Textile, Clothing and Footwear SmallBusiness Program

CustomerInformationGuide

December 2013

Content

1Introduction

1.1Purpose of this guide

1.2TCF Small Business Program

1.3Objectives of the program

2The applicant

2.1Eligible applicants

2.2Eligibility criteria

2.3Consortia

3Eligible Projects

3.1What makes an eligible project

3.2Grant limit of eligible expenditure

3.3Eligible Expenditure

4Merit Criteria

4.1Competitive assessment

5The application process

5.1Applying for funding

5.2Submitting an application

5.3Completing the application form

5.4Submitting an application

5.5Acknowledgment of applications

6The assessment and decision process

6.1Assessment of applications

6.2The decision process

6.3Announcement of successful projects

6.4Applicant feedback

6.5AusIndustry customer service

6.6Confidentiality and disclosure of information

7Successful Applicants

7.1Offer of a grant

7.2Grant agreement

7.3Grant payments

7.4Underperformance

7.5Final report

7.6Variations to the grant agreement

7.7Taxation implications

7.8Record keeping

7.9Site visits and document retention

7.10Program evaluation

Appendix A Completing the application form

Eligibility checklist

Part AApplicant Details

Part BProject Details

Part C Merit Criteria

Part D Attachments to the application

Part E Applicant Declaration

Appendix B

Consortia applications and preparing a consortium agreement

How should a consortium apply?

Consortium Agreement

What must be included in a consortium agreement?

Appendix C

Eligible TCF Activities

Part A - Textile Fibre, Yarn and Fabric Manufacturing

Part B - Knitting Mills Manufacturing

Part C - Clothing and Manufacturing

Part D - Footwear Manufacturing

Part E - Leather and Leather Product Manufacturing

Part G - Made-up Textile and Leather Product Manufacturing

TCF SBP Customer information guideDecember 20131

1Introduction

1.1Purpose of this guide

The material in this customer guide aims to assist potential applicants to decide:

  • whether or not to apply for a grant under the Textile, Clothing and Footwear (TCF) Small Business Program and, if so,
  • to provide the information they need to complete an application.

It will also assist grantees to understand how the program is administered. It will be most beneficial if read in full, as it includes information about how to address the concept of improving business enterprise culture, questions of eligible expenditure, has a detailed guide to completing the application form at Appendix A,information for consortia applicants at Appendix B, and Appendix C, which defines eligible TCF activities. Potential applicants should also read the application form and draft grant agreement, and familiarise themselves with the TCF Small Business Program Determination 2005, as amended in December 2011, available at

1.2TCF Small Business Program

The TCF Small Business Programwill provide grants to improve the business enterprise culture of established TCF small businesses. It is a competitive, merit-based grant program that will provide up to $50,000 (exclusive of GST) for each successful project.

Funding of $2.5 million is available for grants each year for the ten year duration of the TCF Small Business Program. Grants will be awarded in annual funding rounds, for projects to be completed within a year. The program is delivered by the Department of Industry(the department), through its division of AusIndustry.

Applications will first be considered against the eligibility criteria and, if eligible, will then be considered against the merit criteria to determine whether or not the project is of sufficiently high merit to be funded, relative to other applications. As there is a limited amount of funding available, only the best eligible projects will be competitive. Applicants should note that meeting the eligibility and merit criteria does not guarantee an offer of funding.

The TCF Small Business Programis specifically aimed at TCF small businesses that do not qualify for assistance under the Clothing and Household Textile Building Innovative Capability (BIC) Scheme.

1.3Objectives of the program

The TCF Small Business Program aims to improve the business enterprise culture of TCF small businesses.

What is Business Enterprise Culture?

For the purposes of the TCF Small Business Program, ‘Business Enterprise Culture’ (BEC) refers to the way you do business; i.e. thevalues of the business, the nature and style of its decision-making and production processes, and the extent to which a business can be described as entrepreneurial. Entrepreneurial behaviour can also be regarded as a reflection of a particular business’s culture.

A good enterprise culture is found in businesses which:

  • are focused on financial growth and expansion (a growth orientation) – they are also skilled at maintaining a competitive market edge and understand how to maximise commercial returns on products and services;
  • are flexible and adaptable (to market and economic changes);
  • emphasise characteristics such as initiative, self-reliance and creativity (e.g.the process of change is generated and managed largely from within);and
  • manage and mitigate risk – that is, have the ability to calculate and evaluate the benefits from taking risks.

The TCF Small Business Program aims to encourage projects which enhance these characteristics in a business.

2The applicant

2.1Eligible applicants

Any TCF small business, or a consortium that includes at least one TCF small business, may apply if it meets the eligibility criteria (described below) set out in the TCF Small Business Program Determination 2005. A TCF small business is defined as any entity employing fewer than 20 employees and a turnover of at least $100,000 that undertakes eligible TCF activities within the meaning of the former TCF Post-2005 (SIP) Scheme (see Attachment C).

