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Many new small businesses go through the struggle of finding capital to start-up of expand their businesses. Government funding and grants can be a worthwhile way to get the funds that you need.
There are a lot of important things you need to be aware of such as: Strict criteria, a lot of paperwork and maybe even a very long wait. It is worth it in the end so have a look and see which government funding and grants you qualify for.
This is when a project or initiative is awarded government funding for some or all of its financial support. The business grants do not need to be repaid or accrue interest and have strict guidelines for application. Government funding is linked with efforts such as black economic empowerment, job creation and developing the economy.
Here is a list of some of the government grants available for business funding in South Africa:
- Automotive Investment Scheme (AIS)
- Black Business Supplier Development Programme (BBSDP)
- Clothing and Textile Competitiveness Improvement Programme (CTCIP)
- Critical Infrastructure Programme (CIP)
- Film Incentive Programme
- Business Process Services (BPS)
- Capital Projects Feasibility Programme (CPFP)
- Support Programme for Industrial Innovation (SPII)
- National Youth Development Agency (NYDA)
- National Empowerment Fund (NEF)
The Department of Trade and Industry (DTI)
DTI business grants are responsible for actively encouraging small businesses. The DTI is actively searching for new business owners, specifically those who will positively affect South Africa’s economy with an emphasis on valuable job creation.
The DTI business grants provide financial support to various economic activities, including manufacturing, business competitiveness, export development, market access and provide a channel for foreign direct investment. The following are some of this department’s latest programmes:
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This business grant is designed to grow the automotive sector. By investing in new and replacement models and components which will:
- Increase production volumes
- Sustain and increase employment
- Strengthen the automotive value chain
Qualifying for the grant
These types of grants are aimed at:
- Light motor vehicle manufacturers
- That either have accomplished or will accomplish, a minimum of 50 000 annual units of production per plant, within a period of three years
- Component or deemed component manufacturers
- Which fall under the Original Equipment Manufacturer (OEM) supply chain
- Light motor vehicle manufacturer supply chains who will reach at least 25% of total entity turnover or R10 million by the end of the first full year of commercial production whether they are situated locally or internationally.
Contact information:
- Working Hours: Monday – Friday 08h00 until 17h00
- National callers: 0861 843 384
- Enquiries can be sent to the following e-mail address: contactus@thedti.gov.za
- Find more information here.
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The DTI offers non-repayable grants of up to R1 million to ensure your business can boost its competitive edge and its sustainability. The aims of these business grants are to expand existing businesses as well as employ additional people.
Be aware: These business grants do not assist start-ups
The R1 million grants are divided into R800 000 specifically for tools, machinery and equipment. The outstanding R200 000 is then used specifically for business development and training. In order to improve:
- Business corporate governance
- Management
- Marketing
- Productivity
- Use of modern technology
6 Points you need to qualify for these grants:
- CIPC registered company or cc
- 50.1% or more black owned (Black, Indian or Coloured)
- Management team is 50% Black
- Must have been trading for at least one year and have financial statements to prove turnover
- Turnover must be between R250 000 and R35 million per annum
- Must have valid SARS tax clearance and IRT14 SARS document.
Document checklist for these grants:
- CIPC Company registration documents (proof of ownership and shareholding)
- Certified ID of all Directors/ members
- Certified ID of all managers/ staff to be trained (if applicable)
- Certified financial statements for latest financial year (three years if available)
- Management accounts for current year
- Valid SARS tax clearance (with 3 months to expiry or get a new one)
- VAT registration document (where applicable)
- IRT 14 document from SARS. (matching turnover as per latest financials)
- 3 Months bank statements
- 3 Quotations (comparable) for every intervention
- Declaration appointing Graphit as the consultant.
- Company diagnostic questionnaire and application typed on template supplied by Graphit. Please send back as a Word Document
- Domicilium form
- Bank confirmation of your 50% contribution (Will you be able to get finance for your 50% or 20% contribution.) (Clear credit record)
Contact information
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This type of government funding is targeted at the clothing and textile industry. They offer a R200 million grant fund launched this year. The aims of these types of grants are:
- Stabilise employment
- Improve overall competitiveness within the clothing, textile, footwear, leather and leather goods manufacturing industries.
