R&D tax credits are a lifesaver for many startups, the money is invested in new innovation, contributes towards the next payroll run, the rent for the following few months or maybe even an upgrade to the latest Apple MacBooks.
Regardless of the size of the R&D claims, or how it’s going to be spent, companies are always eager to get their R&D tax credit claims into their bank as quickly as possible – and why wouldn’t they be.
The good news is there is a way to accelerate R&D claims in the form of a drawdown loan facility.
Let’s do this by way of an example:
Say a company has a March year-end. So at the end of each year, the company makes an R&D tax credits claim. But what if in one particular year, the company had a funding gap, or wanted to accelerate their R&D roadmap, or perhaps buy a piece of high-tech laboratory equipment, but just couldn’t do it right now because of cash flow reasons.
The good news is, that as long as the company is spending money on R&D qualifying activities, many lending providers are more than happy to entertain a loan facility.
So this company has already made a claim for the year ended 31 March 2019 and is intending to make a claim for the year ending 31 March 2020. The R&D tax credits won’t arrive until mid-May 2020 the earliest and they could do with the money right now to secure a good deal on a specialist piece of research equipment.
Well, if the company has a track record of making successful R&D tax credit claims, and is currently spending money that qualifies for R&D tax credits, all that the company needs to do is quantify the amount of R&D tax credits they expect to get for the year ending 31 March 2020 and arrange a drawdown loan facility of up to 80% of the value of their accrued and forecasted R&D tax credits amount.
The loan is then repaid once the money arrives in the company bank account in May 2020.
Loan set-up fees are between 4-5% of the value of the loan and charge a monthly interest rate of around 1-1.5%. These loans are usually be arranged within a week or so.
RDvault works with many lending providers such as; ArchOver, Finstock Capital and Rocking Horse to name a few. Our software can also help estimate the value of R&D claims quickly, and we’re recognised by all the major R&D lending providers in the UK.
We’ve helped businesses secure millions of pounds of R&D tax credits drawdown loan facilities to date.