Business development is an exciting time for the innovation and advancement of any small but ambitious company. But, SMEs may be subject to a startup grant, a collapse of cash resources during this time, as money is hemorrhaged on research, development and operational costs. For some Australian startups and scaleups, this experience is all too familiar.
Luckily, this cycle is breakable. Government grants in Australia can be a lifeline for innovative companies that need a cash injection. There is more than $75 billion in cash grants available across several Australian government grant programs. Grants and funding in Australia are in abundance, you simply need to know how to access the startup grant funds.
Introduction to Grants and Funding
In 2019, the Treasury reported that 78% of young firms remained operational after 36 months, which speaks to the vastly positive state of business in Australia. It is clear that many SMEs were not only surviving, but thriving prior to Covid-19.
So, why do small business grants exist in Australia at all?
For one, they act as an incentive for new ideas so that Australia can become one of the world’s top innovation hubs. Funding to help businesses develop new, exciting technology not only comes with bragging rights, but Australia also benefits from business activities such as patent licensing, etc.
Secondly, a venture capital injection is sometimes the only, and costly, option for early stage, pre-profit companies. Without a minimum viable product (MVP) or prior revenue patterns, SMEs could traditionally struggle to be approved for a loan. The major benefit of applying for a grant compared to equity-based funding is that founders are not required to compromise on equity shares with grants and government funding.
There are numerous funding types to suit different business models and company growth stages. While some grants offer a lump sum or matched funds, other support includes startup grants, research grants, and a tax offset (or advanced reimbursement.).
Popular Australian Government Grants
As mentioned, there are thousands of opportunities for investment assistance helping startups. Some of these are run by the central government, whereas others are controlled by the individual states. Remember that the process varies between opportunities, and that you’ll be required to tailor the application, making it relevant to the support you’re requesting. In most cases, hiring a grant writer or working with a specialist company is recommended.
We have gathered a list of some of the most popular Australian government grants to get you started.
R&D Tax Incentive
The R&D Tax Incentive is, in our biased opinion, one of the most effective ways for startups to receive a cash injection. Built for businesses who invest heavily in research and development, the government rewards this innovation in the form of a refunded tax offset of up to 43.5%.
Let’s imagine you spend $100,000 on R&D in a business year. The R&D tax incentive can allow you to claim up to $43,500 back. Eligible companies can apply 10 months after their income year ends, and Fundsquire exists to help you access this smarter source of growth. To assess your eligibility, simply get in touch with us.
Export Market Development Grants (EMDG)
The EMDG program provides funding to help businesses expand their markets and promote their products and services internationally. SMEs can apply for 3 different grants over 8 years, and can access 50% of their promotional expenses (to a maximum of $770,000 per applicant).
The program has 3 tiers:
- Tier 1: Open to first time exporters that are ready to export. It’s a 2-year grant, with a maximum funding of $40,000 per financial year.
- Tier 2: Open to those expanding their export activities. It’s a 3-year grant, with a maximum funding of $80,000 per financial year.
- Tier 3: Open to those expanding and also making a strategic shift in their business plan. It’s a 3-year grant, with a maximum funding of $150,000 per financial year.
Modern Manufacturing Initiative
A popular startup grant is the Modern Manufacturing Initiative. The MMI is a $1.3 billion matched funding opportunity for scale-up and community collaboration in the manufacturing industry. This project is specifically for large scale operations and eliminates R&D innovation activity as part of the qualification process. Instead, the focus (as you’d guess from the name), is on manufacturing qualifying products.
The MMI offers up to one third of the funding required, and encourages private investors to contribute to this space. The priorities of the Modern Manufacturing Initiative include: critical mineral processing, food, space and clean energy, among others.
Accelerating Commercialisation Grant
The AC grant offers matched funding of up to $1 million and is open all year round for applications. This grant is most often used to help bring fresh items to market, since the eligibility criteria specifies new and innovative products.
The AC grant is not industry specific, and is most useful for companies who already have a product-to-market strategy in place. This type of grant is also exciting for businesses looking to develop and implement their scale-up strategy.
The project harnesses mentorship and expert guidance within its process in order to guide successful entrepreneurs, which provides a more holistic approach than some of the other opportunities available.
Australian Renewable Energy Agency
ARENA‘s funding opportunities are two-fold:
- It offers research grants in order to measure the impact of renewable energy generation.
- It helps advance and deploy renewable energy projects that will aid Australian families.
Focusing specifically on the green energy market, ARENA has already funded over 600 projects, providing over $1.7 billion in funding. The organisation is striving to hit Australia’s emissions target of net zero by 2050, and it is looking to support innovative technologies in order to reach this goal.
The process is more involved than some of the other government opportunities, since you can receive funding throughout the testing and commercialisation stages.
Advanced Manufacturing Growth Centre
The AMGC was created in order to increase the number of Australian job opportunities and put pressure on the global markets by increasing competition. The commercialisation fund seeks to improve pre-existing intellectual property, so is not particularly suited to early stage developments.
