Business Development Grant: up to 500 000 euros to implement a company's comprehensive development plan
4 October 2026 saw the entry into force of the new Business Development Grant regulation, which aims to support companies' comprehensive development, strengthen their international competitiveness, increase value added and improve export capacity.
The grant amount is 100 000–500 000 euros per project. For micro, small and medium-sized enterprises, the grant may cover up to 50% of eligible project costs. For large enterprises, the grant rate under the block exemption is up to 15%, but for de minimis aid, it may be up to 50% (§ 9 lg-d 2–3).
A key feature of the measure is that funding is not sought for a single standalone investment or activity. The project must be based on the company's comprehensive development plan, covering at least three development activities specified in the regulation, which EIS must approve before the grant application is submitted (§ 13).
What is the purpose of the Business Development Grant?
The grant aims to help a company implement a comprehensive development plan that increases its international competitiveness, value added and export capacity (§ 3 lg 1).
The measure focuses, among other things, on bringing higher-value-added products, services and technologies to market faster, exports, and the development of production and service processes (§ 3 lg 2).
The grant is intended, among other things, to accelerate the market launch of products and services, increase exports, improve process efficiency through digitalisation and artificial intelligence, strengthen international cooperation and improve the commercial use of intellectual property (§ 3 lg 3).
The grant also comes with a specific performance requirement. By the end of the second financial year following the year in which the project's eligibility period ends, both the company's value added and exports must have increased by:
- at least 15% for micro, small and medium-sized enterprises;
- at least 10% for large enterprises (§ 3 lg 4).
Who is the Business Development Grant intended for?
A company registered in the Estonian Commercial Register that meets at least three of the eight conditions set out in the regulation may apply (§ 10 lg 1).
These conditions include:
- sales revenue of at least 500 000 euros in the previous financial year;
- export sales revenue of at least 100 000 euros in the previous financial year;
- value added per employee at least equal to the Estonian average for the relevant sector;
- total investment of at least 100 000 euros in research, development or innovation activities over the last two financial years;
- at least 100 000 euros in private-sector investment raised over the last three financial years, including equity, venture capital and other market-based capital investments; loans, public-sector grants and financing from related parties are not counted (§ 10 lg 1 p 5);
- the company has a prototype, proof of concept or tested service model demonstrating the core functions or operating model of a technology, product or service, and its functionality has been verified in an appropriate development or target environment (§ 10 lg 1 p 6);
- the company has at least two full-time employees, and at least one employee's duties include managing technological or service development; this employee must have a relevant higher education qualification or proven work experience in the field (§ 10 lg 1 p 7);
- the average gross monthly salary paid by the company per employee in the quarter preceding the application was at least equal to the latest Estonian average gross monthly salary for the relevant sector published by Statistics Estonia (§ 10 lg 1 p 8).
The company therefore does not need to meet all eight conditions simultaneously, but must meet at least three of them.
The usual requirements also apply regarding tax arrears, submission of reports, repayment of previous grants, bankruptcy and liquidation proceedings and, for certain types of State aid, the status of an undertaking in difficulty (§ 10 lg-d 2–7).
Which sectors are excluded from funding?
The regulation does not apply, among other things, to projects in the following sectors:
- wholesale and retail trade;
- financial and insurance activities, except fund management;
- real estate activities;
- gambling and betting activities;
- manufacture of tobacco products (§ 1 lg 3).
Exclusions arising from State aid rules must also be taken into account (§-d 1–2).
Which activities are supported?
The grant is intended to implement a company's development plan, and the regulation sets out seven main areas of supported activity (§ 6 lg 2).
1. Organisational and process development
Support is available for developing and implementing new or significantly improved work and business processes.
This may include, for example, financial management, product development, procurement, personnel, inventory, materials or resource planning processes, as well as the development and implementation of software solutions needed to manage them.
Process development consultancy and the recruitment of a new development employee or outsourcing of the corresponding development capability may also be supported (§ 6 lg 3).
2. Quality and compliance management development
Support is available, for example, for developing quality and compliance systems, audits, certification, developing processes needed to meet regulatory requirements in target markets, and certification and legal advice related to entering new markets (§ 6 lg 4).
Implementation of the baseline standards ISO 9001, ISO 14001, ISO 45001, ISO 27001 and ISO 22301 is not among the supported activities (§ 6 lg 4 p 1).
