Unlocking Business Investment Regional Growth Fund Prospectus. UNLOCKING BUSINESS INVESTMENT Prospectus 2015

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1 UNLOCKING BUSINESS INVESTMENT Prospectus

2 In partnership with: This programme is endorsed by and is available to support business projects within the following local authority areas: Devon County East Devon Exeter Mid Devon North Devon South Hams Teignbridge Torridge West Devon Somerset County Mendip Sedgemoor South Somerset Taunton Deane West Somerset Plymouth Torbay 2

3 Unlocking Business Investment - Regional Growth Fund Introduction Unlocking Business Investment (UBI) is now open for applications. Unlocking Business Investment (UBI) - a programme funded from Regional Growth Fund - aims to stimulate growth in the economy across the Heart of the South West Local Enterprise Partnership (LEP) area (Devon, including Plymouth and Torbay, and the county of Somerset). It will do this by supporting individual businesses to invest in projects that create or safeguard jobs in the private sector. All applications will need to evidence how they address these two objectives: The creation of new private sector jobs and/or the safeguarding of existing private sector jobs; and How they will lever private sector investment into the economy. UBI will be used to support distinct projects or activities that would otherwise not happen or that can show other additionality, such as an increase in the scale or acceleration of the delivery of the investment project. A range of activities and projects can be supported, examples of which include the acquisition of new plant, equipment and premises together with certain on-costs of expansion, bespoke or general training programmes, and some research and development activities. The first stage of application involves submitting an Expression of Interest (EOI) - EOIs are a useful way for businesses to find out more detail about UBI. These EOIs will be reviewed for eligibility/suitability, and those submissions which meet basic eligibility criteria, appear to be deliverable and are expected to further programme objectives will be invited to proceed with a Full Application. This Prospectus should be read in conjunction with State Aid Regulations in accordance with which the programme will operate (summarised in the Annexes attached). Eligibility All successful applications will need to be compliant with the eligible activities listed below and with the State Aid General Block Exemption Regulation (Regulation EC 651/2014) (GBER) including incentive effect requirements (this is summarised at Annex A), or de minimis rules (that permit up to 200,000 of State Aid to be provided to an undertaking over a rolling three year period, subject to certain administrative steps being taken. Applicants must be able to create (or safeguard) private sector jobs located in the Heart of the South West LEP area (including the administrative boundaries of the following Local Authorities: Plymouth City Council, Devon County Council, Torbay Council, and the Somerset County Council not including North Somerset and Bath & North East Somerset). Applicants must be committed to sustaining new or safeguarded jobs for a minimum of four years (for Small and Medium-sized Enterprises) and five years (for Large Enterprises). 3

4 Applicants must demonstrate why the grant is necessary to enable the project to proceed ( additionality ). Applicants must be able to provide private sector match funding alongside the grant (eg from own reserves, bank loans, new equity or similar sources). Applicants must demonstrate that the project is deliverable in terms of planning, regulatory requirements or similar issues. Businesses receiving support must not be in financial difficulty (see Annex A). Sectoral restrictions apply as set out in Annex A. Who can apply? Small (including micro), medium and large enterprises can apply (Annex C gives definitions), but all applicants should be aware of the restrictions on grant assistance imposed under State Aid regulations (See Annex B). For the purposes of the Fund, universities and charities are generally considered to be private sector. Organisations can be part of more than one bid; for example a company may be submitting a bid of their own and be part of another consortium bid. Duplicate bids for the same project will not be accepted; each project should only have one bid associated with it. Applicants may have offices or an HQ outside of the LEP area, but the project location (work place) where the investment will be made and the jobs will be created or safeguarded must be in the LEP area. Eligible activities UBI will support the following activities, set out in more detail in Annex B: Capital Investment by Small and Medium Sized Enterprises (SMEs) and Large Enterprises. The majority of the Fund will be allocated to Investment Projects, for example: Purchase of tangible capital assets (fixed assets including machinery, plant, new premises etc). Intangible assets entailed by the transfer of technology by the acquisition of patent rights, licences, know-how or unpatented technical knowledge. Some operational and wage costs generated by increased employment following capital investment in assets. Up to 5% of the Fund may be allocated to Research and Development (R&D) Projects. Research, Development and Innovation. Fundamental research. Industrial research. Experimental development. Up to 5% of the Fund may be allocated to Training Projects. Training General training. Specific training. 4

