Project Financing Government Funding Government support comes in many shapes and sizes. By Reg Renner O ur latest federal election in Canada has shown that numerous politi-cians and supporters are willing to spend many hours knocking on doors looking for your support. So too must you prepare if you are to obtain suitable gov-ernment support for your project. First of all, government support, like political parties, can come in many shapes and sizes, and you need to do your re-search before you cast your vote or fill out the appropriate grant application form. It is also advisable to recognize that gov-ernmental support could be in the form of an approved environmental permit, a biomass fibre award, or a new piece of leg-islation such as the Ontario Green Energy and Green Economy Act. If you are involved in bioenergy, you are probably aware that there are many challenges with pursuing and finding the appropriate government grants. The list of potential challenges includes tight timelines, limited eligibility, long approval delays, and untimely cash flows. When I think of all the time that has been spent by project developers pursuing govern-ment grants in spite of these challenges, it can seem like a poor return on their time investment. Yet I often come across groups that have just received a substantial grant from a previously unknown governmen-tal agency. Remember, you can only get a government grant if you are willing to put in the work and apply to the appropri-ate programs. Many people say this about grants: “There is no free money.” They are right; you will have to work for it, just as a politician will have to earn your vote to get elected. So allow yourself sufficient time to meet the requirements and deadlines, as it is a competitive process and you must submit a compelling argument as to why your project should be supported. I rec-ommend that you start by calling your Regional Economic Development Offi-cer, as they are often very well connected and may know which programs are best suited for your specific requirements. The executive director of a Provincial Innova-tion Council once told me that his staff was tracking more than 100 government grant programs. It is a lot easier to call a couple of well-placed experts than it is to start the process from scratch, especially with new programs being added, deleted, and changed monthly. It is also advisable to treat the gov-ernment grant as only part of your finance package and to continue working with other financial groups to obtain a complete funding package. There is nothing worse than wait-ing 12 months to be awarded only one-third of the required project financing and then have to start looking for the remaining required financ-ing. No matter how good the government grant is, you will need equity capital to get the project off the ground, and you must be careful not to spend all your equity during the grant process and subsequent waiting period. Also early in the process, find out how the proposed grant is paid out during the project construction phase. I remember a project developer who called and told me that he had just been awarded a grant for $2.3 million, but the funds were not avail-able until 90 days after the project was completed. That was the end of that proj-ect developer’s dream, as unfortunately he did not understand the cash flow require-ments until after the long awaited “good news” announcement. Timing can be more important than the dollar amount. Given these various challenges, it is often advisable to look at other forms of government support that can be just as valuable as a non-repayable loan or grant. Government support can come from vari-ous levels of government, including munic-ipal, provincial, and federal, so do not lose focus by only being concerned with one agency. Check out all the levels of govern-mental involvement, make sure that you understand all the rules and regulations, “Instead of complaining about government like so many others do, check it out and work hard to see how it can help you achieve your goals.” and create a regulatory checklist. As an example, can you get a timely building permit and an acceptable environmental impact study from your local building in-spector? No matter how much money you might have, a project can be stopped in its tracks if the proper authorities have been ignored or bypassed. Another critical role for governmental support can be in the awarding of a sup-ply contract. As an example, the recent Ontario Ministry of Natural Resources’ allocations of wood fibre have been key to launching new value-added sawmills and wood pellet plants. Without a secure wood supply contract, there would be no business case for the local entrepreneur. In this context, local provincial ministry Canadian BIOMASS 7
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