Note from Meryl: Government Grants can really help to fast track business growth! We’ve asked grants specialist Erik Anderson from Grant Central to put together an article on the Export Marketing Development Grants (EMDG). Take it away Erik …..
Free Money: Financial assistance for Australian exporters
Do you want the Australian Government to repay 50% of your international marketing expenses?
It may sound too good to be true. The great news is that if your business qualifies for the Export Market Development Grant (EMDG), you can claim up to 50% back on most of your international marketing expenses.
Why would the Government do that? The Government wants to work with you to grow Australian export and distribution channels into international markets. (For the Grant, this does not include NZ)
What is the EMDG and why do we care?
The EMDG grant scheme is a key Australian Government financial assistance program for exporters. Administered by Austrade, the scheme supports a wide range of industry sectors and products. Including the export of intellectual property (do you sell a service?) and experts located outside of Australia (do you have team-members or agents based overseas?) and even inbound tourism (do you run conferences with international attendees?).
In short, they give you 50% back on your export costs, should you be eligible.
It’s designed to:
- Encourage SME Exports
- Provide a 50% rebate in year 1 of eligible costs of export if spend is above $15k. And you can claim for up to 8 years.
So for marketing and distribution costs spent in getting export revenue, you get 50% back. This means:
- you can spend twice as much
- you can grow twice as fast
- you can access more markets
- you can be more profitable
Sounds great, doesn’t it?
Who can apply for EMDG?
To be eligible for the EMDG program, you need to be an Australian individual or business that has done the following:
1. Your business must be carried out in Australia. Your business must be a registered Australian business with (ideally all) revenue coming back into Australia. If the business structure includes an international entity, we can only claim the expenses that the Australian entity has paid for during the Grant period.
2. You promoted the export of goods or services as the principal in the transaction.
- The principal is a person who appears on the shipping document as the exporter.
- An agent merely facilitates the transaction between the overseas customer and the Australian manufacturer while taking a commission on the transaction. Therefore, it is not the exporter and ineligible to claim the Grant.
3. The applicant business will need to have an income of less than $50 million during the applicable financial year and have spent at least $15,000 on eligible export activities. From that $15,000, Austrade subtracts $5,000 leaving the minimum claim of $10,000 of which Austrade will reimburse you 50%, or $5,000
This formula remains valid up to the capping limit of $150,000 in Grant funding per application.
e.g. >$305,000 expenditure = $305,000 – $5,000, Austrade will pay you 50% of the balance remaining netting a maximum grant return of $150,000.
What is an eligible product or service for EMDG?
It is important to note that not all types of products or services are eligible.
The goods have to be of your own idea or design. Manufacturing goods overseas is okay. Goods will not be eligible where you have merely bought the product from an overseas manufacturer and had no input into the manufacturing and design process.
These criteria can become quite complex. You may still be eligible if foreign manufactured goods result in a justifiable and significant net benefit to Australia by the end of the transaction. Please contact us at Grant Central if you have further questions regarding your product’s eligibility.
The EMDG program also covers Australian based service providers that promote to an international audience. Examples of service-based businesses include copywriting or business coaches.
The promotion of Australian held intellectual property and know-how is also an eligible commodity/product for the EMDG program.
I’m eligible for EMDG, which of my expenses are eligible?
It can be hard to know what you can claim and what you can’t. It can make it easier if you think of it like this – is this expense helping to market the business to a global audience?
There can be a fine line between sales and marketing expenses and what could be claimable. If this is the case, we will apport those expenses to cater to genuine marketing vs. sales activities.
A typical example of this is the expenses relating to some common CRM programs. While they can be used as a sales platform, they also have the capabilities for marketing automation and customer research. We would apportion the expenses between the marketing aspects and the post-sales aspects of the service.
