The new $190m ‘Jobs for NSW’ fund unashamedly channels NSW Government business grant support programs to start-up and established growth business with a high potential to grow employment.
In other news, the Turnbull Government has introduced legislation as part of its budget repair push to reduce the R&D tax incentive from 45% to 43.5% of eligible R&D expenditures for companies with <$20m turnover.
Bill Ferris has also handed in his Report reviewing the R&D Tax Incentive to the Government. There was a lot of special pleading by the University sector and Big Accounting firms wanting more targeted incentives to support commercialising university based research. Watch this space for more changes to R&D!
- A Minimum Viable Product Grant of up to $25,000 to fund a concept or develop a prototype product or service on a 1:1 matched funding basis. The predecessor program offered up to $15,000.
- A Building Partnerships Grant of up to $100,000 on a 1:2 (35%) dollar matched basis designed to support development and market validation of new products and services. This grant was previously known as the Collaborative Solution Grant which was available on a 1:3 dollar matched basis up to a maximum of $100,000.
- An Accelerating Growth ‘soft’ Loan of up to $300,000 for businesses with revenues >$0.5m and <$3m and more than 5 employees for projects with job creation milestones.
- A Loan Guarantee of up to $5m for fast growing SME’s with revenues >$3m and <$150m with a track record of 20% growth pa (so-called ‘Gazelles’) over the last 3 years who are seeking support for projects with job creation milestones.
The four elements are designed to support new business incubators and accelerators, early stage businesses and high growth pre-venture capital businesses where external funding has traditionally been difficult to access. The intent is to provide a wider range of support programs better calibrated to suited to the early stages of business growth. To this extent, they are not purely driven by innovation as previous programs have been.
30% of this fund must be spent in regional NSW.
The introduction of a loan component acknowledges that State Finances remain tight and as such loans rather than grants provides an opportunity to recycle scarce funds back into the SME community from successful investments.
This program seems to be working reasonably well. MVP grants are in high demand. Regional Solutions Grants have been replaced by repayable no interest loans of up to $500,000 for regional business with concomitant additional employment commitments of between 10-25 people of the life of the loan. There is a strong bias towards revenue -earning and cash flow positive enterprises, leaving a still substantial gap for undercapitalised early stage businesses seeking Government support.