Non-repayable grants can be classified into 5 types, each with a different purpose, accounting, and tax treatment. In this post, we will not delve into the accounting topic as it is generally not an area of interest for the entrepreneur, but it is correct to keep this aspect in mind.
Types of non-repayable grants.
1. Capital grant: aimed at strengthening the company's assets, meaning they are not always linked to the obligation to make specific investments, but may be aimed at covering management costs.2. Plant and machinery grant: these are granted to reduce the purchase cost of depreciable assets, and therefore to incentivize the purchase, production, expansion, or reactivation of tangible fixed assets. For these grants, the beneficiary company may be required to keep the tangible fixed assets to which they refer in use for a specific period of time, established by the regulations granting them.
3. Operating grant is granted to companies to cover ordinary management costs incurred in the execution of a specific project, or at particular moments in the life of the company, such as the start-up phase. This type of grant seems similar to the capital grant, but the difference lies in the tax treatment of such a grant.
4. Interest grant: granted upon the signing of a loan agreement, and aims to reduce the cost of the applied interest rate. The beneficiary of the grant can choose the bank with which to sign the loan from a series of banks affiliated with the entity providing the interest grant; therefore, the subject will be subject to the normal loan approval process, namely assessment of repayment capacity, request for guarantees, processing costs...
5. Lease payment grant is like the interest grant, but it is granted upon the signing of a financial leasing contract.
Examples of non-repayable grants.
To better understand the types of grants just described, here is an example for each type:-
Investment measure for micro-enterprises
This measure is exclusively aimed at Lombardy micro-enterprises, with the goal of supporting their investments in new equipment and production infrastructure. The call provides a non-repayable grant of 50% of the expenses incurred, with a maximum grantable amount of 50,000 euros and a minimum required investment of 10,000 euros. Eligible expenses include the purchase of machinery, plants, equipment, and other capital goods necessary for the development and improvement of production processes. The call is in the opening phase, with the aim of facilitating access to credit for micro-enterprises and promoting technological renewal and production expansion within the regional economic context. The initiative aims to strengthen the competitive capacity of micro-enterprises, facilitating the purchase of tools that can improve business efficiency and sustainability.
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Nuova Sabatini is the perfect example of an interest grant and a lease payment grant (if the capital good is purchased through financial leasing, as it is against a loan taken by the company for the purchase of a capital good). A contribution is provided equal to the interest accrued on the loan amount, calculated conventionally on a 5-year amortization plan with semi-annual installments at an interest rate of 2.75%. For material and immaterial 4.0 capital goods, the contribution equal to the interest accrued on the loan is 3.75%.
*from January 1st, 2023, if investments related to the purchase of plants or machinery have a low environmental impact, an increase of 30% in the grant (2.75% or 3.575%) is provided.
Who provides non-repayable grants?
As mentioned earlier, they are Entities that publish calls for proposals with the intent of stimulating self-entrepreneurship and supporting the development and innovation of companies.The main national instrument is Invitalia, the national agency for investment attraction and business development, owned by the Ministry of Economy. It manages all national incentives that favor the birth of new businesses and innovative startups.
Regions and local authorities also often implement territorial non-repayable grants, either to support particular areas affected by natural disasters or to incentivize investments by specific categories of people, or in certain areas. The examples given regarding capital grants can give us an idea of the range of possible granting entities.
How to identify the right call for your project
One of the main obstacles for those who want to access a non-repayable grant is the difficulty of identifying the call most suitable for their needs. Each measure indeed has different objectives, requirements, timelines, and scopes of application. For this reason, it is essential to constantly monitor the opportunities available at regional, national, and European levels.
Glacom offers a free call monitoring service designed to help companies and professionals promptly identify the incentives most relevant to their sector and investment projects. Our team is able to accurately report active calls, upcoming deadlines, and access conditions, thus facilitating the first step toward obtaining a grant.
Furthermore, we can support clients in feasibility assessment, preparation of documentation, and submission of the application, significantly increasing the chances of success. Staying informed is fundamental: seizing an opportunity at the right time can make the difference between a project that remains on paper and one that takes shape with the right support.
In several posts, we have defined some types of incentives as non-repayable grants, but we have never explored the topic in depth. We hope to have clarified the fundamental aspects and allowed you to access calls with greater awareness. It is not simple to summarize an entire call briefly, as in more complex cases, the amount of the grant depends on the location and size of the company, as well as the type of aid regime requested. Non-repayable incentives may have a term, be renewed annually, or be constantly active; this depends on the regulatory source from which the incentive arises. The call could also be closed because the funds made available have been exhausted. Precisely because these are usually incentives aimed at favoring certain sectors or categories, reporting of the expenses incurred is required or verification of compliance with the parameters indicated in the call is provided. It is important to understand that they often do not cover 100% of the project, but only a part or a much lower percentage, as they are associated with other types of contributions, such as a subsidized loan or a tax credit.
How a non-repayable grant works (step by step)
The functioning of a non-repayable grant follows a precise process, which varies based on the call but maintains some common phases. Knowing them helps companies and professionals prepare correctly and increase their chances of access.1. Identification of the call
The first step consists of identifying the call most suitable for one's needs. Non-repayable grants can be made available by national, regional, or European entities and are often intended for specific categories (startups, SMEs, professionals, young entrepreneurs, innovative companies). By listening to your needs and the next planned company investments, we are able to advise you and present the best active calls.
2. Verification of access requirements
Each call establishes precise requirements, which may concern the legal form, the size of the company, the sector of activity, the geographical location, or personal characteristics such as age, gender, or professional experience. Verifying these criteria is fundamental before proceeding.
3. Preparation of documentation
To submit the application, detailed documentation is generally required, which may include a business plan, an economic-financial plan, cost estimates, as well as tax and administrative documentation. This phase is crucial because the quality of the documents affects the outcome of the evaluation. And here too, you will have the full assistance of our manager, who will guide you step by step in completing all the necessary documents.
4. Submission of the application
The request for the grant must be sent strictly following the procedures indicated by the call and respecting the established deadlines. In many cases, applications are evaluated in chronological order or via a ranking list.
5. Reporting and controls
Once the grant is obtained, the beneficiary is required to demonstrate that the funds have been used correctly. This happens through the reporting of expenses, which may be subject to verification and controls by the granting entity. Glacom will handle all reporting and any subsequent requests for clarification from the various entities.
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