5 The application process Expressions of interest (EOIs) can be submitted using the on-line EOI form found here (ND+UBI). These will be reviewed for compliance with fundamental eligibility criteria, alignment with programme objectives and State Aid eligibility. Expressions of interest will be accepted until 31 st January 2016 (but this date may be subject to change depending on demand for the Fund). Subject to passing the EOI review and initial due diligence, applicants will then be invited to submit a Full Application by completing an application form on-line. This process will only become active once you have been invited to submit a Full Application by the UBI Programme Management Team. Full applications can be submitted at any time until 31 st March 2016 (however the Fund may close before this date dependent on demand). Non-refundable processing fees are payable at both the EOI and Full Application stages. Details of these fees are set out below. Applications will be appraised as they are received on a case-by-case basis, and any awards of funding will be made to a regular timetable (which will be reviewed dependent on demand). Applications will be treated as commercial in confidence and will not be shared with any third party other than those that are directly involved in the appraisal, selection and due diligence processes. However general details of all applications received will be subject to Freedom of Information Act legislation. In common with all Regional Growth Fund grant funds, UBI is a discretionary programme. Funding will be allocated on a competitive basis taking account of job creation, private sector co-investment, positive regional impacts, value for money and demonstrable need for grant. There are no automatic qualifying criteria that entitle any applicant to support. All decisions on awards of funding are taken by the UBI Steering Group representing the programme partners, and are final. Project appraisal (including credit checking) on applicants will also need to be completed before any offer of funding is made. An initial eligibility review and compliance checks will be undertaken on EOIs, and a non-refundable EOI Fee of 120 ( 100 plus VAT) will become payable to North Devon+ on submission of the EOI as a contribution to these costs. All full applications will be subject to high level financial review and assessment of the business plan and supporting documents, and a non-refundable Application Fee of 180 ( 150 plus VAT) will be payable as a contribution to this. Following appraisal of Full Applications, all positive decisions in principle to award grant in excess of 250,000 only will be subject to final in-depth due diligence checks. This due diligence will be carried out by an independent professional firm and will be recharged to the applicant at a tendered price of up to 2.5% of eligible project costs (excluding VAT). 5

6 Financial support will be made available in grant form up an agreed maximum percentage of total eligible project costs ( intervention rate ). The maximum intervention rates vary by eligible activity, size of the applicant enterprise and location, and must comply with State Aid regulations (see annex B). This means that private sector match funding from the applicant organisation, lenders and/or investors will be needed for all projects or activities and is likely to form the majority of the funding package. Governance and appraisal processes. All applications will be appraised for impact, value for money, deliverability and sustainability by the UBI Grants Team. Principal appraisal criteria are summarised here: Compliance with State Aid legislation and Fund eligibility o The application is for a compliant activity and the costs for which grant is sought are eligible for support under the programme. o The level of grant funding sought is compliant with the intervention rate for the relevant eligible activity and is within State Aid limits. o The proposed project will create new or safeguard existing private sector jobs within the Heart of the South West LEP area. Leverage o The amount of direct additional private sector investment into the economy that is contributed to the project compared with the value of grant being sought (total project costs ( ) / grant funding sought ( )). Benefit cost ratio (BCR) o The benefit of using public funding to support the project must outweigh its cost, where, in summary, the benefit of a project is the wages generated from the employment created or safeguarded by it and its cost is the value of grant being sought. The gross benefits of each project will be subject to standard economic appraisal discount factors and to any multipliers that apply. Projects with BCRs of less than 1 are not expected to proceed (as the cost would outweigh the benefits). Deadweight and displacement o Funding will not be awarded towards project costs or job creation or safeguarding that would happen in any event without any grant funding being made (Deadweight). o Funding will not be awarded where the creation or safeguarding of jobs as part of the project will give rise to the loss of jobs elsewhere within the applicant organisation or in the wider UK economy as a direct consequence of the project being undertaken (Displacement). Due diligence o All applicants will be subject to initial due diligence checks, including a credit checking process using an established industry report that will derive an overall credit risk score. Additional comprehensive due diligence checks will be undertaken for applications that are approved subject to due diligence. Job characteristics 6

