Cheat sheet: Take your business global with $770,000 worth of export grants

The federal government’s Export Market Development Grants (EMDG) were overhauled for the 2021 financial year, with the model changing from a reimbursement program to a grants scheme.

The major change was announced in the October 2020 budget when the federal government revealed it would inject about $230 million into revamping the scheme.

In a similar vein to the previous program, the new grants-based scheme will encourage Australian SMEs to undertake export activities for goods, services, IP and software activities in overseas markets.

The difference, however, is that companies will be able to access a total of $770,000 in funding, over an eight year period.

Here’s everything you need to know about the new scheme. 

Who can apply?

To be eligible for a grant under the EMDG program, applicants need to be an Australian business and sell eligible products and expenses.

A wide range of entities are eligible for the grants, including sole traders, incorporated bodies, associations, cooperatives, partnerships, trusts and representative bodies. The entity must have a valid Australian Business Number (ABN).

Exporters must also have annual turnover of less than $20 million in the year before lodging the grant application. This is a reduction from the previous $50 million threshold, which means that some businesses will no longer be eligible for funding under the new EMDG program. 

What are eligible exports?

You can receive funding for costs associated with marketing goods, services, events, intellectual property or software in overseas markets. Within each of these categories there are more conditions. For example, goods must either be a primary product of Australia, made from primary products of Australia or manufactured, or partly or wholly assembled in Australia. 

To check whether your product meets the full criteria, take a look at sections 15 and 16 of the EMDG Act and Part 2 of the EMDG Rules.

What support do you get?

You can apply for a maximum of $770,000 in grants over eight years. The years don’t need to be consecutive.

The grants will help you cover 50% of your marketing expenses from July 2021 onwards, and the grant amount you receive depends on the tier you qualify for. 

There are three tiers of grants available:

• Tier one is for businesses that are new to exporting. Under tier one, SMEs can receive grants of up to $80,000 over two years;
• Tier two is for exporters that plan to expand their marketing activities. Under tier two, businesses can receive grants of up to $240,000 over three years; and
• Tier three is for exporters that are making a strategic shift, such as expanding into a new market. Grants of up to $450,000 are available over three years. 

<!– wp:acf/pm-alert {"name":"acf/pm-alert","data":{"title":"You don’t have to systematically progress from tier one to tier three","_title":"field_63dc5c208a0a7","content":"

For instance, you could apply for a tier one grant as you start exporting, then two years later apply for a tier three grant when you’re ready to expand in another market. 

“,”_content”:”field_63e3067fb31ae”},”mode”:”preview”} /–>

What expenses can be claimed?

Austrade doesn’t give grant recipients free rein when it comes to claiming expenses, as there are a range of costs that can or can’t be claimed.

A key difference under the new scheme is that expenses can include the cost of training as well as promotional activities. Eligible expenses include costs associated with: 

• Overseas representatives who conduct business development work on your behalf
• Marketing consultants based in Australia or overseas who assist you with marketing
• Marketing trips, including travelling to meet with prospective buyers or attend trade shows
• Free samples, such as sending products to influencers
• Attending and exhibiting at trade shows 
• Physical and digital advertising and content production
• Bringing overseas buyers to Australia 
• Registering intellectual property in overseas jurisdictions
• Training programs that help you better market your products internationally

What expenses can’t be claimed?

• Expenses covered by other federal or state government schemes 
• Sale or export of products that contravene Australian law
• Seeking sponsorship for events
• Trade with New Zealand or North Korea
• Government costs, such as payment of a tax or levies
• Sales-related costs 
• Regular expenses that are a normal part of operations, including the payment of employee salaries
• Illegal activities, including expenses incurred overseas that would be illegal in Australia
• Any expense that Austrade thinks would have a detrimental effect on Australia’s trade reputation

How do I apply?

You or your EMDG consultant can lodge an application on Austrade’s website between August 16 and November 30. You’ll need your MyGov ID, which you can link to your business using the authorisation service called Relationship Authorisation Manager (RAM). 

Your application must include: evidence of your eligibility, evidence that your product is eligible, your plan to market, and your 2020–21 Balance Sheet and Profit and Loss Statement to prove your turnover is less than $20 million.

It’s recommended that you read the EMDG Rules and RMDG Act before applying. 

Is it a competitive process?

EMDG grants are not competitive, meaning that if you meet the eligibility criteria your application will be successful. 

Am I guaranteed to receive the full grant amount?

The short answer is no. While you’re guaranteed to receive a grant if you meet the criteria, you’re not guaranteed to receive the full grant amount. There are a couple of reasons why.

Firstly, each year the government allocates a set amount of money to the EMDG and because it’s an eligibility-based grant program, all SME exporters that apply and are eligible will receive a grant.

If Austrade receives a large number of applications, it may not have enough resources to offer each applicant the maximum amount of funding.

Secondly, you’re obliged to match the dollar value of the grant monies you receive. So if you sign your grant agreement and then end up spending a lot more on marketing expenses, you will not receive more grant money.

The amount in your grant agreement is the maximum you will receive.