2020 was an extremely difficult year for small businesses. Volatile markets, difficulty with supply chains, and, of course, the various lockdowns, have all resulted in a loss of revenue for many Australian businesses. This is particularly true in the export business, where the difficulty of international travel and shipping has hit especially hard.
For many small export businesses, help is needed to stay afloat. One avenue for this help is the newly simplified and reformed Export Market Development Grant. Due to COVID-19, the Australian Government announced that funding for the grant scheme has been increased for the 2019-2020 financial year. This means there are more funds available to assist eligible export businesses.
The EMDG is considered an entitlement in Australia. This means that rather than being a competitive grant any business that applies and meets the eligibility requirements can receive funding. And since it is a grant, rather than a loan, this is not money that needs to be repaid.
In order to qualify for the EMDG, an organisation must carry on business in Australia, but also be involved in the sale of Australian goods to international markets or the delivery of Australian services to non-residents. Businesses that encourage tourism in Australia also qualify, as do those that specialise in the export of intellectual property. Since the grant is focused on small businesses, there is an income limit – currently set at $50 million for the year, but dropping to $20 million starting July 1, 2021.
How it Funds Your eCommerce Business
The funding is intended to reimburse promotional expenses incurred by eligible export businesses. Growing a business requires a significant outlay of capital in order to market and promote the business in other markets. Businesses can claim money spent on promotional literature, free samples, consulting fees, travel expenses for marketing visits, marketing booths at trade fairs, and the costs of in store promotions. The grant will cover up to 50% of such expenses, minus the first $5,000 spent, provided the company has spent at least $15,000 on these costs.
Things to Note
The total value of the grant has changed with the new regulations. In the past, companies could receive up to $150,000 per grant application, with up to eight applications allowed per year, as funds permitted. However, new regulations limit the grants to $80,000 over two years to new export businesses, while established exporters who plan to expand can access up to $240,000 over three years. Those established businesses that further expand will then become eligible for up to $450,000 worth of grant money paid out over three years.
There are restrictions on the use of the funds. Since the EMDG is intended for use solely on marketing and promotional expenses, expenses that relate to product development or sales cannot be claimed. And, of course, any expenses that are determined to be fraudulent or illegal in nature are not eligible; the same applies to trade with North Korea. Finally, since the point of the grant is to expand Australian trade into new markets, any expenses related to trade between Australia and New Zealand are also ineligible under this grant, since the two nations are such close trading partners already.