How are business development grants issued?
Many entrepreneurs are interested in the question of how to get a grant from the state for the development of small businesses. It became relevant in the context of economic instability. It should be noted right away that each region of the Russian Federation has the right to independently approve the requirements that an applicant for a business grant must meet: the candidate must submit an application and follow the conditions of a certain competition.
Where to apply for a grant
A grant for the development of small businesses is gratuitous financial assistance provided through special government programs, projects, competitions, and financial institutions. It stands out as an encouragement to aspiring entrepreneurs to implement the submitted business plan. Hence follows the main requirement for receiving a grant: it is that the prototype of the idea and the business model must solve any social problem and be of obvious benefit.
Conducting contests among small business entrepreneurs and distributing grants are carried out by:
- Union of Entrepreneurs.
- Local government bodies.
- Department of Economic Development.
- Department of Entrepreneurship Development.
- SME support funds.
- Fund for Assistance to the Development of Small Forms of Enterprises in the Scientific and Technical Sphere.
Issuance of grants by state organizations and their features
For the state, one of the main tasks is to ensure social protection and employment of the population. Therefore, local authorities give up their management in their region. Consequently, it will be easier for an entrepreneur who has chosen the appropriate direction to receive a grant.
The grant for starting a business by state organizations is preferable to newcomers who need a confident start, that is, university graduates, the unemployed, the disabled, single mothers, retired military personnel.
Issuance of grants by private and foreign foundations and their features
If a project is financed by a private or foreign fund, then their priority feature is the full targeted use of funds in accordance with the submitted and approved business plan. Foreign sponsors are more willing to invest in entrepreneurs who have previously participated in such competitions and received a grand.
Required documents to receive a grant
An individual entrepreneur who wants to participate in the program for providing financial assistance to a small business, before submitting an application, must prepare a package of documents for a future project and submit them within a certain period of time for consideration. The package of required documents should include:
- Business plan of the project.
- Photocopies of constituent documents.
- EGRIP record sheet.
- Copy of the passport.
Application for participation in the project, which must consist of:
- table of contents;
- statement of the problem;
- goals and objectives of the project;
- ways of solving the assigned tasks;
- risk assessment;
- the amount of funds;
The application must be accompanied by a cover letter explaining why the business plan deserves government support.
How are Grant Applications Decided
After the committee receives the application and supporting documents from the entrepreneur, it will be considered within three working days. If during this period it is established that all documents meet the requirements and conditions of the grant program, then the submitted application will be considered at a meeting of the specialized commission. The commission has three months to make a decision.
Each application participating in the grant program is assessed by the points system used in the region of the Russian Federation. This information system becomes the basis for compiling an overall rating of applications. After the rating has been compiled, the members of the commission, based on the results of voting, select suitable candidates from the entrepreneurs who have submitted applications, and they will be given grants for the development of small business. The results of the competition can be found on the official website of the regional fund. After that, within a month after publication, an agreement is concluded between an individual entrepreneur and a regional fund, which describes in detail the conditions for obtaining a grant for the development of a small business.
What to do with the received funds
After receiving a grant for starting a small business, the transferred funds should be used by the enterprise in accordance with the business model presented in the competition. The grantee is obliged to regularly provide reports to the donor, which confirms that the funds are used specifically for the development of small businesses, and not for any others. If the grant is issued with the exact wording and purpose of use, it can be spent, for example, only for the purchase of equipment, and it is precisely such reporting that the entrepreneur must provide. Otherwise, the organization that provided the grant has the right to demand a refund through the court, and foreign foundations may still demand compensation for moral damage.
Small Business Grant Sizes
In most regions of Russia, the maximum amount of assistance to small business entrepreneurs is 300,000 rubles, excluding Moscow. In order to receive material assistance from the state for such an amount, an individual entrepreneur should not only draw up a business plan but also have his own funds available, which will be used to implement the drawn-up project.
An entrepreneur participating in a competition for a grant for business development must have documentary evidence that he has the opportunity to invest at least 15 percent of his own funds for the implementation of a business project.
In conclusion, we add that, in general, those individual entrepreneurs of small businesses who will work in the field of creating consumer goods and providing services to the population become the winners of competitions for a grant. Therefore, before submitting an application for participation in the competition, it is worth carefully considering and working out a potential sales market.