R&D Advance Funding: How can it benefit your business?

R&D Tax Credits can make a big difference to cash flow for many businesses. The process of R&D Advance Funding ensures that any organisation can access a future tax credit earlier in the year. This means that the funds that are freed up via R&D Tax Credits can be accessed at the most critical time for your business, creating a source of income that is available to be invested at a time when it is most needed.

How does it work?

R&D Advance Funding essentially uses the future tax relief payment from HMRC as collateral for a loan facility. The loan, fees and interest will be repaid when HMRC makes the R&D Tax Credit payment further down the line. The process of applying for R&D Advance Funding is fairly simple and involves looking at whether your business is eligible for R&D Tax Credits as well as the general financial health of the business. For any business going through this application, there will be a requirement to prove that development costs fall into the right categories and that the project is eligible.

When is the funding available?

It can be accessed at any time during the financial year. Most R&D Advance Funding will require at least three months’ worth of development spending on at least one project or technology that falls within the eligibility criteria. The funding is paid directly to your business as a loan and then repaid by HMRC later in the year through the R&D Tax Credit mechanism.

What are the benefits of R&D Advance Funding?

• The opportunity to invest more in R&D – Research and development is vital and the cycle of R&D Advance Funding helps to ensure that the more your business invests now, the more funds it will have available to continue doing so in the years to come. For example, funding can be used to hire developers and engineers and those costs can then be used to create an additional claim.

• There are no limits on what the loan can be used for – Whether it’s technology or marketing investment, your business can use the funds where they are needed most.

• An additional source of growth funding, available now – Especially for early-stage companies, funding can be a complex process that often means giving away a degree of control and/or waiting for complex equity rounds to close. Using R&D Advance Funding allows your business to use its innovation and intellectual property to get straightforward growth funding that doesn’t come with the high costs of something like equity sales.

• Push through the bottlenecks – Many business owners and founders know exactly where they need to go next when it comes to development and growth but the issue is funding. R&D Advance Funding provides a way to plan cash flow and make strategic investment decisions that will help to drive the business forward.

There are clear benefits for any business interested in using the SPRK Capital process of R&D Advance Funding. If you’d like more information about the SPRK Advance, to find out if you’re eligible, or how much capital you could access, then please click here.