England Finance

Jun 11 2017

Government Grants #simple #loan #agreement

#small business funding

Government Grants

There’s a pervasive myth that there’s no funding available for businesses. This is not the case – if you meet the criteria there’s government grants available for your business.

The South African government is well aware of the importance of developing the economy, creating employment and attracting foreign investment.

To make these goals a reality, there are grants and assistance programmes available from the government and associated organisations that can get your business off the ground and expanding.

What is a government grant?

It is an award of funds from the government that does not need to be repaid, does not accrue interest, and has strict guidelines for application. Grants available from the government usually tie in with its key deliverables such as black economic empowerment, job creation and developing the economy – to name some.

Do you have to repay a Government Grant? 

Unlike a loan, a grant is an award of money that is non-repayable – meaning there is no obligation by the receiving parties to repay the money received. While the government is one of the best sources of grants, its selection criteria is strict and paperwork intensive, and the receiving business is obligated to spend the funds in a manner specified by the provider. Most funds available in South Africa have their own specific requirements, so it’s advisable to research each fund carefully to assess their criteria and up your chances of receiving funding.

List of Government Grants for Business

The best place to start with researching government grants for business is through the Department of Trade and Industry (DTI). By visiting www.thedti.gov.za. you can explore a number of funding options from grants to incentives and all their qualifying criteria. Some grants available include:

  • Aqua-culture Development and Enhancement  Programme (ADEP) – is available to registered entities involved in primary, secondary and ancillary aquaculture projects for both marine and fresh water. It is approved for new, existing and upgrading entities. See more at here .
  • Automotive Investment Scheme (AIS) – is designed to grow and develop the automotive industry through investment in new and replacement models and components  that will increase production volumes, sustain and increase employment, and strengthen the automotive value chain. See more here .
  • Black Business  Supplier Development Programme (BBSDP) – is a cost-sharing grant offered to black-owned businesses to improve their competitiveness and sustainability. It aims to fast-track small and micro-enterprises, foster links between black-owned businesses, corporates and public sector, and to complement affirmative procurement and outsourcing. It provides grants to a maximum of R1 million. See more at here .
  • Business Process Services (BPS) – This scheme aims to attract investment and create employment in South Africa through  off-shoring activities. It involves a three-year tax-exempt grant for qualifying businesses. See more here .
  • Capital Projects  Feasibility Programme (CPFP) – is a cost-sharing grant contributing to the cost of feasibility studies for projects that will lead to increased local exports and stimulate the local manufacturing sector. See more here .
  • Critical Infrastructure Programme (CIP) – is aimed at improving the infrastructure of South Africa. The grant covers a minimum of 10% to a maximum of 30% of total development costs of qualifying infrastructure. See more here .
  • The Co-operative Incentive Scheme (CIS) – is a 90:10 cost-sharing grant for registered primary cop-operatives of five or more members to improve the viability and competitiveness. See more at here .
  • Incubation Support Programme (ISP) – is designed to create and develop successful enterprises with the ability to revitalize communities and local economies. For more information visit this site .
  • The Manufacturing  Competitive Enhancement Programme (MCEP) – provides enhanced manufacturing support to encourage facility upgrades to sustain employment and improve productivity. See more here .
  • Manufacturing Investment Programme (MIP) – is a reimbursable cash grant to local and foreign-owned manufacturers who wish to establish new facilities or expand on existing ones.
  • National Youth Development Agency (NYDA) – while it is moving away from grants for youth and going toward mentorship and development programmes, grants are available for youth entrepreneurs. See more here .
  • People-carrier Automotive Investment Scheme (P-AIS) – is a cash grant of between  20% and 35% of the value of qualifying investment in productive assets approved by the DTI. See more at here .
  • The Sector Specific Assistance Scheme (SSAS) – is a cost-sharing grant offered on an 80:20 principle and a maximum of R1,5 million is awarded to qualifying businesses. See more at here
  • Support Programme for  Industrial Innovation (SPII) – aimed to promote technology development in South African industry. Visit their site for more information .

Who can apply for Government Grants for Business?

Because of the number of grants available – and each with its own criteria – you will need to individually research each grant. Generally through, the following will be required:

  • The business needs to be majority black-owned
  • It needs to have a significant representation of black managers (if applicable)
  • Minimum and maximum turnovers vary from grant to grant
  • The business must have a minimum of one year in trading
  • The business must be a registered entity with a tax clearance certificate, Vat number, etc.
  • The business must comply with all regulations such as CIPRO, SARS etc.
  • All owners and major shareholders need a clear credit history.

Tips on applying for Government Grants for Business

Once you’ve identified a grant applicable to your business and industry, research it thoroughly to determine the qualifying criteria. Each grant listed on the DTI website has a contact person you can call or email for more information.

When applying, make sure you’ve completed the following checklist:

  1. Completed and signed application form
  2. SARS Tax Clearance Certificate – Original and valid
  3. Detailed business plan
  4. Co-operative resolution (if applicable)
  5. List of directors, shareholders etc. complete with certified copies of IDs and CVs
  6. Copy of business registration cerfiticate
  7. Motivational letter
  8. Bank statements
  9. Projected financial statements for start-up and/or expansion

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