The detailed conditions of calls for proposals may include eligibility, financial and implementation requirements that can fundamentally determine the success of a project. These should be reviewed not only when preparing the funding application, but ideally even before the project concept is finalised.
Let us look at the most common pitfalls that applicants should prepare for in good time.
Do not focus solely on the amount of funding
A common mistake is for a company to first select an attractive-looking funding opportunity and then try to design a suitable project around it. The correct order should generally be the reverse: the company should first identify its genuine development needs and then look for an appropriate financing opportunity.
The title and short summary of a call for proposals are not sufficient to determine whether a company is genuinely eligible for funding. Among other things, the following must be examined in detail:
- the required number of completed financial years;
- the size of the company and its SME classification;
- requirements relating to revenue and equity;
- the number of employees;
- eligible and excluded activities;
- restrictions relating to the project implementation location;
- and any sector-specific or special eligibility requirements.
In the case of a consortium application, it is not sufficient to assess these conditions only in relation to the consortium leader. Depending on the call, certain requirements may have to be met by every consortium member, while others may apply to the consortium as a whole.
An eligible project is not necessarily a feasible project
Formal eligibility does not automatically mean that the project can be implemented safely from either a financial or professional perspective. In many cases, funding is provided on a reimbursement basis or with only a partial advance payment. This means that the company may have to pre-finance certain costs and will only be reimbursed at a later stage. Applicants must also take into account ineligible costs, possible price increases, exchange-rate fluctuations and the possibility that the amount of funding attributed to certain items may be reduced during the verification process.
The following should already be assessed during the planning phase:
- whether the necessary own contribution is available;
- whether continuous project liquidity can be ensured;
- whether a loan or other external financing will be required;
- whether VAT and expenses related to ineligible items can be financed;
- and whether the development can remain sustainable after the funding period has ended.
It is not advisable to undertake a project that is disproportionately large compared with the company’s financial capacity. A smaller development that is properly financed and professionally well-founded may be safer than an investment whose implementation relies entirely on the funding advance.
A quotation is not merely an attachment
Planned costs must be supported by genuine market prices. The method to be applied may vary from one funding scheme to another: several independent quotations, a detailed market survey, publicly available prices or other documents accepted under the call may be required.
When obtaining quotations, applicants should not focus only on the price. It is important that the quotations:
- are valid at the required date;
- contain the necessary technical and commercial information;
- relate to identical or comparable content;
- clearly identify the bidder and the subject of the procurement;
- and are consistent with the budget and professional content of the funding application.
The formal requirements applicable to quotations must always be checked against the relevant call and guidance documents. Not every funding scheme requires the same information, and a quotation template used for a previous application may therefore not be suitable without modification.
The selection of the supplier must also be transparent. If the lowest-priced quotation is not selected, the technical, professional or economic justification for the higher price must be presented in detail. Such justification may include more suitable performance, a longer warranty, a shorter delivery period, compatibility with existing systems or more favourable operating costs.
The implementation location must be genuinely suitable
The project location is not merely an address to be entered on the application form. It must comply with the territorial requirements of the call and must be suitable for carrying out the activities planned under the project.
In the case of equipment procurement, for example, it should be examined whether:
- the equipment can be installed and operated safely;
- the necessary electrical, IT or other infrastructure is available;
- the location is accessible;
- the company has an appropriate legal right to use the premises;
- and the project activity can genuinely be carried out at the site.
The suitability of the implementation location may also need to be demonstrated through photographic documentation, floor plans, ownership or lease documents, official permits or other supporting evidence.
It may be particularly risky if the funding application specifies a location that is not yet available to the company at the start of the project, lacks the necessary infrastructure or is unsuitable for carrying out the planned activity.
Do not plan only until the end of implementation
The obligations do not end with the funding decision. The beneficiary must fulfil its commitments during project implementation and, in many cases, throughout the subsequent maintenance period as well.
Depending on the funding scheme, such obligations may include:
- maintaining the equipment purchased or the capacities created;
- operating the project results for a specified period;
- maintaining or increasing the number of employees;
- meeting specific professional indicators;
- fulfilling revenue-related or other economic commitments;
- complying with data provision and reporting obligations;
- and providing the required securities for the funding.
When defining commitments, it is not advisable to focus solely on achieving a higher score or a more favourable assessment. Overly optimistic indicators must also be achieved later, and failure to meet them may result in a reduction of the funding or a repayment obligation.
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