The ACT's mid-year budget review, released on Tuesday, flagged $586,000 in funding for the festival in 2019-20, up from $134,000 in 2018-19. In 2021-22, that was expected to rise to $637,000.

The extra money should be used to make it cheaper for local businesses to hold a stall at the event, Adrian Mercieca, owner of Mobile Margaritas, said. He has had a stall there for the last two years but this year felt like it wasn't worth it.

"Quite frankly, I was really disappointed with the way it's being run. There's just no profit, and [the ACT government] is just taking all the money," Mr Mercieca said.

"I paid about $11,000 for my stall, [including more than $1000 for a liquor licence]  ... then you have to factor in all your wages and all your expenses, and you're running at a huge loss."

Stallholders who stay for the full three-day duration of the festival pay between $900 for a 3 x 3 metre community group-run site, selling food only, and $9000 for a commercial store-run site of 6 x 3 metres, selling food and alcohol.

Liquor licences cost extra, between $126 and more than $6000 depending on how much alcohol is stocked, and power and cool room facilities are also additional.

In 2018, Mobile Margaritas had trouble breaking even on costs because their stall was hidden behind others, Mr Mercieca said. He suggested that, with the extra funding, the festival should take a portion of each stall's profit from the event, rather than charging exorbitant fees for permits up-front.

"Last year, my store was recessed three metres behind the other stores. I literally had to have spruikers out there, telling people that we were sitting behind the Greeks," Mr Mercieca said.

"People selling chips on a stick, they're getting the prime real estate spot."

Mr Mercieca also decided not to have a stall at this year's festival because of new rules that stated commercial stalls could only sell locally produced alcohol. He said it was nearly impossible to get Australian-made, let alone Canberra-made, tequila, and using local alcohol would mean charging up to $30 for a margarita.

The George Harcourt Inn was also not participating in the festival this year due to the rule change, a staff member said.

NSW-registered company Chips on a Stick is a sponsor of the festival, and will have five stalls at this year's event. Its owner, Deep Shah, would not say how much he spent on the sponsorship but the festival's "gold package", which gives access to up to five stalls, is listed at $50,000 plus.

"We're providing a product that everybody loves and it's a good product," Mr Shah said.

"Everyone wants something for nothing. We're paying a large amount of money for [the festival] and we're sponsoring it, so we get these stalls.

"We want people to know that events like these would not happen without their sponsors."

It is understood that stallholders apply for different sections of the festival grounds but aren't guaranteed particular spots. This could be influenced by how many years they have had a stall at the event, and whether they are sponsoring it.

The Australian Croatian Club has had a stall at the Multicultural Festival nearly every year since the event began in 1996, a spokesman said. The club relies wholly on volunteers - it employs about 10 for the event - and money from its leaders' pockets.

"If [the government is] getting that much funding, they shouldn't charge us that much for tents. It's costing me $1030 for a liquor licence for two days and $3000 for a stall. I've got to sell $4000 [worth of stock] before I make any money," the spokesman said.

"Things that are not multicultural shouldn't be there. The ones that are struggling are the not-for-profit organisations. We run our club for the community and any money we've got we throw back into the church and dancing.

"Who the hell needs chips on a stick?"

Mr Kernal, another seller of chips on a stick, was forced out of attending the festival this year because of costs and too much competition between similar stalls, its Sydney-based owner, Sam Nabhan, said.

"I know [Mr Shah] gets very good [stall] positions with sponsorship but if I was to sponsor the event, I'd want exclusivity. I don't want four or five other people doing chips on a stick," he said.

As of February 13, there were 340 stallholders registered to attend the National Multicultural February, which will be held in the city centre from Friday to Sunday. This is up from the 337 applications received in 2018.

Alcohol permits have been granted to 28 stallholders, six of which are commercial operators. This has also grown from last year's festival, where there were 17 stalls selling alcohol.

Extra funding for the event was not a result of community backlash, a spokesperson for Chief Minister Andrew Barr said.

"The festival continues to grow in popularity, participation and attendance, this new ACT Government investment will support further growth through assigning dedicated, permanent, staff to the Festival in the lead up to its 25th anniversary in 2021," the spokesperson said.