What are the benefits of R&D Tax Credit Loans?
Companies can wait over 15 months from the moment they start incurring R&D expenditure to when they receive their R&D tax credits, this is where SPRK comes in. We advance against your incurred R&D expenditure at any point in the financial year. Many companies take an advance against their R&D tax credits to optimise their cashflow, either reinvesting more into R&D, extending their cash runway or using R&D Tax Credit Advances as a non-dilutive source of capital to help their growth, meaning founders are not selling equity in their businesses to finance expansion.
Which companies are eligible for R&D Tax Credits?
Companies that make investments in research and development that are making advancements from a technology or scientific basis typically qualify for R&D tax credits.
What does R&D stand for?
Research and Development is defined as any activity that leads to the innovation of new products, processes, or services or improvements to those that already exist.
Is there a difference between an R&D Tax Credit Loan or R&D Advance Funding?
Both terms are used interchangably to define when a company looks to borrow money against its expected tax credit.
What companies qualify with SPRK for R&D Tax Credit Loans?
Companies that work with one of our SPRK Approved Advisors or are willing to have their R&D tax calculations and/or submission reviewed by one of our SPRK Approved Advisors may be eligible to apply for a SPRK R&D Advance.
How long does it take to apply for an R&D Tax Credit Loan?
Typically our online process is quick and easy to complete, once we have all the information we look to provide decisions within 24-48hrs.
How much will SPRK lend against my R&D Tax Credit?
SPRK will lend up to 80% of your expected R&D tax credit. For first time borrowers through SPRK this is typically set at 70%.
How much can I borrow?
SPRK lends from £75,000 to £1m+.
What are SPRK 's criteria for applying for R&D Tax Credit Loans?
Companies must have at least 3 months cash runway when applying to SPRK, each company is assessed against SPRK’s underwriting criteria in place at the time.
What sectors does SPRK lend to?
SPRK focusses its lending on the sectors that drive UK innovation. We do not lend to Construction Companies, Money Lending businesses and those where there may be a moral hazard from lending (such as Weapons Manufacturing / Sales or the Adult Entertainment businesses).
What security does SPRK take?
SPRK takes a first charge fixed and floating debenture over the business.
What happens if I already have an existing charge on my business?
SPRK will request a first charge over the business and if this is not available we can discuss this with you on a case by case basis.
Do you take Personal Guarantees?
No, SPRK does not typically take PGs. Our loans are secured against the company.
What happens if I have outstanding PAYE or a Time to Pay arrangement with HMRC?
HMRC typically nets amounts that are overdue on PAYE against the R&D Tax Credit, irrespective of if this is on a Time to Pay arrangement. For this reason SPRK will not lend where debts are owed to HMRC. In certain circumstances we can work with you to clear outstanding HMRC balances from your SPRK advance.
Does my business need to be making a profit to be eligible?
No, SPRK typically lends to loss making businesses – many of which are also pre-revenue.
How long does it take post approval to fund my Tax Credit Loan?
Post approval we look to issue loan agreements, borrowers have 72 hours to sign these agreements and funding is typically within 24-48hrs of signing.
Do I need to make interest payments on my R&D Tax Credit Loan?
Interest is calculated on your SPRK R&D Advance and added to the loan principal. There are no interest payments during the term of loan, interest is settled at the end of the loan.
Is there a minimum term on my R&D Tax Credit Loan?
SPRK has a minimum term of 3 months on any R&D tax credit advance.
How does repayment work?
SPRK’s bank details are used on the CT600 tax return. HMRC pays the R&D tax credit to SPRK, where we settle the outstanding principal and interest and return the excess to you within 24hrs.
Can I pre-pay my R&D Tax Credit Loan?
Yes, you can pre-pay your R&D tax credit at any time without penalties.
Do I need an R&D tax advisor to make an application to SPRK?
Yes, you will need to work with one of our SPRK Approved Advisors or be willing to have your tax calculations reviewed by one of our SPRK Approved Advisors. This ensures that we continue to work with clients that are getting best in class advice on their R&D tax credit submissions.
What happens if HMRC does not pay my R&D tax credit?
If HMRC reduces or declines or R&D tax credit you are still liable for the loan. The R&D Tax Credit Loan is a secured loan, in these cases SPRK will work with companies to find a solution.