SPII funding for inventors

Need funding to design, protect, prototype and SABS certify your product?

Look no further than SPII.

SPII funding is:

  • Quick (2-3 month turnaround time)
  • Free (in the form of a non-repayable grant)
  • Simple to access (with little red tape)

SPII Financial Assistance:

SPII Scheme Type of funding Funding limit 0-25% BEE ownership 25,1%-50% BEE ownership or >50% ownership by women / disabled persons >50% BEE ownership
PPD Scheme Non-repayable grant R 1m Reimburses 50% of qualifying costs paid Reimburses 75% of qualifying costs paid Reimburses 85% of qualifying costs paid
Matching Scheme Non-repayable grant R 3m Reimburses 50% of qualifying costs paid Reimburses 65% of qualifying costs paid Reimburses 75% of qualifying costs paid

NOTE: In terms of the PPD Scheme, an upfront payment of 2% of qualifying costs may be paid to finance project start-up

SPII Qualifying Criteria:

Qualifying criteria PPD Scheme Matching Scheme
Type of applicant South African registered company with:

  • total assets < R5m (excl. fixed property);
  • revenue < R13m; and
  • total employees < 50

(i.e. SSMEs)

South African registered company with:

  • total assets < R19m (excl. fixed property);
  • revenue < R51m; and
  • total employees < 200

(Including SMMEs)

Novelty National novelty, i.e. the product is new to South Africa International novelty, i.e. the product is new to the world
Development period Not regulated Projects expected to be completed within 6 months from the date of application will not be considered

Additional qualifying criteria common to both schemes:

  • Development and production must be based in South Africa
  • Related patents must be registered in the applicant’s name and the applicant must retain ownership of intellectual property for 3 years from completion of the project
  • Applicant must submit a SARS Tax Clearance Certificate together with the application
  • No parallel applications – applicants may only have one funding application in the pipeline at any given time
  • The product developed must comply with relevant National and International Standards

SPII Disqualified Projects:

PPD Scheme Matching Scheme
Projects more than 70% complete at time of application Projects more than 50% complete at time of application (an exception may be made for applicants with total assets < R5m)

Disqualified projects common to both schemes:

  • Product/process development for a single client (e.g. a new container to be supplied exclusively to Woolworths)
  • Basic and applied research
  • Where the SPII grant contribution is less than 20% of the total project cost
  • Projects receiving other government funding
  • Military projects, unless they have a substantial commercial application
  • Projects where commercialisation is restricted by licensed technology (e.g. a third party patent will prevent commercialisation of the developed product)

SPII Qualifying / Disqualified Costs:

SPII will only reimburse the following “qualifying” costs incurred (i.e. spent) after the date on which the SPII application is submitted:

Cost PPD Scheme Matching Scheme
Applicant’s own salary and labour Includes maximum hourly rate calculated at:

(total annual salary package) / (2,016 working hours per annum)

Limited to R250 per hour

But:

  • Only applies to costs of personnel directly involved in the project
  • Maximum time allocated for management costs may not exceed 80% of costs in this category
  • For shareholders and directors, a maximum of 134 hours per month may be claimed

Excludes:

  • Costs not substantiated by timesheets
  • “Non-guaranteed” payments, e.g. profit or performance bonuses and share options
  • Statutory staff-related costs such as RSC levies, SDL payments and UIF contributions
Includes maximum hourly rate calculated at:

(total annual salary package) / (2,016 working hours per annum)

Limited to R295 per hour

But:

  • Only applies to costs of personnel directly involved in the project
  • Maximum time allocated for management costs may not exceed 50% of costs in this category
  • For shareholders and directors, a maximum of 134 hours per month may be claimed

Excludes:

  • Costs not substantiated by timesheets
  • “Non-guaranteed” payments, e.g. profit or performance bonuses and share options
  • Statutory staff-related costs such as RSC levies, SDL payments and UIF contributions
Materials Includes only direct cost of materials for developing the prototype or model

Excludes materials for production or inventory

Includes only direct cost of materials for developing the prototype or model

Excludes materials for production or inventory

Subcontractors
  • Where a subcontractor is not at ‘arms length’, costs are treated as if incurred by the applicant
  • Where the costs of a single subcontractor or group of related subcontractors comprise more than 20% of total cost, costs will be audited by SPII against same criteria as applicant
  • Prior written consent from the IDC is required if subcontractors differ from those approved in the application
  • Where a subcontractor is not at ‘arms length’, costs are treated as if incurred by the applicant
  • Where the costs of a single subcontractor or group of related subcontractors comprise more than 20% of total cost, costs will be audited by SPII against same criteria as applicant
  • Prior written consent from the IDC is required if subcontractors differ from those approved in the application
Tooling Includes cost of design, compiling mechanical drawings, building models and prototypes and related tooling costs

Excludes costs relating to manufacturing, production or general purpose use

Limited to 50% of total cost

Includes cost of design, compiling mechanical drawings, building models and prototypes and related tooling costs