3. Developing export activities in a new target market
Support is available for developing export activities in a new target market for a new or improved product or service with high value added.
For example, a project may include preparing a sales and marketing strategy, target-market consultancy, preparing client meetings, product development advice to adapt a product or service to the specific characteristics of the target market, participation in international trade fairs and production of marketing materials (§ 6 lg 5).
However, the grant does not cover routine direct sales activities.
4. Strategic management of intellectual property
Support is available for preparing and developing an intellectual property strategy, freedom-to-operate analysis, securing initial protection for intellectual property rights and extending protection to target markets, and expertise related to developing licensing systems (§ 6 lg 6).
Trademark protection is excluded from the supported activities.
5. Digitalisation, automation and artificial intelligence
The measure can support the development of a company's data management and data-driven management, the analysis, development and implementation of information systems and digital solutions, and the creation of interfaces between them.
It can also support the analysis, development and implementation of solutions based on artificial intelligence, automation and data analytics (§ 6 lg 7).
6. Testing a product or service in a real-world operating environment
Support is available for conducting pilot projects, involving pilot customers, collecting feedback and making limited adjustments based on that feedback before entering the wider market (§ 6 lg 8).
It is important that these activities test the functionality and market fit of the product or service, rather than constitute routine sales or marketing activities.
7. Machinery and equipment related to digitalisation and automation
Equipment directly and inseparably linked to the digitalisation, automation or artificial intelligence solution in the development plan may also be supported.
The regulation lists, among other things, sensors, machine vision equipment, measurement and data collection equipment, edge computing devices, automation controllers, robots and data collection infrastructure equipment (§ 6 lg 9).
However, this does not mean that the measure is a conventional equipment investment grant. As a general rule, the purchase of conventional machinery or equipment used for production or service delivery is ineligible (§ 7 lg 3 p 7).
If machinery or equipment is not used in the project throughout its entire useful life, only the proportion corresponding to its use in the project is eligible, and costs exceeding the depreciation attributable to that period of use are ineligible (§ 7 lg 3 p 7).
The development plan must combine at least three areas of activity
The development plan is central to the Business Development Grant.
Before submitting a grant application, the company must complete a preliminary consultation with EIS and submit its development plan to EIS for approval (§ 13 lg-d 1–4).
The development plan must cover at least three activities listed in § 6 lg-s 2 (§ 13 lg 5 p 2).
The activities must be innovative, logically connected and form a coherent whole. The project's business impact, financing rationale, activity schedule and interdependencies must also be credibly described (§ 13 lg 5).
Approval of the development plan does not yet mean that funding has been awarded. It is a prerequisite for submitting a grant application, which is then assessed separately (§ 13 lg 6).
How much funding is available?
The grant amount per project is 100 000–500 000 euros (§ 9 lg 1).
The maximum grant rate as a proportion of eligible project costs is:
- up to 50% for micro, small and medium-sized enterprises;
- up to 15% for large enterprises under the block exemption (§ 9 lg 2).
For large enterprises, the grant rate may be up to 50% where de minimis aid is used (§ 9 lg 3).
The company must cover the remaining eligible project costs through its own contribution. Other non-repayable grants from the State, local authorities, European Union funds or other external funding sources cannot be used as the company's own contribution (§ 9 lg-d 4–5).
How long can the project last?
The standard maximum duration of the project's eligibility period is 24 months (§ 8 lg 3).
For a valid reason, the grant recipient may request an extension once, by up to 12 months, provided that the project's intended outcome remains consistent with the measure's objective (§ 8 lg 5).
The project's eligibility period begins on the application submission date or a later date specified in the application and set out in the grant approval decision (§ 8 lg 2).
When applying for aid under the General Block Exemption Regulation, project activities must not begin, nor may commitments be made to implement them, before the grant application is submitted (§ 8 lg 4).
Which costs are ineligible?
When planning to use the measure, it is worth noting that the grant generally does not finance routine business activities.
