences to support marketing promises.

Two types of project funding are available through TQUAL grants:

Tourism Quality Projects: up to $100,000 for smaller scale projects to support collaborative community tourism industry development projects

Strategic Tourism Investment Grants: up to $1 million for larger scale projects to support Indigenous tourism, economic development, and tourism employment

Hurry Applications close  April 15, 2011.

AusIndustry (www.ausindustry.gov.au) is committed to delivering business services that build on three key drivers of economic growth: innovation, investment and international competitiveness. AusIndustry offers both entitlement and concession programs. For grants-based programs, customers compete for limited funds based on the merits of their application. 

Taking it for Granted

No doubt government grants can be a useful source of funding, but keep in mind they have very specific application and eligibility requirements. All grants have limitations. Some are limited by a fixed amount of funds allocated, some are limited to particular businesses, specific items of improvement or equipment, or by particular time in the business cycle. Others have limits on the size of the businesses that are eligible to apply for available funds.

And remember, it may seem like government grants are “free money” since they do not have to be paid back. However, as already pointed out, there are the substantial “costs” of the time and effort needed for application processes, and the significant impact on your business that always should be considered.