Excludes costs relating to manufacturing, production or general purpose use

Capital equipment Includes Items required specifically for development Includes Items required specifically for development
Computer hardware and software Includes computer hardware and software costs used in the development process

Limited to 5% of grant value, up to a maximum of R25,000

Generally, excludes costs related to computer hardware or software

Where, software forms an integral and inseparable part of, and is essential for functioning of the prototype and eventual product, it may be approved

Licensed software is always excluded

Patents Includes costs to file patents, but limited to 20% of total cost

Excludes costs to defend patents

Includes costs to file patents, but limited to 20% of total cost

Excludes costs to defend patents

Travel Local travel cost limited to R8,000

Foreign travel cost limited to R30,000

Limited to one employee (directly involved in technical development) per trip flying economy class only

Excludes:

  • Travel not related to development (such as attendance of seminars, workshops, training courses and conferences) or related to marketing of the product
  • Accommodation, car hire, taxis, trains, meals, laundry and tips
Local travel cost limited to R6,000

Foreign travel cost limited to R25,000

Limited to one employee (directly involved in technical development) per trip flying economy class only

Excludes:

  • Travel not related to development (such as attendance of seminars, workshops, training courses and conferences) or related to marketing of the product
  • Accommodation, car hire, taxis, trains, meals, laundry and tips
IP (excl. software) licensing (local and foreign) Limited to 10% of total cost Limited to 10% of total cost
Trials Limited to 50% of total cost

Excludes cost of marketing trials

Limited to 20% of total cost

Excludes cost of marketing trials

Documentation Includes cost to prepare development-related user, maintenance and specification manuals

But excludes cost to print such documents

Also excludes cost of marketing-related documents such as brochures and pamphlets

Includes cost to prepare development-related user, maintenance and specification manuals

But excludes cost to print such documents

Also excludes cost of marketing-related documents such as brochures and pamphlets

Quality assurance Includes cost of:

  • preparation of quality assurance manual
  • in-house quality assurance
  • control of development process

Excludes cost of company ISO certification

Includes cost of:

  • preparation of quality assurance manual
  • in-house quality assurance
  • control of development process

Excludes cost of company ISO certification

Product certification Includes cost of product quality or other certification (e.g. SABS, DIN, CE) Includes cost of product quality or other certification (e.g. SABS, DIN, CE)

SPII Absolute Disqualified Costs:

PPD Scheme Matching Scheme
  • General management costs
  • Marketing
  • Production
  • Administration
  • Support personnel
  • Maintenance-related costs
  • Commissions
  • Vehicle hire
  • Interest
  • Allocated costs of overhead and services (e.g. electricity, telephone)
  • Statutory costs
  • Consultants fees
  • Foreign exchange contingencies
  • VAT

But rent in respect of business premises is limited to R12,000 p.a. and only for the duration of a project not exceeding 12 months

  • General management costs
  • Marketing
  • Production
  • Administration
  • Support personnel
  • Maintenance-related costs
  • Commissions
  • Vehicle hire
  • Interest
  • Allocated costs of overhead and services (e.g. rent, electricity, telephone)
  • Statutory costs
  • Consultants fees
  • Foreign exchange contingencies
  • VAT

FAQ:

  • What is the effect of SPII’s reimbursive scheme on my cashflow?
    Applicants must break their projects into three Milestones. Following completion of each Milestone, a SPII consultant will review expenditure, confirm Milestone completion and authorise reimbursement of related qualifying costs incurred. Applicants must have sufficient cash flow to finance the period between: (i) the date on which the applicant pays for qualifying costs; and (ii) the date on which the applicant is reimbursed 50/65/75/85% of such costs by SPII
  • Do I actually have to pay a service provider before SPII reimburses me, or is an invoice sufficient?
    Before SPII reimburses you any amount, SPII must first confirm that the qualifying cost was actually paid. To do this, the SPII consultant will review your bank statements.
  • What if my development costs exceed the amounts in my SPII application?
    SPII will only reimburse you up to the amount detailed in your application. The additional costs are for your own account
  • What if my development costs are less than the amounts in my SPII application?
    This is no problem. SPII will merely reimburse you 50/65/75/85% of your qualifying costs actually incurred. You should therefore presume “the worst case scenario” when preparing a SPII application.
  • What if I do not achieve the milestones committed to in my SPII application?
    You can be late in achieving a Milestone, but don’t even consider abandoning a Milestone. You must achieve the milestones committed to. Else, you will be required to refund SPII
  • What if I have two products that need development?
    You can only have one product in the “SPII system” at a time, so complete development of one product, then submit a new SPII application for your second product

Reporting Requirements

Following completion of a project, applicants must for a period of 3 years complete and submit annual reports to SPII including related sales and employment data

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Contact us

Intangible Consulting (Pty) Ltd.
9 Kruger St
Oaklands
Johannesburg
South Africa

T +27 (0)11 483 1439
T +27 (0)11 483 3128 (alt.)
C +27 (0)83 233 4582
F +27 (0)86 627 0055
info@ideanav.co.za