LEADER Funding

Are you seeking to start a new business, or diversify in an existing one? Would grant aid of 75% of the costs make your decision a little easier? If so, you should consider whether the LEADER programme may be of use to you. This programme has money available, has a high level of support (up to 75%), and has a relatively easy application process.

The LEADER program (Rural Development Programme) has operated in Ireland since 1991 and is often thought of as a rural support programme, just for farmers. While many farmers do avail of support, it is open to any microenterprise (up to 10 employees) outside of the larger urban areas. For instance, in my own county of Clare, only Ennis is excluded (eg Shannon is eligible). Even then, only the electoral area boundaries count, so many of the commercial parks on the outskirts of Ennis are eligible. LEADER also supports other activities such as community development, conservation, and training, but this article concentrates on commercial activities.

The current LEADER programme will accept applications until the end of 2013. It is administered by local development companies, often county based (eg Clare Local Development Company). Having established that your location is eligible, the next step is to determine if your activity is eligible. Eligible costs are broad and include construction, machinery and equipment, marketing, and training. Each development company will set its own policy on what is ineligible, but ineligible costs often include motor vehicles, general working capital or stock, and property (ie actual land purchase). Furthermore, certain sectors may be ruled out; these often include retail, childcare, healthcare, etc. However there may be room for discussion depending on the actual project detail – for example, while mainstream horse racing may be excluded, ancillary support services may be considered. Individual development companies may also have their own priority support areas.

While the above may seem to exclude a lot, it actually means that a large number of manufacturing or service businesses are eligible. Generally a ceiling of €150,000 grant aid per project applies, and a further limit of €200,000 total grants per business over a three year period applies (this may include certain grants from sources other than LEADER). With a grant rate of 75%, this means a business could potentially avail of €150,000 on a project with a total spend of €200,000. Of course many applications are for smaller amounts. Lest there be any confusion, an old grant rate of 50% was recently increased to 75% but there are some other rates for different projects (eg community training).

A further recent change was in the area of small scale food and beverage production. This was previously excluded from LEADER support, but was made eligible earlier this year.

An eligible application will be considered against a set of pre-defined criteria, which include:

  • Innovation
  • Need for grant aid (“deadweight”)
  • Displacement
  • Market research
  • Financial viability
  • Sustainability
  • Job creation

These criteria are flexible. For example a project only creating 1 job would not necessarily be ruled out, nor would one with a relatively low level of innovation, but it would need to score higher in other categories. Unlike other forms of state support, LEADER do not have an employment formula (eg a maximum of €10,000 per job for instance).

In my experience, the displacement issue is one that can completely rule out a project because LEADER will, understandably, not wish to support a project if that would give it an advantage over a very similar project nearby. A balanced project, with some innovation, and no exactly comparable competitor in the area (often defined as the county), which appears to have sound financial and marketing viability, creates some jobs and is seen to need some grant support, has a strong chance of success.

The application process is relatively straightforward. There is an application form, which is easy to complete, which should be supported by a standard business plan. The complexity of the plan will obviously depend on the project and level of support requested. The application form is not generally available as the development companies prefer to engage with prospective applicants to ensure their project will be eligible from the start. In general the development companies will allocate a staff member to assist in making the application. They will also outline any additional requirements such as planning permission, matching funding, tax clearance which may apply for particular projects.

An eligible application will then be assessed by an Evaluation Committee, with their recommendation being considered by the full company board. Depending on the project some level of government department may be required, but in many cases the local development company can make the full decision – in these cases the timetable is reasonably quick.

It may be easier to assess if LEADER is for you by reviewing some examples of projects that have been assisted. Not all companies publish this information, but the following do:

If you believe you have a project which may benefit from LEADER funding you should, as a first step, contact your local development company.

Niall Garvey chairs the Rural Economy Advisory committee of Clare Local Development Company. He has also supported clients in obtaining grant aid in other areas. However the views expressed here are entirely personal.

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