Ineligible costs include, for example:
- costs of transactions between related parties;
- standard software and conventional IT solutions without an innovation component;
- maintenance, hosting and operating costs of existing systems;
- creation and modification of websites and mobile applications;
- routine tax, legal, accounting, audit and marketing consultancy;
- training related to routine operations;
- conventional machinery and equipment used for production or service delivery, except equipment meeting the conditions set out in the regulation;
- day-to-day operating costs and overheads;
- direct sales activities and advertising;
- costs incurred before submitting the application;
- VAT (§ 7 lg 3).
Costs are reimbursed on the basis of costs actually incurred and paid. Only costs paid by bank transfer are eligible (§ 7 lg 1).
How are applications assessed?
Applications are assessed against five criteria (§ 15 lg 2):
- strategic impact – 25%;
- market potential and international validation – 25%;
- project justification and coherence – 20%;
- the company's capacity and competence – 20%;
- cost-effectiveness – 10%.
All criteria are scored on a scale of 0–4 (§ 15 lg 3).
To receive funding, a project must score at least 3,0 points for each of the strategic impact and market potential criteria, at least 2,0 points for the remaining criteria and an overall score of at least 2,5 points (§ 16 lg 1).
Where applications are submitted in rounds, eligible projects are funded in ranking order until the budget is exhausted (§ 16 lg 2).
State aid conditions
Depending on the activity, funding is granted either as State aid under the General Block Exemption Regulation or as de minimis aid (§ 2).
Different activities may fall under different State aid categories. For example, Article 29 of the General Block Exemption Regulation may apply to process and organisational innovation activities, Article 18 to SME consultancy and Article 28 to innovation aid for SMEs (§ 2 lg 2).
Support for developing export activities (§ 6 lg 2 p 3) and testing and validating a product or service in a target market (§ 6 lg 2 p 6) is granted only as de minimis aid (§ 2 lg 2 p 3).
When using de minimis aid, the amount of de minimis aid already used by the company and its linked enterprises, as well as EU cumulation rules, must be taken into account (§ 2 lg-d 3–4).
When can companies apply for the Business Development Grant?
The regulation entered into force on 4 October 2026, but its entry into force does not automatically mean that applications can already be submitted.
Under the regulation, applications may be accepted either on a rolling basis or in rounds. EIS may also organise thematic application rounds focusing on only some of the activities listed in the regulation (§ 12 lg 1).
For round-based applications, EIS must publish the opening and closing dates of the application round and its budget at least 20 calendar days before applications open (§ 12 lg 4).
The regulation and explanatory memorandum analysed do not specify the opening date or budget of the first application round.
What should companies do now?
A company considering applying for the Business Development Grant should first check whether it meets at least three of the eight qualifying conditions listed in § 10 lg-s 1.
It should then consider its comprehensive development plan: what measurable strategic objective it wants to achieve, and which combination of at least three supported areas of activity would form a coherent whole for achieving it.
The project's projected impact on exports and value added should be calculated separately, as growth in these indicators is not only part of the assessment: receiving the grant also entails the subsequent performance requirement set out in § 3 lg-s 4.
It is also worth taking the following steps early:
- identify the project's eligible and ineligible costs;
- assess the capacity to provide the required own contribution;
- check the company's use of de minimis aid;
- prepare a forecast of the project's business impact;
- define target markets and their potential;
- assess the need for an in-house team and outsourced expertise.
Submission of the application must be preceded by a preliminary consultation with EIS and approval of the development plan, making substantive preparation of the development plan one of the first steps under this measure.
Summary
The Business Development Grant is aimed at companies whose planned development is not limited to a single investment or consultancy service, but consists of several interconnected development activities.
The grant amount is 100 000–500 000 euros per project, with grant rates of up to 50% for SMEs and up to 15% for large enterprises under the block exemption (up to 50% for de minimis aid) of eligible costs.
The applicant must meet at least three of eight conditions relating to financial capacity, innovation capability, exports and its team. The development plan must include at least three areas of activity listed in the regulation and must be approved by EIS before the application is submitted.
The regulation governing the measure has entered into force, but the documents analysed do not yet specify the opening date or budget of a particular application round.
Sources and legal basis
- Minister of Economy and Industry's 26.09.2026 määrus nr 30 “Business Development Grant”, in particular §-d 1–3, 6–10 and 12–16.
- Explanatory memorandum to the draft regulation of the Minister of Economy and Industry “Business Development Grant”, 18.06.2026 – used to explain the background and objectives of the measure.