If you're starting a business, or indeed have a small business, there are several options for funding. These include debt financing (ie bank loans), angel investment or venture capital, and finally grants. But why take on venture capital or debt funding when you can get a grant you won't have to repay?
Grants can be a viable source of funding for small businesses. They can help start or grow a business. Furthermore, small business grants are not hard to come by. There are plenty of options and sources.
However, it’s important to remember that nothing is entirely free in life, and the same applies to grants. Yes, you might be able to get money for free, in that you won’t have to hand over equity or have debt on your books, but there is a lot of hard work involved.
While they may be plentiful, grants are not easy to secure. Competition can be fierce, and it takes a lot of time and effort to find the right grant for your business and to complete the application.
You need to do your research, look up the grant deadlines, and get your application in. Those holding the purse strings don’t want basic one-liners, or proposal outlines. They want proper, in-depth proposals that show milestones, benchmarks and some evidence that you know what you’re doing.
You also need to think about what the organisations giving the grant are looking for. Whether it’s Enterprise Ireland, the Local Enterprise Office or New Frontiers, it’s important to find out what they like.
Dublin's commissioner for start-ups Niamh Bushnell says venture capital firms invest in companies that have something big to prove through their vision and execution. And governments invest for the same reason.
“They want to support companies that are developing innovative new solutions, that have the tenacity to go out and compete in global markets and, yes, that can create jobs back home,” she says.
Several requirements
In order to apply for most grants, several requirements must be fulfilled: you need to be a registered company; you need to be registered for taxes; you need to have tax clearance certs for all founders/ shareholders; and finally you need to have a corporate bank account.
If there is any business that knows about grants, it's Bullet HQ and its founders Peter Connor and John Farrelly. The two successfully applied for and received several government grants when they set up Bullet, a company which provides free automated online accounting and payroll software.
“Even in the leanest bootstrapped companies, you need money to keep the lights on and the credit card companies at bay, and ideally that money has to come from a source that won’t distract you too much,” Connor says.
The two have compiled a guide to start-up grants in Ireland called How to get €100,000 Free off the Government. It lists all the deadlines for various grants in 2016, and gives tips on applying.
Connor says one of the first grants that businesses/start-ups can apply for is the feasibility study/innovation grant from either Enterprise Ireland or local enterprise offices. The business owner will receive 50 per cent of the costs, excluding VAT, and capped at either €7,500 with enterprise boards or €15,000 with Enterprise Ireland.
However, Connor cautions that, due to the way Enterprise Ireland runs its funding in a concurrent manner, a lot of people jump over feasibility study status and are then too far gone to claim it.
Next up is the refundable priming grant, available from a local enterprise office, and targeted at businesses less than 18 months old. Costs covered are capital and/or salary costs.
‘This grant isn’t too easy to get and has a lot of rules, but the €7,000 per employee is good, although you get half the €7,000 up front and the rest at the end of six months,” Connor says.
Innovation vouchers
With innovation vouchers, available from Enterprise Ireland, you get €5,000 to spend with a third-level institution. It’s a quick two-page application too.
“The best two in our experience are DCU and Dún Laoghaire. You can get about three innovation vouchers; we used all of ours,” Connor says.
Connor reckons the New Frontiers entrepreneur development grant is among the best to apply for, as it "offers by far the best cash flow for bootstrapping".
A lot of the grants are connected to each other, according to Connor: “If you have a go or annoy someone, you’re closing the door on everything else.”
Finally, he says business owners – especially entrepreneurs focused on the tech sector – who are applying for grants should remember that free money is not easy money.
“If you think filling in some forms to get money from the Government is painful, wait till you have to deal with VCs who are gambling their careers on you.”