7 o Quality of jobs taking into account qualification and salary levels. o Gross grant cost per job created/safeguarded. Other local and regional benefits, for example o Local supply chain benefits. o Links with regional Universities and Colleges. o Environmental benefits of the project. o Training of apprentices. o Employment of disadvantaged workers. Once appraised, Full Applications will be presented to an Investment Appraisal Panel made up of representatives from the private sector and the public sector. This panel will evaluate all applications received and score them on their relative merits. Panel recommendations will then be passed to the UBI Steering Group (representing ND+ and senior stakeholders in the economic development of the Heart of the South West LEP area) for final review and, where appropriate, approval of individual awards of grant (subject to final due diligence checks for grants of 250,000 and above). As stated above, there are no automatic qualifying criteria or entitlements to support from the Fund. The UBI Steering Group will make final decisions on the award of funding to successful applicants. Given the anticipated scale of interest in the Fund, we will not be able to offer detailed feedback to unsuccessful applicants. Conditions and payment of funding Awards of funding will be formalised by a funding offer letter that will establish the precise terms in each specific case. Successful applicants will be required to agree to the funding terms including any State Aid undertaking. Funding will be released in stages upon the achievement of agreed milestones (principally physical milestones eg equipment acquisition, spend targets and job targets) and following the submission of a valid claim supported by evidence of defrayed expenditure. All funding awarded must be claimed during the 2015/16 and 2016/17 financial years, with the latest claims being payable during the last quarter of the 2016/17 financial year (i.e. 31 st March 2017). All funding will be subject to the applicants complying with the Equalities Act How much funding can be applied for? Applications can be made for funding of up to 499,000. The minimum value of funding that can be applied for is 25,000. When considering how much to apply for, applicants should bear in mind the maximum intervention rates allowable for each eligible activity as set out in Annex B. Maximum intervention rates provide the upper limit for the total value of support it is possible to give subject to these limits grant will be awarded at a level assessed to be the minimum necessary to enable the project to proceed. 7

8 Job creation and safeguarding Job creation will be measured by the additional number of permanent, full time equivalent employees, over and above the baseline numbers employed at the point of application, employed by the beneficiary as a direct result of the funded project or activity. Safeguarded existing jobs may be taken into account where these are demonstrably at risk (typically though the existence of a live statutory redundancy consultation process) at the time of application for funding. These will be measured against the baseline number of jobs in place with the applicant organisation at the point of application. New jobs and safeguarded jobs must be clearly linked to the activity or project for which support is given. Jobs created and safeguarded must be maintained for a minimum of four years for SMEs and five years for Large Enterprises. Job creation and safeguarding will be monitored regularly and for the duration of these minimum periods. Leverage Leverage describes the amount of private sector funding used to finance project expenditure. This funding may come from a variety of sources such as the applicant s own funds, hire purchase, bank loans, crowdfunding or new equity investment. Each project will have a total eligible cost, that is the total value (excluding recoverable VAT) of the project costs towards which State Aid compliant support can be offered. For example: Purchasing a new piece of machinery might cost 1m (ex VAT), the full amount of which is an eligible cost. Where the maximum intervention rate for this activity is 20%, this can be funded by UBI (subject to demonstrable need for grant and value for money criteria being met). The remaining 800,000 of eligible costs will therefore need to be funded by the applicant from commercial, private sector sources 800,000 (or 80%) is the leverage. Further information indicating the maximum levels of support available depending on project activity, enterprise size and location are set out in Annex B below. State Aid All funding under UBI must fully comply with State Aid requirements. This is a complicated area and applicants must satisfy themselves that their project complies with State Aid regulations. Applicants may wish to obtain specialist advice prior to submitting an application. Further details are summarised in Annex A of this Prospectus. Publicity and media requirements All projects funded by UBI will be required to acknowledge support from the Regional Growth Fund through UBI in all written material including press releases and public presentations. Additional media requirements will be specified in project specific grant offer letters. 8

