Editorial: Follow that grant

There’s about $5 billion in commonwealth and state government grants up for grabs each year – and most businesses have no idea they are available.

Research and development grants, money for training and apprenticeships, grants for exporting and innovation funds are all there for businesses prepared to take the time to apply.

Government giveaways are a great way for small business to top up working capital, but they aren’t for the faint-hearted. Accessing the grants means cutting through red tape and providing ongoing information about your business to the government. And if you don’t succeed, the government can ask for the money back.

But this shouldn’t deter business.

In some sectors, such as biotechnology, pharmaceuticals, manufacturing and the environment, there are hundreds of millions of dollars of grants available. About one-third of the grants made each year go to the environment and sustainability sector, and about one-quarter end up in manufacturing and trade.

This week’s BRW provides a comprehensive overview of the best ways to access grants. There are a few basic rules to follow if you want some of the 403 grants on offer from federal, state and territory governments.

Keep in touch with the government agency handing out the money is the first and most important rule. Unless you know about the grant, you aren’t going to receive it. Don’t try to impress the government agency with jargon. The people assessing grants, usually public servants, will look more kindly on applications when they know the business and its owners, and when they understand the business plan and strategy.

Business should understand that governments hand out grants to achieve a policy objective, and often this is either to increase employment or boost exports. Targeting either area in an application form makes sense.

Most grants are on a dollar-for-dollar basis, so a company needs to invest just as much as it receives from a grant. While a government handout can make a project viable, the business owner still needs to invest his or her own cash. This means taking a financial risk.

Governments don’t like handing out money for projects that fail, and they hate opposition parties pointing to wasted taxpayer funds. So they look for winners. Ironically, marginal projects are less likely to attract funding even if they are more in need. The best part for business is that unlike bank loans, government seldom needs collateral to hand over the money.

Government handouts aren’t one-off events. Many business owners have accessed different grants throughout the life of their company. And much of the hard work is done the first time around, so applying for a second and third grant is easier.

Using third parties – accountants, peak bodies and consultants – to access grants may be worthwhile if you would never get around to applying for the grant yourself. But consultants can take up to 15 per cent of the grant. Some business people say a little perseverance can negate the need for a third party.

Federal, state and territory handouts are meant to boost business and can be a relatively cheap way of accessing finance. It’s a worthwhile exercise to see if your business is eligible.

Sean Aylmer

BRW

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