Until 2023, $30 million is available to manufacturing companies as part of a 50% matched funding opportunity, where the maximum awarded to each recipient sits at $1 million. Accepted applicants will be required to use their grants on specific activities; such as creating product distribution strategies, developing state-of-the-art manufacturing technologies and installing new machinery.
BioMed Tech Horizons
The BMTH funds projects in the health industry, with a focus on proof of concept and post-research development. Up to $800,000 is available for four chosen recipients in order to solve real world health problems experienced by Australia’s population.
The secondary purpose of this grant is to encourage those solutions to remain within Australia. Two of the natural consequences of having increased health research projects include the creation of jobs and holding human trials locally. This means that with a focus on biomed tech, this fund is successful in building local economies and creating global healthcare solutions.
While this fund is not open year-round, there are currently 41 separate medical projects receiving aid from the BMTH with varying levels of success.
Cooperative Research Centres Projects
CRC-P grants are available for entrepreneurs seeking to collaborate with other Australian-owned businesses from any industry or background. This type of government grant projects offer matched funding of up to $3 million per successful applicant, and specifies that this is a short-term product development fund.
The Cooperative Research Centres Projects have previously funded a company who turns mixed waste into eyewear, and a digital solution to knee replacement rehab. Therefore, the possibilities are truly endless with this one!
The main specifications of this grant include creating a tangible, beneficial product or service to SMEs and the inclusion of educational activities.
Best State Grants
There are a wide range of grants existing at a national level, but Australian states, including South Australia, Western Australia, and the northern territories also have their own list of programs for entrepreneurs. If you are looking for a startup grant, here are some of the most popular government grants:
Australia Capital Territory
The ICON (innovation connect) grant exists to help small businesses at the pre-seed phase. Where there is a tendency for market failure at this stage (as new infrastructure is tested), the ICON grant’s purpose is to prevent this. The ACT is offering between $10 and $30 million per chosen business.
New South Wales
NThe NSW government offers the MVP (minimum viable product) grants for small businesses who are not yet generating revenue but need a cash injection to prove their concept. This NSW government grant, matchs funding opportunities for up to 50% of the cost, up to $25,000. It takes approximately 8 weeks to learn the outcome of your application. Eligible companies include very early stage companies and small businesses.
Northern Territory
The NT Business Growth Program aims to support and improve local businesses. Unlike a traditional grant, the idea of this program is to offer advice and guidance for businesses based on the best choice for their individual businesses. It also provides access to professional services and mentorship.
Queensland
QLD has the Ignite Ideas Fund, offering up to $200k for small businesses who are looking to commercialise their offerings. Once again, this applies to new and innovative products and services with high growth potential and the proven ability to scale quickly. Residents of Queensland are incredibly fortunate, as this is one of the larger state-funded grants we’ve seen.
Southern Australia
The SA Venture Capital Fund offers up to 50% matched funding to Southern Australian businesses who hold the key to innovation within the State. The program was created in order to increase the competition of local entrepreneurs, as well as accelerate growth into national and international markets.
Tasmania
The Business Growth Loan Scheme is offered by Tasmanian State Government. While it’s not technically a grant, it is a source of funding for local, innovative businesses looking to return to their pre-covid19 levels of operation.
Victoria
The Vic local government provides 35 different grants and programs to its entrepreneurial residents, including industry-specific funding and more generalised business development opportunities. Some examples of its projects include:
- Forestry Business Transition Vouchers
- Future Industries Fund
- Live Performances Program
- Investment Fast-track Fund
Western Australia
WA offers its residents a number of business support options. Local enterprises can apply for Business Improvement Grants to match up to $20,000 in order to generate new ideas and turn a profit.
Other Small Business Support
Australia is the gift that keeps on giving! Alongside the nationwide and statewide government grants, there are a number of alternative programs to aid and support your innovation in business.
Austrade Landing Pad
Ever fancied a 90-day co-working membership, mentorship and a whole network of investors at your feet? The Austrade Landing Pad helps businesses reach global markets such as San Francisco and Shanghai, and provides holistic support instead of direct financial investment. This program is well-suited to those who already have financial backing but need further guidance to build a rapport and bring their product to international markets.
Grant Libraries
Of course, when trying to navigate the appropriate grant for your business, many founders become overwhelmed. Fortunately, there are a number of online grant search engines that aims to help start-ups secure funding for free, with over $40 billion worth of opportunities.
There are several other grant programs available for startups, scaleups, and small businesses across the country. It’s about learning more about them and finding the one that best suits your growth needs.
However, even after early stage companies are able to identify grants well-suited to them, they often face some challenges when leveraging these programs. This includes difficulty in matching contributions, proving alternative funding sources, and funding the delivery of milestones consistently.
If you’re looking to solve these challenges, Fundsquire’s Grant Advance is a simple funding solution that lets you use your future grant payments to fuel your current milestones today. You can learn more here.
Hope this guide has been helpful in providing a rundown of the most popular government grant programs in Australia. If this information was of value to you, feel free to share it others who might benefit from this.
