Understanding Costs and Payment Arrangements in EU Grants

Costs in EU Grants

In the context of EU grants, numerous forms of costs can be utilized, depending on the specific call or topic conditions outlined in the grant agreement. This is particularly relevant for programs like the EIC Accelerator, EIC Pathfinder, and other initiatives under the European Innovation Council (EIC), which aim to support innovative projects, especially for deep tech startups and SMEs.

Types of Costs

• Specific Unit Costs: These costs may be outlined in the specific call or topic conditions. Detailed information can be found in Annex 2a of the grant agreement. Understanding how these costs work is crucial for organizations seeking EIC funding, as they often represent a significant portion of the budget.
• Flat-Rate Costs: This refers to costs calculated by applying a predetermined percentage to other eligible costs. The following are examples of flat-rate costs:
  • Indirect Costs: A flat-rate of 25% is applied to the total eligible direct costs, excluding eligible direct costs for subcontracting, financial support to third parties, and any unit costs or lump sums that include indirect costs. This is an essential aspect for applicants in the EIC Accelerator process, as it allows for simplified accounting.
  • Lump Sum Costs: A global amount considered to cover all costs of the action or a specific category of costs, if provided for in the specific call or topic conditions. These lump sums can be particularly beneficial for startups seeking non-dilutive funding opportunities.

It’s important to note that costs can be declared under multiple EU synergy grants, provided that the cumulative funding under these grants does not exceed 100% of the eligible costs and the contributions declared to them. This aspect is essential for EIC Accelerator applicants who may be combining funding sources.

Reporting & Payment Arrangements

The reporting and payment arrangements are detailed in the grant agreement, specifically in the Data Sheet (point 4) and Articles 21 and 22. Knowledge of these arrangements is vital for managing a successful EIC Accelerator application and ensuring funds are accessed efficiently.

Initial Pre-financing

Once the grant agreement is signed, the consortium typically receives a float to commence work on the project. This initial pre-financing is usually set at 160% of the average EU funding allocated per reporting period (calculated as maximum grant amount divided by the number of periods). For projects that involve only one reporting period, this amount will be lower, as 100% would represent the total grant amount. Understanding this pre-financing mechanism is key for EIC Accelerator SMEs and startups planning their cash flow.

Payment Deductions

Payments might be automatically reduced if any consortium member has outstanding debts owed to the EU (from the granting authority or other EU bodies). These debts will be offset by the Agency, according to the conditions outlined in the grant agreement (Article 22). Awareness of potential payment deductions can help EIC Accelerator applicants in planning their finances strategically.

At the time of the pre-financing payment, an amount ranging between 5% to 8% of the maximum grant amount will be deducted from the pre-financing payment and allocated to the mutual insurance mechanism. This mechanism is intended to cover risks associated with the non-recovery of sums owed by the beneficiaries, which is a critical consideration for all applicants in the European startup funding landscape.

Interim and Final Payments

The consortium will receive one or several interim payments linked to a periodic report, depending on the project’s duration. These interim payments provide a crucial lifeline for many EIC Accelerator startups, ensuring they have access to necessary funds as they progress through various stages of development.

At the conclusion of the project, the consortium will be asked to submit a report upon which the final grant amount will be determined. If the total of earlier payments is less than the total grant amount, the final payment will adjust accordingly. This report will also be essential for demonstrating compliance with the EIC Accelerator evaluation criteria, which assess the project’s alignment with the goals and objectives of the funding program.

Best Practices and Strategies for EIC Accelerator Applications

When navigating the complexities of EU grants, particularly under the EIC framework, following best practices can enhance the likelihood of success:

• Thorough Proposal Writing: Strong proposal writing is essential for the EIC Accelerator application. Make sure to clearly articulate your project objectives, potential impact, and how the funding will facilitate the achievement of these goals.
• Engage with Coaching Services: Consider utilizing EIC Accelerator coaching services to refine your application. These services can provide tailored advice and insights that may significantly boost your grant application.
• Understand Funding Eligibility: Familiarize yourself with EIC Accelerator funding eligibility criteria. Ensuring your startup or SME meets these requirements will prevent wasted efforts on applications that do not stand a chance.
• Keep Track of Deadlines: Staying informed about application deadlines, such as the upcoming EIC Accelerator application deadline in 2025, ensures you have ample time to prepare a comprehensive application.
• Utilize Case Studies: Reviewing successful EIC Accelerator case studies can offer valuable lessons on what works and how to position your project effectively.

Conclusion

Understanding the intricacies of costs, payment arrangements, and the strategic elements of the EIC Accelerator and other EU grants is fundamental for startups and SMEs aiming to secure funding. By harnessing the knowledge of costs—ranging from specific unit and flat-rate costs to pre-financing and final reporting—and employing best practices in proposal writing and application strategies, applicants can significantly enhance their chances of success in securing much-needed funding for innovative projects.

As the landscape of European deep tech funding evolves, it is crucial for startups to stay informed about the latest developments, funding opportunities, and practices within the EU grant framework, particularly as they relate to initiatives like the EIC Accelerator.