Is it realistic to get a grant for your business, and what can get in the way

Farmers often say that grants are something out of reach and unattainable — that whatever they do, they cannot get them. Iryna Nikolaieva, an expert in raising funds for SMEs, Co-Founder of Miran Capital, UN Ambassador of Peace and Wtech Kherson curator, explains why the myths about "unobtainable grants" need dispelling.

Money can always be found for any business, Iryna Nikolaieva believes. Unfortunately, many entrepreneurs, farmers among them, do not know or do not look closely into how to obtain additional funds for their own business needs. Yet a grant is not a fantasy but very real and effective support for a business. To receive grant funds you only need to meet a few straightforward conditions.

1. Be in business for more than two years

Very often, when a farmer reads grant conditions, they state that the company must have been operating for at least one year. In reality, when funds choose a company to finance they look for at least two years of operation. That means a genuinely operating business that has carried out its economic activity for a minimum of two years and can prove it with figures in its financial statements. The company is then entitled to take part in any grant: from a state processing grant starting at UAH 8 million to an international grant of EUR 17 million.

2. Have transparent operations

Cases are fairly common where, for example, certain crops are grown by a farm, the products are sold through a private enterprise, and the grain elevator is registered to a limited company. So when applying for a grant you need to present the single business that actually carries out the activity. "Grants are not loans," says Iryna Nikolaieva. "A grant takes into account only the one main production enterprise for which the financing is being raised. It is very important to move part of your turnover to the enterprise that does the growing, add the sales there, and then present your enterprises as a group."

3. Have a strategic development plan

"We had a case like this in our practice," Iryna says. "Towards the end of the year there are often grants whose competition runs for just seven to ten days in total. Every grant programme has a period during which it operates, usually nine months. If no companies meeting the conditions are found in that period, a sum of money is left over. To avoid returning it to the parent company financing the grant fund, the fund is entitled to run an out-of-competition project. Under its terms a company can apply quickly within seven days and receive not UAH 5 million but the full UAH 25 million to develop its business. But for that you must already understand exactly what you need the money for, and have a development plan prepared."

For example, a farm plans to buy a certain amount of machinery, increase elevator capacity and purchase vehicles to improve logistics. All the figures for the planned purchases must be set out before submitting the application.

"Another story from our practice. Last year on 29 December a competition was held for up to EUR 2 million. Companies had just three days to apply. We submitted two companies and one of them won the grant. And on 1 January the grant fund sent 156 questions clarifying the winning company's operations. On New Year's Day the entire team came in to work, and now they are waiting for financing to be approved for a compound feed plant," Iryna shares.

So companies need to understand which urgent needs the grant funds will be used for, and be ready to respond promptly about their operations.

4. Have officially employed staff

The amount of grant funding a company can receive depends on the number of officially employed workers. These nuances must be taken into account when applying. The more people officially employed, the larger the company is considered to be. The grant funds a company can apply for start from EUR 500,000 and go up to EUR 15 million.

"For example, we were talking to one entrepreneur. Asked how many staff work in the orchards, the owner said 250 people. We offered the company an excellent programme for organisations employing between 200 and 250 workers. We started preparing the documents for the programme. In the process it turned out that only 36 people were officially employed by the farm…" Iryna Nikolaieva recounts.

5. Have no overdue loans or unpaid taxes

A company applying to a grant programme cannot have overdue credit debt. This is not about having a loan, but about being behind on payments.

There must also be no tax arrears or overdue credit debts held by the owner of the business or the director. If such a conflict arises at the time of application, the fund reacts accordingly: if the applicant cannot clear a credit debt, how will they service a grant?

Entrepreneurs often ask whether grant funds have to be repaid. A grant is money that does not need to be repaid, but the business receiving it will have certain obligations, which differ from programme to programme.

6. Be ready to invest your own money

Every grant involves co-financing. "Even if a company finds a programme stating co-financing of 5% or 10%, the calculation should go like this: say the company buys the necessary equipment in Germany with grant funds. Logistics, customs clearance, VAT, installation, assembly and commissioning of that equipment are paid for by the company. In practice that works out at up to 30–40% contributed by the company," Iryna explains.

So a company planning to take part in a grant programme must budget for the additional related costs that the grant will bring with it.