Are There Grants for Businesses?
The availability of grants for business comes down to your size, trading history and the expected benefits of your project.
Under normal circumstances, grant funding for small businesses is pretty rare. Most government funds are diverted into services like the Small Business Development Corporation, firstly because the government knows the best ‘bang for buck’ is in support services for small business.
Secondly, a business concept should stand up to the test of ‘is there enough demand in the market place to make it viable?’ If there is, a business owner and/or investors should feel confident to put money into the business in the anticipation of a financial reward (and if not, then it’s not a viable business proposition).
Small business may occasionally have the opportunity to apply for funds supporting small asset purchases (for example, there have been some grants available to switch to more energy efficient equipment for some sectors) or skills building. The applications for these are typically quite simple and you may well be able to DIY.
Don’t get us wrong – there normally are some opportunities for grants for businesses but they are mostly centred around major export markets or significant commercialisation projects – beyond the aspirations of many small businesses. But these are not normal circumstances.
Although that means things are tough for many businesses, it also means that the government is looking to invest in ventures with business propositions that can demonstrate they will deliver on jobs and economic growth. That means that a business who previously might not have been able to access grant funding have a chance at some real financial support, examples include the Industry Capability Fund and Export Development Grants.
Chasing funds for your exciting new business venture? There are plenty of options out there – unfortunately grant funding is rarely one of them. Governments generally don’t want to invest in a business that may be ‘high risk’. The reality is, despite how amazing your new concept is, the odds of failing in the first year are around one in three. As a new business, another barrier is your length of trade. Most government grants require at least two years’ (sometimes three) of financials (often audited). This is another risk management mechanism to reduce the risk of your business failing and the funds invested being lost. But shouldn’t the government be supporting startups? Absolutely! There is support available – just not through the grant funding channel.
What are the Options?
Examples of Grants
If you’re a business in regional Western Australia, opportunities include the Regional Economic Development Grants and if you are involved in the agriculture and food industry, opportunities include the Value Add Investment Grants and Agrifood and Beverage Voucher Program. Grants may also relate to addressing specific issues or locations, such as the Collie Futures Fund.
Applying is something you should take seriously – although there are more opportunities, expectations around the quality of applications are still high. The government needs to be comfortable with the level of risk presented by your proposal and feel confident your project will deliver on the promised outcomes (generally related to jobs and growth).
Our team are highly experienced when it comes to grant writing and business case development – we’ve netted over $40 million in funding and contracts for clients. One of the things our clients value most is our honesty – we’ll be straight up with you from the start if we don’t think your project will be competitive. You can find our more here.
Alternatives to grants for business include:
- Venture Capital: investors who invest in start ups in return for equity
- Angel Investors: groups who provide seed funding for start ups
- Corporate Venture Funds: similar to venture capital funds but backed by a corporate entity
- Debt Funding: immediate cash injection which does not dilute ownership over the business but does come with interest repayment costs
- Equity Crowdfunding: allows individuals to invest small amounts of capital into businesses for small amounts of equity
- Bootstrapping: starting your business with your own money and being strictly frugal throughout each stage of growth
- Family and Friends: most common for new start ups but can put pressure on personal relationships
- Crowdfunding: not as popular as it once was, but still an alternative to equity funding
- Accelerator Funding – provides access to expert advice, mentoring, and networking opportunities
The first port of call for small business and start-ups should be the free business advisory services that are available through the government. These are run by experts who know the who, what, where, and how of establishing a new business. If these guys can’t help you, they’ll definitely know who can. Here’s our list of helpful services relevant to Western Australian businesses:
- Small Business Development Corporation (SBDC)
- Business Local Program (regional business support, funded by SBDC)
- Innovation Cluster (funded by State and Federal Government)
- The Business Station (funded by the Federal Government as part of the ASBAS program)
- New Business Assistance with NEIS (a free program providing business mentoring and support)
- Startup WA (for an in-depth knowledge of the WA startup scene)
- Incubators/Accelerators (apply to join a class or cohort and access mentoring, training and events)
We also strongly recommend you join a few business groups (including your local chamber of commerce) and occasionally (or regularly) head to a co-working space to gain advice from those who’ve been there and done that. If you based in Western Australia, you may like to try the Small Business Development Corporation’s Facebook group for business owners (‘I’m a Small Business Owner in Western Australia’).
A version of this blog post first appeared on Anna Dixon Consulting’s website, our previous brand.