There are seven major expenditure categories that your expenses can fit into:
- Overseas representation
- Marketing consultants and their expenses
- Travel for marketing visits
- Free samples
- Trade shows and fairs
- Promotional literature and advertising
- Patents and trademarks
All expenditure claims need to be substantiated with invoices, bank statements, journals, trip reports, and formal agreements. Expenses that have been or that will be reimbursed by a third party are unable to be claimed.
(Image credit: Xero)
Let’s break these EMDG expense categories down further
A foreign representative considered expenses related to the employment or allocation of an employee to reside and promote your product or service in an overseas country. This is only eligible if done on a long term basis of at least 12 months.
While the employee is overseas, you can claim expenses for that employee, such as salaries, fees, rent, and car hire (within reason please – a Ferrari is rarely seen as reasonable). Sending and stationing a marketing representative overseas can be a great way to launch into a foreign market. This schedule capped at $200,000 in expenses.
As defined in the guidelines: ‘a consultant is any person or business who is not closely related to the applicant and who undertakes market research or marketing activities related to an approved promotional purpose.’
Marketing consultants are considered any person or business you contract with to promote your products and services internationally. As you can claim their direct costs/fees for assistance, they may be based domestically or overseas. You cannot claim overheads, daily allowances, or other like items under this category. This schedule is capped at $50,000.
Marketing visits can include international travel expenses whereby the primary purpose was to market your product or services. This applies to either you or a team member’s travel. Costs can include attendance at trade shows, visiting stockists or seeking new ones, attendance at a conference or networking event, etc.
You can claim airfares and be allocated a daily allowance in the application of $350 per day, per traveler, per eligible marketing day to reimburse their accommodation, meals, and ground travel.
Samples are a great way to get a potential client or customer to touch, feel, or try your product. You can claim the manufactured cost of the product (not RRP) and the freight to the recipient. This schedule is capped at $15,000
Trade Shows are another way for you to get your products or services in front of new audiences that you know are your target market.
Domestic trade shows might also be eligible if there are many international visitors in attendance. However, this is often difficult to prove and should only be considered if you have evidence from the promoter showing a breakdown of the attendees’ country of origin.
Promotions and literature:
This category covers the majority of the general advertising expenses. You can claim everyday expenses like marketing software, influencer sponsorships, Facebook and Google ads, etc.
Trademarks and patents:
Under the EMDG program, you can claim international copyrights and trademarks for your business. You can claim patents, designs, plant breeders’ rights, circuit layout rights, confidentiality or trade secrets, and copyright expenses. You can also request the fees associated with getting these trademarks and patents, such as lawyers and admin fees. This schedule is capped at $50,000.
How much can you get back?
EMDG: What evidence will I need to provide?
Changes to the Export Marketing Development Grant (EMDG) in 2020
On 1 April 2020, the Federal Government announced an increase in funding for the Export Market Development Grants (EMDG) scheme.
One of the weaknesses of the EMDG program was the lack of certainty around what marketing costs will receive the 50% reimbursement. The reoriented EMDG program will give eligible exporters funding certainty before they embark on their marketing and promotion activities.
Multi-year grants will be available for eligible SMEs at three stages of their export journey:
- Eligible SMEs who are new to export will be able to access grants totaling up to $80,000 over two years.
- For eligible exporters who plan to expand their presence in current markets or enter new markets, grants totaling up to $240,000 over three years will be available.
- Finally, those exporters who continue to expand into new markets will be able to access further grants totaling up to $450,000 over three years.
The first step is to determine whether you qualify for the grant. We’ve documented the criteria above to help with this. The next step is to complete the application.
Want some help with this process?
You can also get in touch with Grant Central – They are Austrade Approved (QIP) consultants and have been successfully supporting Australian business growth via Federally Funded Grant programs for over 18 years.
Have you used the EMDG scheme to your advantage? If not, will you? What advice would you have for those looking to break into the export business?
Let us know in the comments!
- EMDG Guide: Financial help and grants for Australian exporters  - 19 August, 2020