If you are starting a new business, looking to grow or trying to innovate, funding is essential. Government grants may be one avenue for you to gain the resources you need to reach your goals. There are many different grants available and while you certainly won’t qualify for all of them, there are plenty worth applying for. Before doing so, it’s important to consider whether a Government grant is right for you.
Should you seek a Government grant, a business loan or investor funding?
The type of funding that is right for your business will determine largely on your goals, your capital requirements and what you’re willing to give up in return. Each option has positives and negatives, so it’s important to consider it carefully:
- Government grant: many new business founders get excited about grants, because they typically do not incur any responsibility to pay the money back or to share profits with the government in return. This gives the impression that it is simply ‘free money’. In a sense, this is correct. What this does not account for is the significant time and effort which goes into applying for a grant and meeting the compliance and reporting standards required by it. In some cases, grants dictate certain business arrangements and practices, which reduces your autonomy as a business, and the waiting periods to find out if your application is successful can be inhibitive.
- Business loan: a business loan is far more free than either a grant or an outside investment. The bank does not expect to have any say in your business operations, or to receive a proportional profit based on your success. They release funds to you for a fixed period of time and with a schedule for repayment and interest in place. Beyond this you are effectively free to pursue your business goals as you wish. The downside is that repayments typically start right away and are still due even if you fail in your goal and the funding does not help you generate a significant return.
- Investment: bringing in outside investment has many advantages over both grants and loans, in that you get to choose your investment partner and negotiate their level of involvement. If you feel they are someone who can assist you in meeting your organisational goals then you can involve them more heavily, but if you only need their capital then you can negotiate a silent partnership. Of course, the downside is that they are providing funding in exchange for a piece of your business, and they will therefore be entitled to a proportionate amount of your profits should you succeed.
How do I find and apply for a grant?
The Australian government has a full list of the hundreds of grants available here: https://www.business.gov.au/assistance/results?q= and there are options to search by state, by industry, by the type of assistance or by the necessary requirements to apply.
Each grant is different and will have its own requirements when it comes to applications. Most require significant planning and documentation, including profit and loss statements, balance sheets, application forms, forecasts, business plans, personal statements and more.
When preparing financial statements for the grant application process, it is wise to enlist the help of a bookkeeper who can ensure they are accurate. In some cases, your accountant may recommend government grants and incentives you can take advantage of.