The South African grant landscape is one of the best in the world. However, with grants paid retrospectively, many businesses face cash flow issues when financing the initial stages of their project.
By utilising grant advance funding, companies that have secured government grant funding have the opportunity to obtain this capital several months ahead of time.
This approach, also referred to as grant-based funding, enables businesses to commence projects, fulfil grant milestones, preserve equity, and uphold project schedules.
Grant Advance funding refers to a financial arrangement where companies that participate in government grant programs can access a portion of their future grant capital in advance. In other words, it’s a loan to get cracking on your R&D project!
It allows businesses to receive a portion of the grant funds before completing the milestones or project requirements outlined in the grant agreement. This funding option helps companies maintain cash flow, meet financial obligations, and progress with their projects without waiting for the complete disbursement of the grant funds.
Grant Advance funding offers several advantages to companies participating in government grant programs. Here are some key benefits:
Improved cash flow: Grant Advance funding provides companies with access to a portion of their future grant capital in advance, often up to 80% of the total grant you’ve won. This helps improve their cash flow by injecting funds into their business earlier than waiting for the complete disbursement of the grant, essentially accelerating timelines.
Timely project execution: With Grant Advance funding, businesses can maintain (or beat!) project timelines and complete grant milestones without delays. The availability of funds in advance ensures that necessary resources and activities can be carried out promptly, enabling efficient project execution.
Equity retention: By accessing grant capital in advance, companies can retain their equity and ownership in the business. They don’t have to rely on other funding sources or give up a significant portion of their ownership through equity dilution should they need to take on investment purely to provide cash.
Financial stability: Grant Advance funding provides financial stability to businesses by bridging the gap between project expenses and the final grant disbursement. This stability allows companies to meet their financial obligations, pay suppliers, and cover operational costs without undue strain.
Strategic planning: By receiving grant funds in advance, companies can plan and allocate resources more effectively. They can make strategic decisions regarding investment, hiring, and project expansion, knowing that a portion of the grant funds is already available. All of this ultimately leading to a stronger company all round.
Overall, Grant Advance funding offers greater financial flexibility, facilitates timely project execution, and supports the growth and stability of businesses participating in government business grant programs.
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