Grants going for process projects
30 Oct 2008
To do a project or not is a question that presents itself often enough to process operators to force careful consideration to how to apply for capital grants.
Capital projects in the UK are quite well supported through Selective Finance for Investment (SFI) - termed Regional Selective Assistance (RSA) in Scotland and Wales. This is available to qualifying companies in the UK's assisted areas and represents the chief source of capital grants.
Operators contemplating a capital investment project to expand, improve, relocate, inwardly invest or take on new processes and manufacturing assets should look closely at the possibility of qualifying for SFI, which should be done as a first task. Those who decide to do it, discover grants but only belatedly go for assistance have probably blown it at this point. They deserve to fail for short-sightedness or failing to explore the options first to discover if they can justify grants.
Capital costs are the identified costs of doing the entire project aggregated over three years. It does not include working capital and it is not retrospective. The costs allowed are the proposed costs. It is a proposal: keep that distinction in sharp focus. All existing jobs need to be projected for the same three years. Existing jobs might be considered as "safeguarded". Created jobs are added to this to give a jobs total "implication". All jobs qualify that appear on your payroll.
Capital costs and jobs are used as a basis to calculate amounts of SFI that could be requested as a means of making the project qualify and be accepted for this type of support. Companies need to check with the regional body to see if they fall within an assisted area and so qualify for support ranging from 10% to 25%. They must also establish their status as a small and medium enterprise (SME) or larger company.
Applications are fairly complex and demanding in that you need to stick within the published criteria, include a fit-for-purpose business plan, cash flow projections, funding sources, other than grant, and it must take very seriously and address "additionality", which lies at the base of all grant applications.
Additionality means the answer to the question "what would you do if no grant funding is available?" Companies must be able to answer that question in a sound and convincing manner.
This is a concept that you need to seek advice on and to understand and act on its implications. Simple really. But many that fail do so because they don't grasp "additionality"
A project must be viable and sustainable through to operational profitability. The funding gap — grant justification — can occur during the construction and commissioning period. Risk must be assessed, as well as sensitivities that would affect early phase operation.
Accounts lie at the base of applications. Last three years' historicals are set out with the current year's figures extrapolated to year's end.
From this, and taking into account the project investment reflects, projections are made for six years. This is done for the with-project and for the without-project scenarios. The without-project picture is part of the additionality argument because it illustrates what could be the downside if you don't get the grant.
Grant applications should be kept fluid and the timing momentum sustained at all times. Putting in a good application starts the negotiation process. Everything stated could be tested for validity and purpose.
This is a straightforward process whereby they ask a question, you give an answer until the case builds up so that the case officer can present it to the monthly board for recommendation.
Timing is down to you. You must strive to put together a complete and informative document, submit it and follow through in a helpful and co-operative manner.
Understand the case officer's task in taking your complex project cold and having to get up to operational speed in a few weeks. Assisting the officer pushes the timing to your advantage. Be consistent with your arguments; support your claims and plans. Calculate a firm grant amount within the criteria and stick to it. No backsliding or breaking of ranks. Show them your determination and management mettle. Your management team is on show, so maximise its positive effect.
Applications are an executive task. Executive involvement and commitment is usually through the finance director working with an experienced adviser. If you attempt it alone, do so with advice from someone who has done it before.
The system is fair, but unforgiving for obvious and less obvious transgressions. It is not retrospective, so don't try to slip anything in that is ordered or contractually committed. It is a proposal for the future. Keep it that way.
There is a range of grants for research and development, training and special initiatives from time to time. European Union Framework Programmes (FP7) are available for collaborative R&D and these follow a similar pattern of project building and presentation against regular calls that can be identified and responded to.
Tax credits for UK companies engaged in what is broadly called R&D are available but not taken up sufficiently in the UK. The scheme is run by the HMRC and covers much more than R&D. This is an opportunity to obtain ongoing generous support for innovation, new products, processes and the activities that support them.
The credits scheme needs to be set up so that it can be applied by the company to provide an audit trail for annual calculation and submittal. Note that it is the intention of the scheme to encourage on-going research and improvement. It is not a one-off tax allowance to suit an occasional purpose. You are being encouraged to invest in good practices that will generate ongoing economic returns.
Article by Greville Warwick, who works through MCS, which specialises in seeking, evaluating, advising, preparing and submitting grant and capital funding applications for large and smaller projects worldwide. He is a director of Envirotas plc and works on new projects of investment and development in the energy, innovation and bioenvironmental sectors of industry and engineering.
Capital projects in the UK are quite well supported through Selective Finance for Investment (SFI) - termed Regional Selective Assistance (RSA) in Scotland and Wales. This is available to qualifying companies in the UK's assisted areas and represents the chief source of capital grants.
Operators contemplating a capital investment project to expand, improve, relocate, inwardly invest or take on new processes and manufacturing assets should look closely at the possibility of qualifying for SFI, which should be done as a first task. Those who decide to do it, discover grants but only belatedly go for assistance have probably blown it at this point. They deserve to fail for short-sightedness or failing to explore the options first to discover if they can justify grants.
Capital costs are the identified costs of doing the entire project aggregated over three years. It does not include working capital and it is not retrospective. The costs allowed are the proposed costs. It is a proposal: keep that distinction in sharp focus. All existing jobs need to be projected for the same three years. Existing jobs might be considered as "safeguarded". Created jobs are added to this to give a jobs total "implication". All jobs qualify that appear on your payroll.
Capital costs and jobs are used as a basis to calculate amounts of SFI that could be requested as a means of making the project qualify and be accepted for this type of support. Companies need to check with the regional body to see if they fall within an assisted area and so qualify for support ranging from 10% to 25%. They must also establish their status as a small and medium enterprise (SME) or larger company.
Applications are fairly complex and demanding in that you need to stick within the published criteria, include a fit-for-purpose business plan, cash flow projections, funding sources, other than grant, and it must take very seriously and address "additionality", which lies at the base of all grant applications.
Additionality means the answer to the question "what would you do if no grant funding is available?" Companies must be able to answer that question in a sound and convincing manner.
This is a concept that you need to seek advice on and to understand and act on its implications. Simple really. But many that fail do so because they don't grasp "additionality"
A project must be viable and sustainable through to operational profitability. The funding gap — grant justification — can occur during the construction and commissioning period. Risk must be assessed, as well as sensitivities that would affect early phase operation.
Accounts lie at the base of applications. Last three years' historicals are set out with the current year's figures extrapolated to year's end.
From this, and taking into account the project investment reflects, projections are made for six years. This is done for the with-project and for the without-project scenarios. The without-project picture is part of the additionality argument because it illustrates what could be the downside if you don't get the grant.
Grant applications should be kept fluid and the timing momentum sustained at all times. Putting in a good application starts the negotiation process. Everything stated could be tested for validity and purpose.
This is a straightforward process whereby they ask a question, you give an answer until the case builds up so that the case officer can present it to the monthly board for recommendation.
Timing is down to you. You must strive to put together a complete and informative document, submit it and follow through in a helpful and co-operative manner.
Understand the case officer's task in taking your complex project cold and having to get up to operational speed in a few weeks. Assisting the officer pushes the timing to your advantage. Be consistent with your arguments; support your claims and plans. Calculate a firm grant amount within the criteria and stick to it. No backsliding or breaking of ranks. Show them your determination and management mettle. Your management team is on show, so maximise its positive effect.
Applications are an executive task. Executive involvement and commitment is usually through the finance director working with an experienced adviser. If you attempt it alone, do so with advice from someone who has done it before.
The system is fair, but unforgiving for obvious and less obvious transgressions. It is not retrospective, so don't try to slip anything in that is ordered or contractually committed. It is a proposal for the future. Keep it that way.
There is a range of grants for research and development, training and special initiatives from time to time. European Union Framework Programmes (FP7) are available for collaborative R&D and these follow a similar pattern of project building and presentation against regular calls that can be identified and responded to.
Tax credits for UK companies engaged in what is broadly called R&D are available but not taken up sufficiently in the UK. The scheme is run by the HMRC and covers much more than R&D. This is an opportunity to obtain ongoing generous support for innovation, new products, processes and the activities that support them.
The credits scheme needs to be set up so that it can be applied by the company to provide an audit trail for annual calculation and submittal. Note that it is the intention of the scheme to encourage on-going research and improvement. It is not a one-off tax allowance to suit an occasional purpose. You are being encouraged to invest in good practices that will generate ongoing economic returns.
Article by Greville Warwick, who works through MCS, which specialises in seeking, evaluating, advising, preparing and submitting grant and capital funding applications for large and smaller projects worldwide. He is a director of Envirotas plc and works on new projects of investment and development in the energy, innovation and bioenvironmental sectors of industry and engineering.
