Government incentives for small businesses

dti.jpgThe South African government is well aware of the importance of developing the economy, creating employment and attracting foreign investment. To make these goals a reality, there are grants and assistance programmes available from the government and associated organisations that can get your business off the ground and expanding.

Unlike a loan, a grant is an award of money that is non-repayable. While the government is one of the best sources of grants, its selection criteria is strict and paperwork intensive, and the receiving business is obligated to spend the funds in a manner specified by the provider.

List of Government Grants for Business

The best place to start with researching government grants for small businesses, is through the Department of Trade and Industry (DTI). By visiting the dti's Financial Assistance page, you can explore a number of funding options from grants to incentives and all their qualifying criteria. Some grants available include:

  • Aqua-culture Development and Enhancement  Programme (ADEP) – is available to registered entities involved in primary, secondary and ancillary aquaculture projects for both marine and fresh water. It is approved for new, existing and upgrading entities.
  • Automotive Investment Scheme (AIS) – is designed to grow and develop the automotive industry through investment in new and replacement models and components  that will increase production volumes, sustain and increase employment, and strengthen the automotive value chain.
  • Black Business  Supplier Development Programme (BBSDP) – is a cost-sharing grant offered to black-owned businesses to improve their competitiveness and sustainability. It aims to fast-track small and micro-enterprises, foster links between black-owned businesses, corporates and public sector, and to complement affirmative procurement and outsourcing. It provides grants to a maximum of R1 million.
  • Business Process Services (BPS) – This scheme aims to attract investment and create employment in South Africa through  off-shoring activities. It involves a three-year tax-exempt grant for qualifying businesses.
  • Capital Projects  Feasibility Programme (CPFP) – is a cost-sharing grant contributing to the cost of feasibility studies for projects that will lead to increased local exports and stimulate the local manufacturing sector.
  • Critical Infrastructure Programme (CIP) – is aimed at improving the infrastructure of South Africa. The grant covers a minimum of 10% to a maximum of 30% of total development costs of qualifying infrastructure.
  • The Co-operative Incentive Scheme (CIS) – is a 90:10 cost-sharing grant for registered primary cop-operatives of five or more members to improve the viability and competitiveness.
  • Incubation Support Programme (ISP) – is designed to create and develop successful enterprises with the ability to revitalize communities and local economies.
  • The Manufacturing Competitive Enhancement Programme (MCEP) – provides enhanced manufacturing support to encourage facility upgrades to sustain employment and improve productivity.
  • Manufacturing Investment Programme (MIP) – is a reimbursable cash grant to local and foreign-owned manufacturers who wish to establish new facilities or expand on existing ones.
  • National Youth Development Agency (NYDA) – while it is moving away from grants for youth and going toward mentorship and development programmes, grants are available for youth entrepreneurs.
  • People-carrier Automotive Investment Scheme (P-AIS) – is a cash grant of between  20% and 35% of the value of qualifying investment in productive assets approved by the DTI.
  • The Sector Specific Assistance Scheme (SSAS) – is a cost-sharing grant offered on an 80:20 principle and a maximum of R1,5 million is awarded to qualifying businesses.
  • Seda Technology Programme (STP) is a division of seda (Small Enterprise Development Agency) focusing on technology business incubation, quality & standards and technology transfer services & support to small enterprises.
  • Support Programme for  Industrial Innovation (SPII) – aimed to promote technology development in South African industry.
  • Technology and Human Resources for Industry Programme (THRIP) – is one of three industry support instruments of the dti designed to enhance industry competitiveness and production capacity through the application of new technologies.

Who can apply for Government Grants for Business?

Each grant has its own criteria. Generally through, the following will be required:

  • The business needs to be majority black-owned
  • It needs to have a significant representation of black managers (if applicable)
  • Minimum and maximum turnovers vary from grant to grant
  • The business must have a minimum of one year in trading
  • The business must be a registered entity with a tax clearance certificate, Vat number, etc.
  • The business must comply with all regulations such as CIPRO, SARS etc.
  • All owners and major shareholders need a clear credit history.

Most funds available in South Africa have their own specific requirements, so it’s advisable to research each fund carefully to assess their criteria and up your chances of receiving funding.

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