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Business grants: The 10 Commandments

To be forewarned is to be forearmed. When it comes to the whole business of applying for a grant with one of the agencies such as County Enterprise Board, Enterprise Ireland, LEADER companies, there are few ‘rules’  that generally apply. I talk about them here:

1. Not all Grants have been Created Equal

When you are lucky enough to be the type of business that qualifies for a grant under several headings with several agencies, it is important to consider whether the grant is repayable or not. Sometimes, the promise of financing also involves relinquishing some shares in the company in favour of the agency. Furthermore, not all grants are provided at the same level.  Capital grants can be provided at 50% or even 75% of the capital cost, depending on the particular grant. As with everything else, do your research and identify the best option for your business.

2. Mind the VAT

One thing that can be omitted from one’s funding calculations is the VAT. The grants, as a rule, do not cover the VAT portion of the bill, so you need to factor that in when looking at the funding breakdown. In practical terms, that means that for example, a machine costing 12,300 Euro inclusive of VAT financed by a grant @50% will mean that the agency will fund 5,000 Euro – not 6,150 Euro. This has a cash-flow rather than a ‘true cost’ implication, as the VAT can be reclaimed later in the usual way.

3. Bridge the Gap

This is a sticky point for a lot of businesses. You will be required to purchase the item you are seeking funding for first, in order to then claim the grant payment. This seems like an impossible task for many. However, there is a solution available: bridge loans. Bridge loans are temporary short-term loans from your bank that help you pay for the item in order to be able to avail of the grant. The bank will need to get a confirmation from the agency supplying the grant that the grant had been approved in principle. And, just to add in case you were wondering, you cannot retrospectively apply for a grant for an item you purchased already.

4. Do not Cause Displacement

In order to avail of a grant, as a general rule you are not allowed to cause any displacement. What that means is that your application needs to include evidence that you are not going to cause job losses in your area. For example, if you are attempting to open a bakery and there is an existing bakery in that area, you will not get funds. The agency is precluded from putting your business at an unfair advantage and thus causing potential losses to or closure of the existing businesses.

5. Cross Thy t’s and Dot Thy i’s

Good paperwork is essential. Besides submitting a sound and water-tight business plan, you need to make sure that all the required additional paperwork is submitted in a complete fashion and in the required format.

6. Be Realistic

Just because you may qualify for a grant it doesn’t mean that the company vehicle suddenly gets upgraded from a Ford Focus van to a Ferrari. You will need to justify your spend AND you will need to provide comparative quotations, a single quote will not do unless it is a very specialised item from a unique supplier.

7. Honour Thy Taxes

Simply put, if you are in arrears with your tax payments, you will not be able to avail of any grant. A Tax Clearance Certificate is pre-requisite.

8. Thou Shall Not Covet Other Business Grants

What this means is that there are rules regarding application to several agencies simultaneously. You will always be asked to declare if you have already applied with another agency at the same time. There are also limits (a maximum) as to how much funding you can avail of within a given time period.

9. Deal only with Approved Suppliers

When you are looking for quotes for the items you would like funded, you also need to ascertain that the chosen supplier has a Tax Clearance Certificate. A grant payment will only be issued when this has been proven so you risk losing your grant if you do not verify in advance that your potential supplier is fully tax compliant. In case of international suppliers different criteria may apply.

10. Thou Shall Apply in Good Time

The agencies usually have to do a preliminary application review followed up with a board review, usually taking place once a month. The complexity of the approval cycles can vary, but on average it will take at least 6 weeks for a grant application to be processed. Also bear in mind that most agencies will not have a board sitting in December so if you were hoping for a decision before the end of this year, you need to make your submission by early October.

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