To qualify for these types of grants your operational business just need to join a regional cluster recognised by the programme.
Find more information here.
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These grants are cost sharing grants for projects designed specifically to improve critical infrastructure. These types of grants offer a cash to a maximum of 30% capped at R30 million of the development cost of qualifying infrastructure. The aims of these government funding and grants are to:
- Lowering business costs and risks which will support competitiveness
- Provide targeted financial support for physical infrastructure
- Stimulate upstream and downstream linkages.
Qualifying for the grant
Public sector entities qualify for this particular grant. These include:
- Municipalities
- Private investors
- Companies
Contact Information
Government funding and grants offer various incentives to promote the film production and post-production industry.
The incentives consist of the:
Foreign Film and Television Production and Post-Production
- To attract foreign-based film productions to shoot on location in South Africa
- Conduct post-production activities in South Africa
South African Film and Television Production and Co-Production
- The assistance of local film producers in the production of local content.
The South African Emerging Black Filmmakers
- To assist local emerging black filmmakers in order for them to grow enough to take on big productions then they can contribute towards employment creation.
Contact Information:
Find more information here.
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Government funding and grants such as this one was created to attract investments and create employment opportunities through offshore activities. Its secondary objective is to create youth employment opportunities and contributing to the export revenue of the country through offshoring services.
Qualify for these business grants by having:
- Must be performing BPS activities
- May be involved in starting a new operation or expanding an existing operation in order to perform BPS activities.
- By the end of three years from the start of the new project or expansion, must have created at least 50 new offshore jobs
- Must commence its commercial operations no later than six months from the date on which the BPS incentive grants were approved
- If in a joint venture arrangement, must have at least one of the parties registered in South Africa as a legal entity
- The project must employ at least 80% youth
- Have secured a contract for offshore BPS activities
- Comply with the B-BBEE requirements
- Submit an application for the BPS incentive prior to the engagement of qualifying jobs
- The project must be financially viable
- Comply with all statutory regulations
- Be a going concern.
Contact Information:
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Government funding and grants like this one was created as cost-sharing business grants. The objective is that it will contribute to the cost of feasibility studies which will become projects that will boost local exports and stimulate the market for South African capital goods and services.
Business grants that are R8 million cover a maximum of:
- 50% of the cost of the feasibility study for projects outside Africa
- 55% of the cost of the feasibility study for projects within Africa
Requirements:
Must be a South African registered legal entity or partners with a South African registered entity.
Studies which have non-financial criteria:
- New projects, expansion of existing projects and the rehabilitation of existing projects.
- The programme that is anticipated to emerge from the feasibility study must fulfil the objectives of the programme.
- The minimum local content should be 50% for goods and 70% for professional services
- Projects can be situated anywhere in the world ( excluding South Africa)
- The project must have a satisfactory chance of being declared a success.
Evaluation criteria which are motivational factors, the project must have:
- A positive impact on developmental aspects like job creation, skills development, linkages with small, medium and micro enterprises etc.
- A minimum of 10% of the total professional services involved during the feasibility study should be sub-contracted to South African black-owned professionals/entities
- A clear detailed time period from which the project stemming from the feasibility study will be realised
- Funding from private and public sector organisations to realise the project.
Contact Information:
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These are business grants which supports the development of new technology in the South African industry. The government funding and grants focuses on the development of new technology in order to reinforce South Africa’s international competitive edge.
Requirements for SPII Support:
- Development should represent significant advance in technology
- Development and subsequent production must take place within South Africa
- Intellectual Property to reside in a South African registered company
- Participating businesses must be a South African registered enterprises
- No simultaneous applications from the same company.
Various schemes offered by SPII:
- The product process development scheme:
- Provides financial assistance with non-repayable grants to small, very small, micro-enterprises and individuals.
