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ANALYSIS: SMME grant funding

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This article is an attempt to provide useful information to the accountants of two types of business people in relation to access to grant finance offered by the Department of Trade and Industry and the Department of Small Business Development

A popular discussion point around economic growth is small business and its role in growing and stabilising the economic prosperity of our country. Small businesses could be classified as ‘dynamic growth- focused SMMEs (DGFs) and ‘poverty alleviation SMMEs’ (PAs). DGFs traditionally need little public sector assistance, as the private equity players in the market tend to partner with such businesses. My focus is the small businessperson who has no dreams of ruling the business world but rather wants to provide for his or her family and extended family.

It is perhaps to these PAs that grant funding provides that necessary injection of cash which makes the business sustainable.

Available grants

Government has developed a raft of grants that are designed to boost different areas of the economy, including small business.

The information below is a summary of what can be found on the websites of the Department of Small Business Development and the Department of Trade and Industry

Website

http://www.dsbd.gov.za/ and https://www.thedti.gov.za/financial_assistance/financial_assistance.jsp respectively

 

Grant/incentive R-value Brief explanation
Informal and Micro Enterprise Development Programme (IMEDP) 100% offered up to R80 000 This grant is offered to informal and micro enterprises to assist them with improving their competitiveness and sustainability in order to become formal businesses and part of the mainstream economy with turnovers from R1 000 to R200 000
Shared Economic Infrastructure Facility (SEIF) 50:50 cost-sharing grant

capped at R5million (VAT inclusive) per qualifying applicant

The programme is a made available on a reimbursable basis, where DSBD makes a contribution of 50% towards the qualifying infrastructure project upon the completion of agreed milestones. Guidelines have been amended to also accommodate special projects for deserving projects to be assisted even without collateral
Black Business Supplier Development Programme (BBDSP) R1 million broken into a maximum of R800 000 for tools, machinery and equipment and R200 000 for business development and training The programme aims to leverage the competitiveness of black owned enterprises through the provision of machinery, tools, equipment’s and business development services
Cooperative Incentive Programme (CIS) R350 000 to one cooperative entity and up to R10 million to fund secondary cooperative so as to provide support to the primary cooperative

 

The programme aims to promote the development and competitiveness of sustainable co-operatives that promotes equity and greater participation by black persons, women, persons with disabilities and youth. The scheme provides financial support in the form of grants to cooperatives
Enterprise Incubation Programme (EIP) Incubators can receive up to R10 million The programme has been designed to best respond to the specifications placed by firms in opening markets for enterprises in their supply chains; implement a market-driven approach to identify incubation opportunities as opposed to a needs-driven approach; assist with the identification of specific markets and provide focus and direction to the incubator’s work of preparing entities to supply local markets; and provide support for the growth and expansion of SMMEs and cooperatives
Secondary Marketing Cooperative Incentive Scheme (SMCIS) Cooperative can receive up to R10 million The programme is to assist secondary marketing cooperatives to provide specialised managerial services not available within the cooperative, such as quality control, logistical services, bulk-buying, marketing and other value-adding services to primary cooperatives and thereby unleashing their potential to achieve economies of scale, obtain fair market prices for goods and services, comply with the relevant industry and market requirements and to increase profitability for members and thus contributing to the economic development and growth of the economy
Critical Infrastructure Programme (CIP) Up to R50 million for infrastructure A grant for infrastructure and includes industrial parks, renewable energy projects, and upscaling on agro-production capacity in that area
Cluster Development Programme (CDP) Up to R10 million for a cluster development A grant of for cluster development consisting of five or more registered tax-paying entities or NPOs. The majority of tenants must be involved in manufacturing or supply-based entities. There are BEE requirements
Support Programme for Industrial Innovation (SPII) R5 million for all business and an additional R2 million for small business A grant for commercially viable and internationally competitive technological innovative products to cover a percentage of pre-competitive development activities such as personnel, travel, materials, assets, software, documentation, testing, licensing, certification, patents and consulting
Strategic Partnership Programme (SPP) R45 million over three years A programme for Registered Industry Association comprising a minimum of five members. Such a body must develop SMEs. It must have been in existence for two years prior and have a minimum turnover of R100 million in such years
Aquaculture Development and Enhancement Programme (ADEP) R30 million A programme for various aquaculture businesses
Black Industrialist Scheme (BIS) – dream big my friends Up to R50 million A programme for various industrial projects in many sectors
Manufacturing Competitiveness Enhancement Programme (MCEP) Four-year working capital loan or R50 million per application of cost of 4% fixed per annual with no raising fee. Seven-year plant and equipment loan for black industrialists on similar terms A programme that offers a loan to qualifying entities
Capital Projects Feasibility Programme (CPFP) Between R100 000 and R8 million A programme for the manufacture of machinery used to create capital goods, electrical equipment, etc, outside South Africa
Export Marketing Investment Assistance (EMIA) A programme where local manufacturers, exporters, etc, can apply to have the costs of flights, subsistence, sample transportation, marketing material and exhibition costs covered
Sector Specific Assistance Scheme (SSAS) R3 million A programme for export councils, joint action groups and industry associations for research, strategy and advertising
Project Funding for Emerging Exporters (PFEE) R1,9 million A programme for export councils, industry associations, business chambers, SEDA, municipalities, provincial investment and economic development agencies to cover costs for qualifying SMMEs in relation to flights, subsistence, sample transportation, marketing material and exhibition costs
Business Process Services(BPS) Incentive is a sliding scale and is an incentive per job created An incentive for offshore jobs created
Film Incentive (FI) Capped at R50 million for foreign productions. No cap for local or co-productions Ranges from 35% to 50% of qualifying South African expenditure in relation to movie production

 

The above is merely an awareness of some government grant funding out there for small businesses. While there will always be private sector interest in DGFs, it is clear that PAs need to be assisted by those of us who can so that our homes are more prosperous and our hearts are more at peace.

I urge all accountants to use this information to access such funding for their SMME clients. Should you require further assistance or guidance and access, please contact SAICA’s Small and Medium Practices Division.

Author: Afzal Khan is National Small and Medium Practice Interest Group (NSMP-IG) chairperson