Key criteria for evaluating grants. What determines the success of your application?

Did you know that the process of evaluating grant applications is a key moment in the decision to allocate funding? The process of processing grants involves several steps to ensure that applications are evaluated in a transparent and fair manner.  

Even though the systems and forms for creating grant applications and their subsequent administration have become more intuitive and user-friendly, there are many elements to keep in mind when preparing them. That is why we will now introduce the process of evaluating applications to you in greater detail and, as part of our services, will ensure that you go through it successfully. We will provide a detailed assessment of the financial health and status of a distressed business. 

In this article, we will first focus on the eligibility criteria and then we will also introduce you to the formal criteria, the substantive assessment of grant processing and financial health.  

Eligibility criteria 

1. Corresponding programme framework: Applications are evaluated on the basis of their relevance to the objectives and priorities set out in the given programme framework. Projects should contribute to the achievement of the strategic objectives set. 
2. Definition of applicant: The assessment is whether the applicant meets the conditions laid down for accepting an application. This includes, for example, legal personality, legal capacity and financial stability. 
3. History and financial health: Applicants are evaluated in terms of their history, because they usually need to have been in business for a certain period of time before applying for a grant. Their economic health is also being assessed, specifically the results of the balance sheet and profit and loss statement. 
4. Availability of financial resources: It is ascertained whether the applicant has sufficient financial resources and whether its financial plan is realistic and sustainable. 

Formal criteria 

1. Administrative procedures – Documentation and completion of forms: Applications are evaluated for completeness and correctness of the required forms and documentation. 
2. Meeting deadlines: Applicants must comply with the deadlines for submitting applications and providing additional information or documents. 
3. Technical requirements: Applications shall be assessed as to whether they meet the technical requirements set out in the terms of the call for applications. 

Substantive evaluation 

Substantive evaluations may vary depending on the specific programme or fund, but there are some general aspects that are often taken into account. Substantive evaluation generally works with different scoring models. Some programmes need to meet a minimum required score, while for others the score is crucial when competing with other projects. We will look at some of these aspects, and also how they can be extended in various programmes: 

1. Relevance and quality of the project 

• Specific target group: In some programmes, it is crucial that the project is directly targeted at a specific target group, such as unemployed young people, people with disabilities or small businesses. 
• Estimated impact on EU policies: European programmes often assess a project’s ability to contribute to objectives of the European Union in areas such as sustainability, innovation and competitiveness. 

2. Expected outcome and effectiveness 

• Measurable performance indicators: Some programmes require specific success indicators to be set to monitor the progress of the project and the results achieved. 
• Efficiency in the use of funds: Particular attention is paid to how efficiently the allocated funds will be used and whether the costs of the project are adequate to its planned outputs. 

3. Sustainability and long-term impact 

• Sustainability Plan: In some cases, a plan is required for how the project will be sustainable after the funding ends, for example through the introduction of new business models or local community involvement. 
• Long-term social and economic impact: The expected long-term impact of the project on society and the economy is assessed, including its ability to create jobs, increase competitiveness and improve living conditions. 

4. Innovation and originality 

• New technologies and procedures: Some programmes focus on innovative approaches and technologies that have the potential to address current challenges in areas such as health, energy and the environment. 
• Cooperation and partnership: Innovative approaches to collaboration and partnerships between different entities, across the public and private sectors, non-profit organisations and research institutions are assessed. 

Other criteria for the substantive evaluation of grant applications take into account the conditions of the different programmes in terms of their specific objectives and expected outputs, which helps to make more efficient use of the available funds and achieve the desired results. This is followed by the decision to award the grant and the subsequent provision of funds.  

Do not forget the financial health of the company 

If you have only just learned that the financial health of your business is part of the process of evaluating your grant application, don’t worry. We will explain it to you! The conditions for assessing financial health vary between grant programmes. For example, within the OP TAK (Operational Programme Technology and Applications for Competitiveness), this applies to projects with a budget of CZK 5 million and higher. For farmer subsidies, financial health is assessed from a budget of CZK 2 million. 

Financial health: Three basic indicators  

Financial health is assessed on the basis of the financial statements for the last two (in some cases three) closed accounting periods and is done using three ratios: debt, ROA (profitability, to put it simply) and the ratio of the requested subsidy to the total assets of the company. In order to qualify as an applicant, a business must score the minimum required points for the three criteria or be ranked in the given category. 

The good thing is that tools that are publicly available can be used to calculate financial health. Alternatively, the tools can also be used in the reverse way, i.e. to calculate the maximum possible support your company can apply for in order to pass the financial health assessment. We have only mentioned some examples of financial health assessments here, but there are other options for such assessments across grant programmes. 

A distressed business: Compare the amount of equity 

Financial health is also related to the assessment of a distressed business, which, according to the latest methodologies, involves a number of factors. However, the easiest way for any applicant to check, as a preliminary step, whether it is a distressed business is to compare the company’s equity and registered capital, which can be found in the balance sheet for the most recent period. 

A company is considered to be distressed if its equity capital is less than half of its registered capital. For example, if your equity is at CZK 100ths CZK and your share capital is CZK 200ths, your company will not be considered a distressed business. However, if you had equity of only CZK 99ths, you would already fall into the category of distressed business and would not be able to apply for most business grants. 

Use help from professionals!  

You should now be clearer on the important criteria for evaluating grant applications. Still not clear? Never mind. Contact us, we will help you. We always conduct a detailed assessment of the financial health and status of companies in difficulty when implementing a specific project.  

Our experts will find a grant title suitable for your company and your financial plan and guide you through the entire process of preparing your grant application. They will provide the preparation of the grant application including all relevant annexes, all communication with the relevant authorities during the preparation and approval process of the application and assistance in the preparation and subsequent control of the tender procedure for the project supplier.