Fewer than 20 employees

An employee is defined as any individual—that is, a permanent full-time, part-time or casual worker—for whom the employer is required to withhold an amount under section 12-35 or 12-40 of schedule 1 to the Taxation Administration Act 1953. These amounts are salary, wages, commissions, bonuses or allowances, and remuneration paid to directors and committee members. If you employ part time staff, please calculate the Full Time Equivalent (FTE), for example, 20 staff working half time would be 10 FTE.

2.2Eligibility criteria

In order to be eligible for a grant, the project must meet eligibility criteria 1, 2, 3 and 4.

  1. The project must meet the needs of a particular TCF small business that:
  2. has not received funding, or qualify to receive funding, from the former TCF (SIP) Scheme, the formerTCF Post-2005 (SIP) Scheme or the Clothing and Household Textile (BIC) Scheme;
  3. is solvent and not under any administrative arrangement;
  4. have fewer than 20 employees (measured as full time equivalent);
  5. must be registered for GST.
  6. The project must be aimed at improving the business enterprise culture of the TCF small business(or businesses, if part of a consortium).
  7. The applicant must submit an accountant’s letter to indicate a turnover of not less than $100,000 in the financial or calendar year immediately prior to the financial year in which the application is made.
  8. The applicant must demonstrate the ability to pay a cash contribution of at least 25% of the amount of the total eligible project expenditure. This means the contribution cannot be less than 25% of the eventual eligible project expenditure. The ‘cash contribution’ requirement refers to money, not to in-kind contributions. This contribution must not be obtained through another subsidy from either the Commonwealth Government or a state or territory government.

Eligible TCF activities

For the purposes of the TCF Small Business Program, an eligible TCF activity is as defined in Schedule 1 of the former TCF Post-2005 (SIP) Scheme (see Appendix C). A business that solely imports overseas product or only undertakes retail activities will not be eligible. To be eligible to apply, the business must undertake at least one of the activities below:

1Manufacturing activities carried on in Australia

Activities such as the manufacture of clothing, footwear or leather, or textile fibre, yarn and fabric manufacturing (known as ‘Part A–E activity’ in schedule 1 of Appendix C) are eligible if they are carried on in Australia by an entity. In addition, certain activities undertaken on a fee or commission basis using client supplied materials, or materials purchased or transferred in from other entities (‘cut, make and trim operations’), may be eligible.

If an entity manufactures goods other than clothing, footwear or leather, that activity may alsobe eligible – for example, under Part A,4 (Textile Finishing), or Part G (made up products) if the process includes an activity under Parts A to E. If unsure whether the activity is clearly mentioned in PartsA to E, we recommend that you call the AusIndustry program area (03-9268 7565).

2Design for manufacturing activities carried on in Australia

Activities will be eligible if:

they are carried on by an entity in Australia in respect of design in Australia of eligible TCF products;

the products are manufactured in Australia; and

some or all of those products are intended to be sold in Australia.

3Certain ancillary activities carried on in Australia such as early stage processing activities or certain warehousing and distribution activities.

These ancillary activities are eligible only if the operations are wholly and mutually interdependent with eligible manufacturing or eligible design activities.

Examples of design and manufacturing activities

  1. A business produces its own designs and then manufactures the TCF goods in-house in Australia. Some products will be sold in Australia, some will be exported. The business would be considered to be undertaking eligible TCF activities—that is, manufacturing, and design for manufacture in Australia.
  2. A business produces its own designs and then arranges for manufacturing to be undertaken by a different entity in Australia. Some of these products will be sold in Australia. The business would be considered to be undertaking an eligible TCF activity—that is, design for manufacture in Australia.
  3. A business purchases designs from an Australian designer and then arranges for another entity to manufacture the goods in Australia. The business would not be considered to be undertaking an eligible TCF activity because it is not undertaking either a manufacturing activity or a design activity for manufacture in Australia.

Manufacture in Australia: We ask you to declare the percentage of manufacturing undertaken in Australia. This amount is recorded in your Grant Agreement and will be monitored for the duration of the project to indicate your intention to maintain manufacturing onshore. The Grantee must notify the Commonwealth within 28 days if their eligible onshore TCF activity falls below the minimum level of onshore TCF activity at Schedule 1 of the Grant Agreement.

If you are unsure whether an activity is eligible or not, please call the AusIndustry hotline on 13 28 46.

2.3Consortia

If a consortium wishes to apply for a grant, the application must be made by the ‘lead member’ of the consortium. The lead member, as the applicant, should be appointed by all its other members as an agent with the power to act on their behalf for the purposes of the project. The consortium must include at least one eligible TCF small business.Where all businesses which are the focus of the grant are eligible TCF small businesses, the application is likely to be more competitive.

The applicant must propose, on behalf of the consortium, a project that is eligible under the program and is consistent with the terms of the consortium agreement. It must also provide, with its application, a draft or executed copy of a consortium agreement. (For more detailed information see Appendix B).

