Grants and other funding sources are extremely important for small businesses. PKF-FPM Business Advisory Director Michelle Hawkins summarises the Small Business Grants available in Ireland including key supports and funding options.
To say that 2020 was a challenging year for the business community is an understatement. Small businesses struggled for survival and many people lost their jobs. As individuals sought ways to replace lost income, some grasped the opportunity to start their own business. If you are among those affected, set out below is a summary of the key grants and funding sources that you need to be aware of.
Small Business Grants in Ireland & Funding for Start-ups
Starting any new business requires funding and there are several schemes in place to support people who have lost their job and want to become self-employed. These include:
- Start-up Refunds for Entrepreneurs (SURE) which enables eligible individuals starting their own business to reclaim income tax paid previously,
- Short Term Enterprise Allowance (STEA) which eligible people who have lost their job and are starting their own business can claim instead of Jobseekers Benefit
- Back to Work Enterprise Allowance is designed to encourage people on certain social welfare benefits to becoming self-employed.
Other Small Business Grants
The first place that a small business or start-up company should look for financial assistance is their Local Enterprise Office (LEO). The financial supports provided by LEOs include:
- Development grants
- Assistance with feasibility studies
- Marketing assistance
- Advice on how to access loans such as up to €25k available from MicroFinance Ireland
InterTradeIreland is another potential source of financial assistance if your business plans to trade across the Island of Ireland. Programmes to investigate include:
- Acumen – Sales & Marketing Assistance up to €18,750
- Fusion – Graduate funding of up to €67,900 for innovative project
- Co-Innovate – Funds collaborative innovative projects
- Impact – Funds Partnerships that will provide solutions to industry-level problems
A key piece of advice I always give to any small business or start-up is to take time to draw up a robust Business Plan. This is a crucial document when seeking funding. It is important to ensure that it clearly identifies:
- what you want to achieve,
- how you will achieve this
- who will be involved
- what resources will be required
Your plan needs to be kept under review, progress against goals needs to be monitored and the plan should be updated as your business develops.
Tax Relief for Start-up Companies
Depending on your business structure, in addition to the small business grants and funding sources mentioned above, various tax reliefs may also be available.
For start-up companies, a particularly relevant relief known as Section 486C tax relief takes the form of a reduction of Corporation Tax (CT) in the first three years of trading. This relief can be applied to the profits of your new business and/or to any chargeable gains made on assets used in that trade. This tax relief is worth up to €120k over the three-year period or €40k per annum.
Start-ups that intend to trade internationally and create employment may qualify for funding through Enterprise Ireland’s New Frontier Programme. Under this programme, a package of €30k is possible along with various non-financial supports.
Ambitious early-stage companies that have the potential to employ at least 10 staff within 2 years and generate revenues in excess of €1m, can apply for support through Enterprise Ireland’s High Potential Start-Up Programme. This support is in the form of a co-funded equity investment.
Enterprise Ireland has a portfolio of other start-up funds, such as the Competitive Start-Up Fund (CSF) where up to €50k is available in return for a 10% shareholding.
Loans for Small Businesses
Loans are available from sources such as the Microfinance Fund (up to €25k). Where businesses have no security available to access bank loans, the Credit Guarantee Scheme provides Government-backed loans.
In addition to the State-sponsored supports offered by the Local Enterprise Offices, InterTrade Ireland, Enterprise Ireland and other agencies, many start-ups and small businesses attract private investors.
Schemes to be aware of include the Employment Investment Incentive Scheme (EIIS) which gives tax relief to investors. This makes your proposal more attractive to investors.
The Halo Business Angel Network (HBAN) is another support for the early-stage business community across the island of Ireland. This network often requires a small business to have EIIS approval when seeking investment.
Excellent support is available for early-stage tech companies through incubations located across the country. These incubations provide financial assistance in addition to offering expert guidance and assistance to secure seed investment.
Innovation vouchers, R&D tax credits, and tax-saving opportunities such as accelerated capital allowances are other avenues small businesses should explore when planning how to fund their development strategy and future growth.