- The matching scheme:
- Provides financial assistance with non-repayable grants to all enterprises and individuals.
- The partnership scheme
- Provides financial assistance with conditionally repayable grants to all enterprises and individuals
- The repayment is a levy based on the percentage of sales over a fixed number of years.
- The levy percentage and repayment period are established
Contact Information
The dti Customer contact centre
- National callers: 0861 843 384
- International callers: +27 (12) 394 9500
- Find more information here.
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These grants programmes are provided to young entrepreneurs as an opportunity to access financial and non-financial business development support. This programme is directed at youth entrepreneurs who are showing potential but are not fully developed yet.
Related: Does the South African government award grants to franchisees?
Young people who would like to access the grants programmes will have to commit to participating in the NYDA mentorship and voucher programme for a minimum of 2 years. The youth business funding ranges from R1000 to R100 000.
Requirements:
- The applicant must have attained the age of eighteen (18) years at the time of application
- Require business, start-up or growth funding
- Are youth (18-35 years) with necessary skills, experience or; with the potential skill appropriate for the enterprise that they conduct or intend to conduct
- Are South African citizens and are resident within the borders of South Africa
- Are involved in the day-to-day operation and management of the business
- Require grants from NYDA of not less than R1, 000.00 and not more than R100, 000.00
- Require grants from NYDA of not less than R1,000 and not more than R1, 00, 000 within the following thresholds:
- Threshold 1 – Survivalist business – R1 000 – R10 000
- Threshold 2 – Start Up – R10 001 – R50 000
- Threshold 3 – Growth – R50 001 – R100 000.
- Operate either informally or formally; generally recognised as micro enterprises (e.g. street traders, vendors, emerging enterprises)
- Have a profit motive and are commercially viable and sustainable
- Members of entities should comprise 100% South African youth citizen
- Business are operating within the borders of South Africa
- Individual entity must have bank account and or a young person must be assisted to open an account
- For cooperatives they must have or be willing to form a group of minimum 5 persons.
Be aware: If you receive approval of your grants and you are a full time employee, you might be required to resign and provide your grant officer with your proof of resignation
Find more information here.
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Government funding and grants like the National Empowerment Fund are targeted at black economic empowerment transactions. Through the provision of financial and non-financial support as well as creating a culture of saving and investing. The NEF is divided into four different types of government funding:
- iMbewu fund
- Designed to as start-up business funding for black entrepreneurs as well as supporting existing black-owned enterprises with expansion capital.
- The fund offers: debt, quasi-equity and equity finance products with a range from R250 000 to R10 million.
- Rural and community development fund
- Designed to promote sustainable changes in the rural economy. Specifically in social and economic relations as well as supporting the goals of growth and development through financing of sustainable enterprises. This fund has three products:
- Acquisition finance
- Expansion Capital
- Project finance
- These have a range of funding between R1 million and R50 million
- uMnotho fund
- Designed to improve access to BEE capital and offers five products:
- Acquisition finance
- Project finance
- Designed to improve access to BEE capital and offers five products:
- Capital markets fund
- Liquidity and warehousing
- These products give capital to black-owned and managed enterprises and black entrepreneurs who:
- Buy equity shares in established black and white owned enterprises
- Starting new ventures
- Expanding existing businesses
- BEE businesses that are or want to be listed on the JSE
- Strategic Projects fund
- This is the centre of the NEF’s investment strategy when it comes to acquiring the involvement of black people in early stage projects. Its main function is to provide venture capital finance aimed at developing new and deliberate industrial capacity within planned sectors acknowledged as key drivers of economic growth.
Contact Information
- Call: 0861 843 633
- Find more information here.
The application process for government funding and grants takes time and the paper work can be tiresome. But here has never been more substantial government funding available than right now. The government funding has more than doubled from R242.6 million in government grants in 2011/2012 to R646.5 million in 2012/2013.
An additional R437 million was given out in grants to over 31 000 small and micro enterprises by the National Empowerment Fund, the National Youth Development Agency and others. A lot of success can be accomplished with the help of government funding and grants.
Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds
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