So you want to get a grant?
Q. Yes, I want to go for a grant. Where do I start?
A. Finding out what grants are available is a logical place to begin. Different grant schemes operate in England, Scotland, Wales and Northern Ireland and regional grant-awarding bodies within England also have different priorities. The main funds for farm diversification are awarded by DEFRA”s Rural Development Service, and the Regional Development Agencies, so contacting them is a good starting point. There may be other grants available in your area. Try Business Links first for information. Most offer a free grant search facility for businesses and they can be contacted nationally on 0845 600 9006 or via www.businesslink.gov.uk. Farm and rural business consultants should also be able to tell you what”s on offer. So should industry and trade bodies that represent the sector you”re planning to diversify into, for example your regional tourist board if you are considering a holiday let. Talk to your bank manager, NFU secretary and CLA representative too. And farmers you know who have been successful in getting funds are an obvious source of help.
Q. What are the main grants out there?
A. The key one is DEFRA”s Rural Enterprise Scheme (RES) explains Roger Seed, which has been around since 2000. It offers grants across a range of activities from farm diversification, through marketing of quality agricultural products to tourist and craft activities. Contact your regional DEFRA Rural Development Service office (see contacts box) to find out more. Most of the Regional Development Agencies in England also operate grant schemes (see contacts box), mainly to help farmers convert redundant buildings into new uses. Other grants do exist and are worth checking out. For example EU Structural Funds are available in parts of the country and these may include farm diversification support.
Q. What size grant can I reasonably expect to get?
A. It depends on the type and size of your project. For projects that are primarily geared to providing a commercial return to the farm, RES farm diversification grants are paid at a rate of 30-50% of eligible costs, says Barry Willett. The average award in the south-east is somewhere about 60,000, but the range is wide. Mr Seed says the 25 or so RES applications he has been involved with yielded grants from 10,000 to 150,000. You”ll normally only get above 150,000 if the public benefits from the project are substantial, he adds.
Q. When should I start talking to the grant-giving bodies?
A. As far as DEFRA is concerned, it”s never too early to start talking, says Mr Willett. He points out that you can speak to one of its rural development advisers right at the start of the process. Check, too, whether it”s running clinics or workshops in your area. These give you the chance to have a pre-application one-to-one chat with a DEFRA adviser. You can outline your idea, find if it fits with DEFRA”s priorities in the region and whether it”s something you stand a reasonable chance of getting funds for.
Q. Do I just go away, sort out the application and submit it?
A. You could do, but it”s not the best way of doing it, says Mr Willett. By far the best policy is to talk to your local DEFRA rural development adviser on a regular basis through the pre-application period. “We sometimes find that what started as an eligible project at the clinic stage can change quite a lot over the following months as the farmer incorporates different ideas. Sometimes a project will move into an area we”re not so keen to fund, even though it started out fitting our remit. The farmer then finds his application is rejected and is understandably frustrated. By keeping in contact we can avoid this happening.”
Q. What will I have to provide as part of my grant application?
A. For the RES scheme, you need to complete the base forms which are quite straightforward, but the main emphasis is on preparing a business plan. Business plans do require a lot of work, admits Mr Seed. But if you produce a 40-page plan for a 60,000 grant, it”s worth about 1500 a page – not a bad return on your investment. Remember that the point of the business plan is to ensure your plans are viable, and that you”ve thought of everything – including the risks. So they”re there for your benefit as well as the grant awarding body”s or the bank”s. Both DEFRA and Mr Seed have draft business plan templates that guide you through the different aspects of the task. For RES you”ll need to provide the following details:
A description of the existing business
Details of the product or service you plan to offer
Evidence to prove that there”s a demand for it (usually from market research)
An assessment of the economic, social and environmental impact of the project
Details of competitors and the impact your project may have on them
Marketing plans, including pricing and promotion activities
The investment required, together with three years of profit and cashflow forecasts, timetabling income and expenditure
An assessment of the risks involved and how you plan to manage them
Management and staffing requirements
The impact on the project, your farm, the community and the environment if a grant award is not made
An assessment of how your project meets the needs of the region
A summary of the key outputs from the project eg. jobs created or sustained
Proof that you have planning permission and other regulatory permissions in place (depending on the nature of the project)
Proof that you have secured the balance of funds available to carry out the project
- Quotes from suppliers, usually three quotes for big items
A. dauntingly long list? “Maybe, but it”s all information that you would need to know anyway for the business to succeed,” says Mr Willett, “and your bank will want to see similar details before giving you a loan.”
Q. Where do farmers struggle most with the business plan?
A. Market research is often the sticking point, agree Mr Willett and Mr Seed. Being able to demonstrate that there is enough demand for the product or service to make the project feasible can be tricky. So include both published research (of the sort found in libraries or on the internet) and your own market research. Include letters of support from potential customers, survey results and questionnaires, or interviews with key people.
Q. Do I have to provide employ-ment for several local people?
A. Not really, says Mr Willet. The main purpose of RES grants is to sustain farm businesses and bring broader economic, community and environmental benefits. If it means an employee who might otherwise be made redundant is kept on, then that will help your cause. Similarly it”s always worth emphasising in the grant application how your proposed business will help to support other farmers and other rural businesses. Show, too, how your proposed new enterprise fits in with the local authority”s economic and environmental plans for the area.
Q. Will I only get a grant if the farm is making a profit?
A. Not necessarily. DEFRA is well aware that few farms have made much of a profit in recent years. “We ask for three years of tax accounts and we”re looking for businesses that are secure but not necessarily profitable. But if we can see that the core business has got problems, then we must be confident that these are being tackled first,” says Mr Willett.
Q. Do I need to use a business adviser to do all this?
A. It depends, says Mr Seed. If you have the time, skill and enthusiasm to do it yourself, you certainly can. In fact DEFRA says that some of the best applications come from farmers themselves, who are in an unrivalled position to know every last twist and turn of the project. Equally, if you haven”t the time or are not confident about how to tackle the process, then a rural business adviser can do some or all of the work. The best outcome is often achieved where a business adviser helps to steer the project rather than taking it over, he adds.
Q. What are my chances of success?
A. Pretty good, actually. In the early years of RES the approval rate was about 50%. This has increased to nearer 80% since DEFRA has boosted the guidance it provides on what projects it wants to support and engaged with potential applicants at an earlier stage in the process.
Q. How long does the whole process usually take?
A. Getting from the germ-of-an-idea stage to making the application typically takes 6-18 months. But there are many variables, notably the time it takes to get planning permission. Once your application is submitted you should normally get an answer within 8-12 weeks. If your application is for a grant of less than 15,000 go for the fast-track scheme. This should give you a decision within about a month.
Q. Can I appeal against a rejection?
A. If you are unhappy with a grant decision, you can discuss the outcome with DEFRA, work out why things didn”t go the way you hoped and in most cases have another go.
Q. When will the current RES scheme end?
A. Applications for the current RES scheme close in October 2006, so you still have 18 months to play with. DEFRA says it has secured additional funds for 2007 and 2008 for projects that are approved and start before October 2006. What grants will be on offer after October 2006 is still not clear, says Mr Seed. Funds for helping farmers adapt to new markets and become less dependent on mainstream agriculture are likely to remain a key part of EU and government strategy for the future, however.
Q. I’m a tenant – can I still get a grant?
A. Yes, but you must have permission from your landlord. Some landlords recognise the need for tenants to develop other income streams, others are reluctant to. Don”t jeopardise your occupation or any potential succession by starting a new venture without doing the necessary checks.
Q. Anything else I should know about?
A. Yes. Bear in mind the following..