Securing a public grant does not end with a favourable decision. Between the award and actually receiving the money lie deadlines, documentary requirements and obligations which, if not rigorously managed, can leave a company without funding it thought it had already secured.
In this article we look at what public grant management really involves, how the process is organised from start to finish and which mistakes account for most lost grants.
What does public grant management involve?
Public grant management is the ongoing work a company or organisation carries out to identify calls for applications, prepare the application, comply with the conditions set by the public authority and account for how the money received has been spent. Contrary to popular belief, it does not end when the award is notified: most of the work, and most of the risk, comes afterwards, during implementation and the justification of expenditure.
Managing public grants in an orderly way brings a company several advantages:
- It allows the company to anticipate relevant calls instead of reacting on the fly when the application period is already well under way.
- It reduces the risk of the authority demanding repayment of amounts already received because of formal non-compliance.
- It makes it easier to demonstrate, in any subsequent inspection, that the expenditure was carried out as approved.
- It frees up internal time by avoiding last-minute, reactive handling of corrections and information requests.
Stages of the public grant management process
A public grant goes through several distinct stages, each with its own documentation and deadlines.
Identifying suitable calls for applications
Before applying for anything, you need to check that the funding line genuinely fits the company’s profile: sector of activity, size, autonomous community (region) and the nature of the project (hiring, innovation, energy transition, internationalisation, among others). It is advisable to read the full regulatory bases (bases reguladoras), not just the published summary, because that is where the exclusions, non-eligible expenses and required implementation period are set out.
Preparing the application file
Once the call has been confirmed, it is time to gather the documentation the authority usually requires:
- A technical report describing the project or activity for which the grant is being requested.
- A detailed budget setting out the planned expenditure and how it fits the eligible cost categories.
- Certificates showing that the company is up to date with its tax obligations and with Social Security (Seguridad Social).
- A responsible declaration (declaración responsable) on other aid applied for or received for the same project, required to rule out double funding.
Submitting and processing the application
The application is submitted within the set deadline, usually through the authority’s electronic office (sede electrónica). This opens a processing phase in which the managing body may request corrections or additional documentation; failing to respond within the stated deadline can lead to the application being closed outright.
Notification of the decision
When the grant is awarded, it is essential to review the decision carefully, as it sets out the final amount, the project implementation period and the specific conditions the company must meet. In many calls, the grant must also be formally accepted within a given period, or it will lapse.
Implementation and justification of expenditure
During implementation, invoices, contracts and proof of payment linked to the subsidised expenditure should be kept in an orderly manner. The justification submitted to the authority must follow the format required by the call (expenditure statement, auditor’s report or financial report, as the case may be) and be filed within the set deadline.
Subsequent checks by the authority
Once the grant has been justified, the awarding body may carry out checks or audits to verify that the money was used for the approved purpose. All documentation should be kept for the full legal limitation period, as it may be requested in a review years after payment.
Common mistakes in public grant management
Most grants are not lost because substantive requirements are not met, but because of management failures that could have been avoided:
- Relying solely on the summary of the call without reviewing the full regulatory bases, which often contain exclusions or implementation periods that completely change the viability of the project.
- Submitting the application late or with incomplete documentation, as many calls do not allow certain documents to be corrected, which can lead to the application being excluded outright.
- Failing to check the limits on combining the grant with other aid, which may force the company to repay amounts already received if double funding of the same expense is detected.
- Incurring expenditure outside the eligible period set in the call, since any invoice or payment made before or after that window is automatically excluded from the justification.
- Submitting a poorly itemised financial justification or one with unverified payments, one of the most frequent causes of full or partial repayment of the grant.
- Missing the deadline to respond to a request for correction, which can lead to the loss of a grant that had already been formally awarded.
- Overlooking post-payment obligations, such as maintaining the investment, employment or activity for a minimum period; failure to comply means repaying the amount with interest.
Well-planned public grant management requires regulatory knowledge, organised documentation and constant monitoring of every deadline, from the call for applications until years after payment. At Afianza we support companies throughout this process to reduce risks and increase their chances of success. Would you like us to check whether your company is eligible for any current calls?
Frequently asked questions about public grant management
Is it compulsory to hire an external adviser to process a public grant?
No. The regulations do not require a third party to be involved, and any company can submit and justify its own application. However, many organisations choose to rely on specialist grant advisers because the volume of documentation and the demands of each call mean that a formal error can prove more costly than the management service itself.
What happens if the company waives a grant after accepting it?
A grant can be waived at any time before the end of the implementation period, but this must be formally notified to the awarding body and may involve repaying any advances already received, together with the corresponding late-payment interest. In addition, some calls include penalties that restrict the company’s participation in future rounds of the same funding line.
Are public grants subject to Corporate Income Tax?
Yes. As a general rule, grants received are treated as income and must be included in the Corporate Income Tax (Impuesto sobre Sociedades) taxable base for the financial year in which they are awarded or recognised in the accounts, unless a specific exemption is provided for in the applicable legislation. That is why it is advisable to plan the tax impact of the grant in advance, as it can significantly reduce the net benefit that ultimately remains for the company.
