Grant finance
Grants can support investment, employment, innovation or other policy objectives, but eligibility, permitted expenditure, performance conditions and repayment clauses matter. The business may need to provide matching funds, report progress or repay amounts if conditions are breached. Cash timing can differ from expenditure and accounting recognition. Evaluate the net financial benefit and obligations rather than describing a grant as unconditional free money. Government loan guarantees are different: they support a lender's risk while the business normally remains responsible for repaying its loan.
Worked example
A business receives a $50,000 grant for equipment on condition that it operates the facility for three years. If it closes after one year, the agreement may require some or all of the grant to be repaid. The funding plan must consider that obligation.
Common mistake
Assuming every grant can never be repaid, or treating a government loan guarantee as cancellation of the borrower's debt.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Direct | September 2026–June 2027 |