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Government Grants for Businesses - Practical Tips & Traps

Written by Glen Bower . December 07, 2020
6 min read

Businesses within Australia have faced unprecedented challenges within 2020 with the COVID-19 pandemic and natural disasters such as bushfires, floods and drought impacting localised trading conditions and the economy as a whole. Many are still relying on government funding to survive, including the extended JobKeeper scheme.

Contents

1. Research and apply for grants that align with your business needs
2. Check the eligibility criteria
3. Ensure all required supporting documentation is provided with applications
4. Seek guidance and feedback from grant providers
5. Be prepared for ongoing reporting obligations
6. Understand the tax consequences

Fortunately there are a wide range of grants and other funding programs currently available from all levels of government to assist businesses, supporting objectives such as:

  • Business expansion
  • Business start-ups
  • Disaster recovery
  • Employment & training
  • Importing or exporting products or services
  • Infrastructure projects
  • Recycling & energy saving initiatives
  • Research & development

Below are some key practical tips and traps for businesses considering applying for one the many government grants that are currently available to support the preparation of a successful grant application:

1. Research and apply for grants that align with your business needs


The initial challenge generally faced by most businesses interested in exploring grant funding opportunities is to identify available funding programs.

Whilst there are numerous tools and resources currently accessible online, such as the Federal Government’s official Grants & Programs website and GrantReady’s GrantGuru database, most grants are developed to support a specific industry and/or are tailored to achieve a defined objective. Also, most grants are only available for a limited timeframe and have predetermined funding caps.

Therefore it is important to initially review your business plans and to identify specific areas where there is a genuine need for funding support. This will not only streamline the process of identifying grants, it is also likely to align your business needs with the eligibility criteria for available grants.

2. Check the eligibility criteria


Applying for grants can be an extensive, time consuming process and applicants often invest substantial resources into applications for grants in which they do not actually satisfy the underlying eligibility criteria. The eligibility criteria for grants can vary greatly and will not always be obvious when reviewing the grant application requirements.

It is also common for grant programs to require successful applicants to contribute to or match dollar-for-dollar the amount of requested funding. It is critical for businesses to consider the cash flow implications of such programs, especially when already experiencing difficult economic conditions.

Reviewing all eligibility criteria in detail prior to commencing a grant application is essential and can result in substantial savings in time and costs.

3. Ensure all required supporting documentation is provided with applications

Grants providers often require applicants to provide extensive documentation to support a grant application including, but not limited to, business plans, financial statements, budgets/forecasts, evidence of funding capabilities, project costs, planning approvals and letters of support.

It is imperative that all required supporting documentation is submitted upfront with a grant application and that this documentation is tailored to the specific objective of the grant. Applications with insufficient or incomplete supporting documentation are much more likely to be rejected by grant providers, especially for competitive grants with multiple applicants.

Ensuring that financial reporting is up-to-date is also important for businesses considered grant funding opportunities as it enables supporting financial information for grant applications to be prepared efficiently and accurately. This is also likely to be required by financial institutions when applying for other funding sources such as overdrafts and commercial loans.

4. Seek guidance and feedback from grant providers


Proactively engaging with grant providers, both before and after the submission of a grant application, can both enable applicants to ensure that applications have been successfully submitted with all required supporting documentation and also provide the opportunity to promote an application.

Requesting feedback if a grant application is unsuccessful can also provide valuable feedback for future applications.

5. Be prepared for ongoing reporting obligations


As mentioned above, most grants are established to achieve specific strategic priorities. As such, it is common for successful applicants to have an obligation to provide ongoing reporting to evidence where grant monies have been spent / directed and to demonstrate that they have satisfied all grant conditions. This reporting also enables grant providers to assess the success of a funding program and future viability of similar programs.

Often these reporting obligations are overlooked by successful applicants which in some cases can result in a requirement to repay grant monies. Further, these obligations can be more extensive than the initial application process.

Therefore it is imperative for successful applicants to understand, and monitor their compliance with, all grant conditions and to proactively implement processes to streamline post-grant reporting obligations.

6. Understand the tax consequences

The receipt of grant monies by businesses can be subject to income tax and may also have Goods & Services Tax implications. If so, successful applicants should provide for the cash flow implications of such tax consequences and ensure that grant monies received are recorded appropriately for accounting and tax purposes. Further, successful applicants should consider seeking specialist tax advice to understand the potential tax consequences of grant monies.

It is important to note that the Federal Government does provide income tax exemptions for specific funding programs, such as the Victorian Government’s business support grants for small and medium businesses impacted by COVID-19 restrictions as announced on the 13th September 2020 (Business Resilience Package).

The process of identifying and applying for grants can be daunting and onerous. However grants can provide the launching pad for a successful new innovation or alternatively may simply enable a business to remain viable in difficult times.

To discuss your options with someone and clarify the details, please make sure you talk with us today. Our team at BLG Business Advisers are happy to assist and make the whole process easier.

*This information is correct at the time of publishing and is subject to change.*
Written by Glen Bower . December 07, 2020
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