9 Frequently Asked Questions: What qualifies as eligible expenditure for Investment and Employment Aid? Capital investment into fixed physical assets (tangible assets such as land, buildings and plant, machinery and equipment) that will normally appear as fixed assets on company balance sheets; these are assets that are owned by the company. Assets purchased with asset finance from commercial lenders can meet this definition provided that there is a requirement to purchase the asset in the finance agreement. Capital investment into the purchase of intangible assets can also be supported in some circumstances. Examples include patents, trade marks and assets arising from technology transfer. Eligible assets must meet the following four conditions: Must be used exclusively by the beneficiary (the company receiving support from this Fund). They must be amortizable assets (i.e. those where the acquisition value is spread over the period of the useful economic life of the asset). They must be purchased from third parties under market conditions. They must be included in the assets of the undertaking for at least three years post acquisition. In addition to the above, some revenue costs can be considered as eligible expenditure where these can be specifically attributed to the project. These can include rental of additional project premises and equipment, equipment installation, refurbishment costs of project premises, legal and professional fees (eg surveyors, architects and planning), project-related marketing costs, and limited salary costs relating to the new project jobs. Please note that day to day operational costs, cost of sales, stock acquisition and any expenditure that would be incurred by the business in any event are not considered eligible project spend. In all cases, expenditure incurred prior to an offer of grant being made by the UBI team is ineligible for support as there is no demonstrable need for grant. What qualifies as Research and Development? There are three recognised categories of Research and Development, each summarised below. Fundamental Research: means experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts. Industrial Research: means the planned research or critical investigation aimed at the acquisition of new knowledge and skills for developing new products, processes or services or for bringing about a significant improvement in existing products, processes or services. It comprises the creation of components of complex systems, which is necessary for the industrial research, notably for generic technology validation, to the exclusion of prototypes. 9

10 Experimental Development: The acquiring, combining, shaping and using of existing scientific, technological, business and other relevant knowledge and skills for the purpose of producing plans and arrangements or designs for new, altered or improved products, processes or services (including the creation of commercially usable prototype or pilot projects under certain conditions). Experimental Development shall not include routine or periodic changes made to products, production lines, manufacturing processes, existing services and other operations in progress, even if such changes may represent improvements. It may be worth considering whether the activity would qualify for R&D Tax Credits under HMRC regulations when assessing eligible projects. What constitutes Training? Training grants can be awarded for General Training, that is, generic training that gives workers recognised, transferrable workplace skills, or Specific Training which is of a highly specialised and technical nature and of relevance to the specific employer and job category. To qualify as a training project, the applicant must demonstrate that the training to be offered will go above and beyond training activities that would be delivered as a matter of course, and it must give rise to new or safeguarded job outputs. For example, the training might enable the application enterprise to enter a new market or offer a new product that will enable the business to expand and create jobs. Can I apply for aid from UBI and from other public sector funders, like Innovate UK or Manufacturing Advisory Service, for the same project? Under GBER State Aid exemptions it is possible to accumulate aid from several sources provided the total amount received from all sources does not exceed the prevailing intervention rate (the maximum percentage of grant allowed by the regulations). In practice most projects receive funding from a single public source, but if multiple sources are being sought, potential applicants are recommended to seek advice from the UBI team before proceeding with an application. It should be noted that other sources of public sector funding do not count as leverage when calculating the private sector investment and, therefore, do not contribute to the enhancement of the value for money of the proposed grant. Is any of the grant support available up-front to aid cash flow? No, cash flow needs to be carefully managed by applicants to ensure that they can defray the necessary expenditure before claiming it back from UBI. Claims are paid in arrears and upon receipt of an eligible claim that is supported by evidence of eligible defrayed expenditure. 10

11 I have already started my project can I still apply for a grant? Demonstrating a need for the grant is essential in qualifying for support. Therefore, if a project has begun already, it is unlikely that need can be demonstrated. It may be possible to apply for funding towards elements of an existing project that have not yet begun, but you will need to prove that these are genuinely optional and will not go ahead without grant support. In any event, expenditure incurred and jobs created prior to an offer of grant being made will not be considered eligible expenditure in any circumstances. Can UBI grant be used to safeguard existing jobs UBI grant can be used to safeguard existing jobs provided there is compelling evidence to prove that the jobs are under threat if the grant is not awarded. Such evidence may comprise, for example, evidence that a formal redundancy consultation process is under way. We will need to be satisfied that the underlying business is sound and that it will be able to sustain safeguarded jobs for at least four years (five years of a Large Enterprise) if an award of grant is made. In general, we expect to award the majority of grants to projects that will create new jobs. 11

12 Annex A State Aid regulations and sectoral restrictions European Commission State Aid rules relating to the Unlocking Business Investment Regional Growth Fund programme UBI is operated as a programme under the Government s Regional Growth Fund (RGF). The Department for Business, Innovation and Skills (BIS) have informed the European Commission that the national RGF and any programmes created under it will provide aid under exemptions taken from the General Block Exemption Regulation (GBER) or the de minimis regulations. UBI will use the following (GBER) exemptions: Regional investment and employment aid. Investment aid to SMEs. Training aid. Aid for Research, Development and Innovation. EC State Aid rules provide that public assistance may not be used to: Provide aid to export related activities (namely aid directly linked to the quantities exported), to the establishment and operation of a distribution network, or to other current costs linked to the export activity. Provide aid contingent upon the use of domestic over imported goods. A summary table of the eligibility criteria, allowable expenditure and levels of aid permissible (maximum intervention rates) under each of the above exemptions can be found in Annex B. Sectoral Restrictions. UBI may be used to support businesses in many sectors of the economy. However, State Aid rules mean that it cannot be used to provide aid that favours undertakings active in: The fisheries and aquaculture sectors. The primary production and marketing of agricultural and horticultural products. Forestry. Shipbuilding (although small craft building - vessels less than 100gt - is not restricted). Airports. The coal sector. Steel making. Manufacture of synthetic fibres. Certain energy generation, distribution and infrastructure projects. The transport sector (excluding improvements to socially necessary services in rural areas). Sector-specific rules and programmes apply to many of these restricted sectors. In addition, projects that operate in sectors where the market is already well-served locally cannot be supported under UBI as there is a high risk of displacement (ie adverse impacts on local, non-assisted competitors). 12

13 These sectors are: Retail. Tourism (including hotels and leisure facilities). Warehousing. Education. Health services (including medical services and residential care). Business services. Financial services. Franchise operations. Property development and investment. If you have a project in one of these sectors that you consider to be unique to the region and therefore not a potential cause of displacement, you are advised to seek advice from the UBI team before submitting an EOI. Undertakings in difficulty UBI grant cannot be used to support undertakings or firms in difficulty and a full assessment during the appraisal stage will be undertaken to verify the applicant s financial standing. Undertakings in difficulty are defined as those: a) in the case of a limited liability company, where more than half of its registered capital has disappeared and more than one quarter of that capital has been lost over the preceding 12 months, or b) in the case of a company where at least some members have unlimited liability for the debt of the company, where more than half of its capital as shown in the company accounts has disappeared and more than one quarter of that capital has been lost over the preceding 12 months, or c) whatever the type of company concerned, where it fulfils the criteria under its domestic law for being the subject of collective insolvency proceedings. De minimis regulations De minimis aid is used to describe small amounts of state aid that do not require European Commission approval. The European Commission considers that public funding which complies with the de minimis regulation has a negligible impact on trade and competition, and does not require notification and approval. The total de minimis aid from all sources which can be given to a single recipient is 200,000 over a 3-year fiscal period ( 100,000 for road transport enterprises). The sterling equivalent is calculated using the Commission exchange rate applicable on the written date of offer of the de minimis funding. This ceiling takes into account all public assistance given as de minimis funding over the previous 3 fiscal years and which can take various forms (grants, loans, subsidised contracts, etc). Aid given under an alternative, approved grant regime (including GBER) does not have to be cumulated with de minimis aid. This does not mean that all funding under the 200,000 ceiling will be counted as de minimis. Where possible, and in line with best practice, grants will be awarded under GBER, with de minimis cover as a back-up for when there are no other options. 13

14 There are a few things you should keep in mind when considering de minimis aid. De minimis aid cannot be given for export related activities (except attendance at trade fairs), agriculture and fisheries or aid favouring domestic over imported products. De minimis aid does not affect the level of state aid that a recipient can receive under any other schemes approved by the Commission, ie it is cumulated only with other de minimis aid. If grant is awarded under the de minimis regulations, the grant recipient will be required to provide a declaration of all sources of aid received under de minimis during the preceding three year rolling period at the point of contracting to receive the grant offer. Further information may be found in the following BIS guides: State aid: the basics guide and State aid frequently asked questions. You may also find it useful to read the full text of the de minimis regulation on the European Commission s Competition website. Cumulation Aid of different types can be cumulated provided that it is given for different eligible activities and/or project costs. Aid, of the same type, can also be cumulated for the same project and costs, provided that the totality of aid received does not exceed the maximum intervention rate for that activity as summarised in Annex B. However a business cannot cumulate de minimis Aid with Aid exempted under the GBER where it concerns the same project costs. Incentive effect. It is a requirement of State Aid law that UBI may only be awarded when it produces an incentive effect. UBI is considered to have an incentive effect if it enables the beneficiary to carry out an activity or project that would not have been carried out in the absence of such Aid. For SMEs this means that no activities related to the implementation of the project can have started prior to an offer of grant under UBI being made. There will also need to be evidence that the grant will enable one or more of the following: The project would not have been carried out in the absence of grant funding. A material increase in the size of the project. A material increase in the scope of the project. A material increase in the total amount spent by the beneficiary on the project. A material increase in the speed of completion of the project (bringing forward). For large companies, in addition to the SME conditions, there will also need to be evidence that the company has analysed, in an internal document, the viability of the project or activity with or without grant. Such documentation should confirm that the grant will give rise to a material increase in the scale or scope of the project, a material increase in the total amount spent by the beneficiary on the project, or a material increase in the speed of completion of the project. Note: under current GBER regulations, in the case of Large Enterprises grant aid cannot be used to undertake more of the same the project to be considered must be a departure from normal current business undertakings. 14

15 Further information on State Aid regulations may be found here: IMPORTANT DISCLAIMER. This Annex should not be relied upon as definitive legal advice and is instead provided as a general guide. Full eligibility criteria, exclusions and definitions can be found in the GBER and if in doubt applicants are advised to seek their own external legal advice. 15

16 Annex B Intervention rates (maximum grant percentage rates) Regional investment and employment aid to Large Enterprises Regional investment and employment aid may be granted to large companies (ie those too large to be categorised as SMEs see definitions in Annex C) under GBER in a few, very limited circumstances. These are summarised below. Investment and employment aid comprises grant funding awarded to enable a grant beneficiary to carry out a project that comprises new investment in tangible assets (land, building, plant equipment etc), intangible assets (patents, technology transfer etc) and some directly associated revenue costs such as project premises and equipment rentals, professional fees, installation and refurbishment costs, project marketing costs and limited project salary costs for new employees. Please note that for larger businesses, assets (other than property) purchased with grant aid must be brand new. Aid will only be given to projects that create direct, permanent employment on the part of the applicant enterprise, and these jobs must be retained for a minimum of five years. In the case of Large Enterprises, GBER permits grants to be awarded in designated Assisted Areas only. Within the UBI programme area these are parts of Plymouth, Torbay, south Devon and north Devon. The following link gives access to an interactive Assisted Area map and you are advised to check the status of your project location prior to applying: The maximum level of investment and employment grant aid available to a large enterprise in one of these Assisted Areas (the intervention rate ) is 10% of eligible project costs. Investment and employment aid will only be granted towards large company projects for investment in either a new establishment or diversification of an existing establishment into a new economic activity. A new establishment should be fully functional, autonomous and self-standing. Projects that are simply an expansion or adaptation of an existing operation will not be eligible for support. The precise rules governing these definitions are complex and, if in doubt, potential applicants are strongly advised to seek professional advice before applying for funding. Investment aid to SMEs Investment aid to SMEs is expected to form the bulk of the funding applications supported under UBI. Investment and employment aid comprises grant funding awarded to enable a grant beneficiary to carry out a project that comprises new investment in tangible assets (land, building, plant equipment etc), intangible assets (patents, technology transfer etc) and some directly associated revenue costs such as project premises and equipment rentals, 16

17 professional fees, installation and refurbishment costs, project marketing costs and limited project salary costs for new employees. Aid will only be given to projects that create direct, permanent employment on the part of the applicant enterprise, and these jobs must be retained for a minimum of four years under UBI. The maximum levels of investment aid permitted under GBER are dependent on the size of the enterprise (see Annex C for definitions of micro, small and medium sized enterprises), and the location. Projects located in the Assisted Areas may attract a higher level of support compared with those in other areas. The maximum intervention rates are as follows: Regional investment aid maximum grant percentage Enterprise size Assisted Area Non-Assisted Area Micro and small 30% 20% Medium 20% 10% Within the UBI programme area the Assisted Areas are parts of Plymouth, Torbay, south Devon and north Devon. The following link gives access to an interactive Assisted Area map and you are advised to check the status of your project location prior to applying: Investment aid may also be granted to SMEs under the de minimis regulations. These allow greater flexibility in terms of the amount of aid that can be granted in respect of a project, however the maximum amount of aid that an enterprise can receive under de minimis from all sources, for all purposes, over a rolling three year period is 200,000. See details in Annex A above. Training aid Up to 5% of the UBI grant budget may be allocated to support training projects. The GBER covers public support for training given to enable employees to acquire new skills. It applies to training aid whether the training is provided by companies themselves or by public or private training centres. Eligible costs include: Trainers salary and on-costs for the hours during which trainers participate in training; Trainers and trainees travel expenses including accommodation; Other current expenses (materials, supplies etc); Depreciation of tools and equipment, to the extent that they are used exclusively for the training scheme in question; Cost of guidance and counselling services with regard to the training project; Trainees salary and on-costs costs and general indirect costs (administrative costs, rent, overheads) may be supported only where they cover the hours during which the trainees actually participate in the training, after deduction of any productive hours. 17