3Eligible Projects

3.1What makes an eligible project

The TCF Small Business Programseeks to fund projects that assist TCF small businesses to enhance their business enterprise culture. Projects should be standalone and targeted to a specific outcome (not a series of unconnected upgrade activity costs). A project should be comprised of a set of activities scheduled to achievable timelines and, where relevant, include management mentoring and staff training. Examples include:

  • marketing/branding strategy and/or e-commerce systems
  • enterprise resource planning and digitising and integratingsystems
  • business process re-engineering to support a new strategic business approach
  • streamlining design/production systems or manufacturing processes

In identifying a project, you may wish to consider how improving the business enterprise culture could impact on yourbusiness’s:

  • decision-making processes—for example

the ability to quickly react to changes in the marketplace, including the ability to make and implement decisions;

streamlining decision-making processes, even with a small management team;

using information to make good commercial decisions;

mentoring to support development of a business plan.

  • manufacturing and/or design processes—for example

identifying and implementing appropriate innovative manufacturing technology and processes;

increased focus on innovative design processes.

  • internal and external communications—for example

communicating a company’s vision, business strategy and financial framework to its staff;

more effective communications to key stakeholders such as suppliers, and current and potential customers;

identifying synergies with other companies.

  • marketing strategy—for example

the ability to create a brand, adding value to a brand or re-branding as necessary;

identifying new export markets and then using effective marketing tools to exploit these commercial opportunities;

developing new marketing strategies for existing products.

  • up-to-date financial, management, production and accounting processes—for example

using financial information as a business tool to assist in growth and development;

integrating financial data with information from the production process to achieve specific goals.

  • strategic skills, such as planning—for example

implementing business strategies for the medium and long term;

improvingfinancial reporting and forecasting.

Project examples

Example 1: E-Commerce marketing project
Having identified that revenue growth has stalled, a business has identified the need to expand its product rangeand build brand awareness and demand. Profitability will depend on growing the number of Australian stockists and plan for entry into new markets. The project, to develop an e-commerce marketing plan focused on online sales, will include a mentoring program to support strategy implementation, and a web designer will build an enhanced, integrated website. Business Enterprise Culture improvements will include more creative marketing and informed management decisions, better customer communication and new designs based on customer feedback, the ability to more quickly respond to market changes, and to make informed risk assessments about diversifying product and target markets.

Example 2: Improve operational processes with integrated digital business systems
A partnership proposes to improve and digitise operational processes to link all facets of the business from design, costing and specification through to production, sales and distribution. The current manual systems are unlinked and are not able to accommodate increased production demands. The new system should provide for detailed reports and will form the basis of an improved analytical capability and customer service. The implementation plan also includes the development of new operational procedures. The project will lead to improved communications, increased accuracy of data and support improved decision making in all areas of the business, including risk management.

These examples show it is important to demonstrate the need for the project and how the outcome will improve the business culture beyond the project completion. Projects should demonstrate some essential characteristics, including that they:

  • are practical and not theoretical;
  • clearly articulate how the business enterprise culture of the TCF small business will be improved;
  • consist of a series of clearly related activities to achieve the project outcome;
  • actively engage the small business in the project; and
  • address the merit criteria in detail.

The types of projects that can be funded are not fixed or prescribed and a wide variety of projects may be supported. The competitiveness of the project will be assessed by how well the merit criteria are addressed and the extent to which the project will improve the business. When addressing the criteria, consider the current needs of the business and whether a project will lead to fundamental changes to the way the business will operate.

3.2Grant limit of eligible expenditure

Although there is no upper limit to the size of the project, applicants are reminded that successful projects are only funded to a maximum of $50,000 (GST exclusive), regardless of the cost of the project. Be aware of this limit when costing a project, particularly if it is very high, as the grantee bears the additional cost as cash contributionand there may be an unintentional impact of a very high percentage cash contribution. A project over $75,000 may start to impact the amount you are able to fund: in this case Grant maximum = $50,000 and so cash contribution = $25,000 which is about 33%. The percentage is fixed in the grant agreement, so even if the project costs are later reduced, the cash contribution ratio stays the same and may impact on the final report and payment on reconciliation.The grant limit and fixed ratio cash contribution also means thatif actual project expenditure is less than the budgeted amount, the grant amount will be reducedin accordance with this ratio.

3.3Eligible Expenditure

The grant can only be used for eligibleproject expenditure incurred during the project period set out in the funding agreement,and after the execution of a funding agreement.

Grant funding under the TCF Small Business Programis for specified project costs andcannot be used to meet routine business expenses, for example:

  • production costs including the design and manufacture of a new range
  • salaries for current ongoing employees
  • establishments costs, such as office equipment, to conduct routine business activities
  • establishment costs to set up new premises or start a business
  • plant or equipment costs that are usually incurred as part of the normal manufacturing and/or design activities of the business, including maintenance costs, spare parts and depreciation costs
  • routine or seasonal marketing costs
  • routine accounting costs, including the cost of audit certificates
  • routine IT expenses including fees for registration of domain names
  • routine rental costs and expenses
  • routine utility costs
  • routine training costs
  • high level travel expenses or travel expenses not directly related to the project
  • the purchase of plant or equipment not specifically related to the project.

If an application project contains a mixture of eligible and ineligible expenditure, the level of funding provided to the project may be reduced by the amount of expenditure assessed as ineligible.

Note that all expenditure costs must be GST exclusive.

4Merit Criteria

Applications that are eligible will be considered and assessed against the three key merit criteria: