How to make an application for grant funding

15 July 2014

FiC2014 follow up briefings. No 2

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House keeping

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Contents: Presenters and format

• Presentations (8.15am to 9am)

• Introduction and a bit of context: Nigel Somers(10)

• The BIG scheme and an administrators perspective: Alex Nicholas (15) (CDC)

• Applying for grant funds – The principles & “alternative sources”:

David Bullen(15)

• Questions/discussion over breakfast (9am to 10am?)

1. What they look for

2. Key documents: specific comments

3. Why applications succeed or fail?

4. Advice/ “Tips”

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Investment ready: preparation

Understand your

requirements (A)

Understand funding options

available (B) and funders

requirements (C)

Type of funds

required

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Your requirements (A)

Cash: amount and term?

Other e.g., expertise or contacts?

Business Finance Guide (excludes grants):

• Step out from your business

• Take a fresh look at prospects and challenges

• Analyse your opportunities

• Reach for the future (projections)

• Think about finance

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Funding options (B)FiC 2014 and Finance in Cornwall factsheet: Grant, Debt and Equity

And many more…

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Know your options (C – part)

The Business Finance Guide

• Overview: through company lifecycle

• Equity

• Debt

But..

• Grants not covered

Alex Nicholas

The Golden Rules of Funding(from the funders perspective)

BUSINESS INVESTMENT FOR GROWTH

Alex Nicholas

www.cornwalldevelopmentcompany.co.uk/big

FUND DETAILS

• £3.6 million ERDF voucher investment programme delivered by Cornwall Development Company

• Investments between £1000 and £50,000• Funds on a 50% match funding basis• Enquiries through online expression of

interest• Competitive fund and investment decisions

made by private sector led panel

PROGRESS TO DATE

• £3.35M invested, across 185 projects (7/14)• 95% approval rate for full applications• Over 438 Jobs forecast to be created by March

2015• Currently spending at a rate of £100k per month• EOIs received £471k• As we approach completion the best projects will

take preference

WHO IS IT FOR?

• Aimed at high value add businesses• Sole traders to large SMEs• Operating (or with potential) in National or

International growth markets• Innovative and competitive products and

services• Businesses looking to enable and de-risk

investment projects• Able to create skilled jobs

Funding Sweetspots

• Employment (creation /safeguarding)• VFM• Additionality /Displacement• Legacy (causal impact)

Rules & Regulations

• Retrospective projects• Reimbursement at claim /cashflow• Match funding• Forecasts• Audit satisfaction /procurement• Equality & Diversity strands• Timescales

Eligible Expenditure

• Revenue spend• Capital spend• Statutory items• Working capital• ERDF no go areas

Compiling your Application

• Expression of Interest• Business needs first grant second• Urgency /solvency• Round peg – round hole• Checklists• Claim

NEXT STEPS

• Check eligibility and download EOI (expression of interest) at:

www.cornwalldevelopmentcompany.co.uk/big Phone 01209 617006

• Fund open for applications until December 2014

Applying for grant funds – The principles (and a bit on alternative sources)

David Bullen – Corporate Finance Senior Associate

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Funding Landscape

• https://www.gov.uk/business-finance-support-finder

• 742 schemes

• Main sources, include

• EU funds (ERDF and ESF) - http://www.francisclark.co.uk/news-views/blog/the-592-million-question-part-1/ &

http://www.francisclark.co.uk/news-views/blog/the-592-million-question-part-2/

• Regional Growth Fund

• British Business Bank - http://www.francisclark.co.uk/news-views/blog/the-british-business-bank/

• Enterprise Capital Funds

• Business Finance Partnership

• City Deals - http://www.francisclark.co.uk/news-views/blog/a-city-deal-of-300m-cutting-through-the-smoke-and-mirrors/

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External Funds – The Sources

Regional Growth Fund

• Monies left behind on dissolution of RDA’s

• £2.4bn

• 2011 to 2015

• Applications > £1m

• Competitive process

• Round 6 opens Summer 2016

• RGF funded schemes for SMEs

• Incl; PWGF1, PWGF 2, GGF+ and Assisted Asset Purchase

• Not sector specific, criteria different for individual schemes

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External Funds – The Sources

EU

• Convergence: Cornwall 2007 to 2013

• EU (announced June 2013)

Cornwall: €592.9 million (£507 million) between 2014-2020

Devon and Somerset:118 million euros (£100 million).

• Eligibility

Location, Displacement, Quality Jobs, Sector exclusions

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“State aid”

Key phrases

• “De minimis” (< 200,000 euros over 3 fiscal years)

• Block exemption

• Assisted Area

Care

• Other grants

• R&D Tax Credits

• EIS/ SEIS

• Enterprise Finance Guarantee Scheme

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Grants

How to make a successful application…

1. Eligibility

2. Robust Business Case

3. Robust Business Plan (and Financial Projections)

4. Credibility

5. Dialogue with fund holders

6. Understanding their requirements: strategic and operational

7. Need for grant

8. Patience/ Completeness

9. Timeline

10. Understand terms of Offer Letter

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“Business Plan”

• Business case

• Tailor to audience

• Informing v giving away IP

• “Compelling narrative”

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Structure of a business plan

• Front cover

• Contents

• Executive summary

• Background to the business

• Products and services

• Customers and markets

• Business operation

• Management

• Financial history

• Financial projections

• Appendices

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Projections: the perfect scenario

• Monthly integrated profit and loss, cashflow and balance sheet covering a period of three years

• Documented assumptions

• Ability to sensitize the model

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Projections: the real world!

• Choose an approach that works for the business

• Focus on the KPIs of the business

• Make basic assumptions

• Compare to actual results

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Common issues

• Inconsistencies between Business Plan (narrative) and Projections (figures)

• Profit ≠ cash

• Do not forget about tax (VAT and tax on profits)

• Match funding to cash requirements, business model & exit strategy

• Read through documents ‘cold’

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The banks

Banks… still the major source of funds to SMEsDuring the 1st Quarter 2014:

• The banks approved £5.5bn of new loan facilities and £1.3bn of new overdraft facilities. Of this, £2.6bn of new loan and overdraft facilities were for smaller businesses and £4.2bn were for medium businesses, an increase of 10% compared with Q1 2013.

• March 2014 also saw the highest monthly level of approved borrowing since November 2011.

https://www.bba.org.uk/wp-content/uploads/2014/05/BBA01-431558-v1-Bank_Support_For_SME_s_-_Q1_2014.pdf

Approval rates were:

• Smaller businesses – Loans 79%, Overdrafts 77%.

• Medium businesses – Loans 91%, Overdrafts 93%.

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Alternatives…

• Grants, debt and equity (3%)

• Asset backed lending

• “The crowd” - Rewards, Debt and Equity

• http://www.brewdog.com/equityforpunks

• Supply Chain

• High Net Worth Individuals – EIS/ SEIS and Angel Co Fund

• “Access to finance” part of Small Business, Enterprise and Employment Bill

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Discussion over breakfast…

Now…

But first…

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Actions/ follow up: assistance• Presenters• Oxford Innovation, Get Set for

Growth, Growth Accelerator, Growth Vouchers

Developments• http://www.francisclark.co.uk/news-views/blog/

Topics for future breakfasts?• International Trade• The share• An entertaining discussion of “basic

tax”• Protecting the family business• Equity for SMEs• Crowdfunding

Future…

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