Government Grants for Small Businesses

Start-up capital is a huge challenge for many small businesses just starting out. Often business owners will try and secure finance through traditional bank loans or innovative non-bank lenders. But a commonly overlooked avenue that can be amazing value for small business owners is receiving a government loan or grant.

Governments offer loans & grants to small businesses to encourage entrepreneurs to take calculated risks without fear of losing what they already have.

Advantages of Government Loans

The benefits of Government loans for small business owners are:
• Government loans are almost always offered at lower interest than private loans.
• Government loans are offered unsecured, so you don’t need to provide collateral in order to receive funding.
• Government loans may also come with other incentives and benefits such as added support to help your business succeed.

Here’s a list of the 3 top Government loan & grant schemes available to Australian businesses to grow:

1. Export Market Development Grant
What is it?
This scheme is available to small businesses that export their goods and services.
It operates more like an incentive for exporters, as opposed to a straight up cash grant.
What’s on Offer?
Small businesses can be reimbursed up to 50% of eligible promotion expenses above $5000, but only if their total expenses amount to more than $15,000.

2. Business Management
Businesses can apply for Business Growth Grants, which reimburse a business for up to half the costs of working with external consultants to improve the business, capped at $20,000.

3. Accelerating Commercialisation
What is it?
This option offers both cash grants and guidance from experts.
What’s on Offer?
On offer are businesses payments worth up to 50% of their expenditure on a given project, which is capped at $250,000 for commercialisation offices and eligible partner entities, and $1 million for other applicants. To access the grant businesses must first apply for Commercialisation Guidance online here.

4. Research and Development Tax Incentive
What’s on Offer?
Businesses with annual turnover under $20 million can claim a 45% refundable tax offset against research and development expenditure of up to $100 million.To claim the research and development tax Incentive, businesses must first complete the application form to register for research and development activities.

5. Innovation Connections
What is it?
The program gives businesses access to facilitators, who provide a report about knowledge gaps in a business and opportunities for the business to work with research organisations to test and develop ideas to fill these gaps.
What’s on Offer?
If a business chooses to adopt the suggestions in the report, they can apply for an Innovation Connections Grant of up to $50,000 to reimburse 50% of the total costs of the project.

6. Australian Apprenticeships Incentives Programme
What is it?
The Australian government is attempting to address the national skills shortages by offering incentives to hire new apprentice workers. Businesses that employ apprentices may be eligible for one-off payments under the federal government’s Australian Apprenticeships Incentives Programme.
What’s on Offer?
Applications are open year-round for the program, which provides payments between $750 and $4000 based on the certificate level the apprentice has completed.

Disadvantages of Government Loans

The main disadvantage of a government loan is the strict conditions that come with the grant about how the business owner can spend the money. If the business can’t meet this criteria, they can choose between bank and non-bank lenders. As banks are notoriously slow and difficult, non-bank lenders are rapidly growing as the preferred choice for SMEs.

The great thing about alternative lenders is that there is no ‘one size fits all’ loan application. They assess each loan individually and can even create personalised loan agreements in certain cases and provide funding in as little as 1 day.

If you don’t think you’d be a suitable candidate for a Government loan, but are still looking for funds to expand your business, click here to see if you qualify for an unsecured business loan.