The Federal Government’s Exporting Marketing Development Grant (EMDG) scheme – now extended for a further five years and revised in favour of SMEs – is now a significant incentive for SMEs considering developing overseas markets. By Ivan Kaye
Many readers will be aware of the EMDG, a Federal initiative designed to help Australian companies grow export markets overseas. In a nutshell, the grant is designed to help defray the cost of marketing your goods or services overseas, by reimbursing up to half of all eligible promotional expenditure over $15,000. The grant has always been intended as an aid to small and growing businesses – in fact, more than three quarters of past EMDG recipients have been SMEs with an annual income of $5M or less.
The good news for companies is that funds for the Grant have been made available for the next five years, while rules around eligibility and how much you can claim have been broadened, making the grant easier to obtain and more attractive for business owners.
More money, broader eligibility
The most significant change in the revised EMDG guidelines is that from July, businesses can claim up to $300 a day for overseas visits (an increase of fifty percent on the previous limits).
This is particularly significant as the sheer costs of flights and accommodation are the largest segment of the EMDG grants payment – last year around one third of all EMDG monies were allocated to the physical costs of an overseas visit.
Additionally, the EMDG’s definition of eligible markets has been broadened. Previously covering tangible products and services, the Grant’s guidelines now include less clearly defined items, such as intellectual property, typically a prototype or concept in an emerging market.
Furthermore, the EMDG grants – which previously only applied to the owners of the product being exported, rather than agents or consultants – now also afford more flexibility, to include intellectual property exporters with business structures that use one company to own the intellectual property and another company to promote it.
Another feature of the revised Grants is that export performance tests have been removed. Recognising that it can take more than one year or one visit to build an export market, the new guidelines offer businesses a more significant, and easy-to-calculate incentive to venture into overseas markets.
Previously, grant payments were restricted to a certain percentage of export earnings, and that percentage diminished progressively after the second EMDG claim. Under the new guidelines, applicants can receive – regardless of their export earnings - an export grant of up to 50 percent of eligible marketing costs over the initial $15,000 threshold.
Additionally, there is no diminishing scale, so companies can plan that for every dollar they spend (over the threshold), they get fifty cents back, year after year.
While many companies find it sufficient to say, ‘we’re just going to claim our airfares and accommodation because we’re going overseas’, there is much more opportunity to maximise the Grant if you plan ahead.
In fact, a properly planned expedition can reclaim as much as 75 percent of a particular project, by putting together a plan that maximises the upside and limits the downsides.
For example, one of the major expenses incurred by manufacturers is overseas representatives and marketing consultants. If you spend up to $200,000 a year in fees to these representatives, you can possible get back $150,000 within that year, subject to agreements and other Austrade eligibility requirements.
Ironically, under the new EMDG guidelines that largest barrier to accessing an EMDG may be in the hands of applicants themselves. The application period for Grants is from July until November – but in previous years, the Grants body has received at least 50 percent of applications in the last month.
According to Austrade, those that lodge in the last couple of weeks may wait several months before someone gets their grant paid, whereas on average, people who lodge in August received their grant payment within six weeks.
Application forms for EMDG grants are available from www.austrade.gov.au/exportgrants - and further resources and advice on maximising your grants is available from www.bsi.com.au.
Ivan Kaye is a director of early stage business advisory firm, BSI (www.bsi.com.au) which helps companies grow through assistance in strategic business planning, financial management, human capital management and development, corporate finance, research and development incentives and government funding.