18 The maximum rates of support are as follows: Micro and small enterprises Medium sized enterprises Large enterprises 70% of eligible costs 60% of eligible costs 50% of eligible costs Aid for research and development and innovation Up to 5% of the UBI grant budget may be allocated to research and development projects. The following outlines the different types of research, development and innovation that are eligible for support: Fundamental research: Experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any direct practical application or use in view; (it is thought unlikely that much fundamental research will be supported). Industrial research: Planned research or critical investigation aimed at the acquisition of new knowledge or skills for developing new products, processes or services or bringing about a significant improvement in existing products, processes or services. Experimental development: The acquiring, combining, shaping and using of existing scientific, technological, business and other relevant knowledge and skills for the purpose of producing plans and arrangements or designs for new, altered or improved products, processes or services. These may also include, for instance, other activities aiming at the conceptual definition, planning and documentation of new products, processes or services. The activities may comprise producing drafts, drawings and plans and other documentation, provided that they are not intended for commercial use. The development of commercially usable prototypes and pilot projects is also included where the prototype is necessarily the final commercial product and where it is too expensive to produce for it to be used only for demonstration and validation purposes. In case of a subsequent commercial use of demonstration or pilot projects, any revenue generated from such use must be deducted from the eligible costs. The experimental production and testing of products, processes and services shall also be eligible, provided that these cannot be used or transformed to be used in industrial applications or commercially. Experimental development shall not include routine or periodic changes made to products, production lines, manufacturing processes, existing services and other operations in progress, even if such changes may represent improvements. 18

19 Eligible costs: The eligible costs for Aid for research and development projects are as follows: Personnel costs of staff to the extent employed on the research activity; Costs of instruments, equipment and land and premises to the extent and for the period used for the research project (equivalent to standard depreciation costs if their full life runs beyond that of the research project); Cost of contractual research, technical knowledge and patents bought or licensed from outside sources at a market price; Costs of external consulting and equivalent services used exclusively for the project; Additional overheads incurred directly as a result of the research; Other operating expenses incurred directly as a result of the research activity. The table below summarises the support available for each of the types of research activities. Type of Aid Maximum intervention rate (Aid as % of total eligible project costs) SMALL enterprise MEDIUM enterprise LARGE enterprise Aid for Fundamental Research Up to 100% Up to 100% Up to 100% Aid for Industrial Research Up to 70% Up to 60% Up to 50% Aid for Experimental Development Up to 45% Up to 35% Up to 25% Further reading Further information on State Aid and the General Block Exemption Regulations may be found here: IMPORTANT DISCLAIMER. This Annex should not be relied upon as definitive legal advice and is instead provided as a general guide. Full eligibility criteria, exclusions and definitions can be found in the GBER and if in doubt applicants should seek their own external legal advice. 19

20 Annex C Enterprise size definitions Definitions of large, medium, small and micro sized enterprises 1. The definitions of micro, small, medium-sized and large enterprises are summarised as follows: Category Headcount (Number of Employees*) Turnover Balance Sheet Total Large 250 or more Exceeding 50m And/or Exceeding 43 Medium Not exceeding And/or Not exceeding 43m 50m Small Not exceeding And/or Not exceeding 10m 10m Micro Fewer than 10 Not exceeding And/or Not exceeding 2m 2m * expressed as Annual Work Units, broadly comparable to Full-time Equivalents. 2. An enterprise is considered to be any entity engaged in an economic activity, irrespective of its legal form. This includes, for example, sole traders, partnerships, unincorporated associations, private and public limited companies (including companies limited by guarantee and Community Interest Companies) and Industrial and Provident Societies. Micro, small and medium-sized enterprises (as defined in 1. above) are referred to as SMEs. 3. Where an applicant enterprise is owned or part-owned by one or more other enterprises, SME status will depend on the size of the owning enterprises (known as partner or linked enterprises) and the proportion of their share in the applicant enterprise. The rules concerning the assessment of size of such enterprises (and therefore their qualification as SMEs) are complex and must be considered on a case by case basis. Further information may be found here: IMPORTANT DISCLAIMER. This Annex should not be relied upon as definitive legal advice and is instead provided as a general guide. Full eligibility criteria, exclusions and definitions can be found in the GBER and if in doubt applicants should seek their own external legal advice. 20