R&D Tax Relief VS Business Loans

Business financing can be a real challenge for SMEs and start-ups. Especially in the early stages of development it’s difficult for enterprises to secure attractive financial investment and many will opt for business loans instead. However, the reality of traditional business loans is that they can be expensive and there may be other much smarter options available. One of those options is R&D tax relief, which can provide a source of funding for many SMEs, without the expense attached to traditional business loans.

Fuelling expansion plans without debt

R&D tax relief creates options when it comes to expansion by generating another source of cash flow for the business that is set off against R&D spend. So, for innovative organisations that are carrying out eligible activities, there are much better options available than taking out traditional business loans. R&D tax relief can be a straightforward way to fuel expansion plans without harnessing the business to debt – and the substantial amounts involved can make this a smart choice for any SME looking to expand and accelerate growth.

The average claim is £53,000

The average claim stands at around £53,000, which is an amount that can make a big difference in an SME environment. Its is available on a tax-free basis and it’s also interest free, which is not something that can be said for traditional business loans. Whether your organisation is looking to survive through challenging times or fund growth over the coming years, this funding can be vital, especially as it doesn’t come with interest attached. During the pandemic there were many SMEs that only managed to stay afloat due to smart use of R&D tax relief and this is the kind of source that can provide a safety net for any organisation today, whether affected by energy price rises or increases in the cost of living.

A government incentive for innovative businesses

R&D tax relief is aimed at those businesses that are investing in eligible R&D. Any limited company can claim under either the scheme for large businesses or the scheme that is aimed at SMEs – there are no limits on industry. It’s the R&D activities themselves that will determine whether or not a business is likely to be eligible for R&D tax relief. It’s thought that, currently, around 97% of companies that are eligible for R&D tax relief are not claiming under the scheme so it’s a source of funding that is often simply going to waste. R&D tax relief works by setting off a percentage of the investment in eligible R&D activities against future tax liability or making this available as a cash tax credit.

If your business might be one of those SMEs that is eligible but not currently claiming then you may be missing out. There are many more optimum solutions for funding than traditional business loans – and R&D tax relief is one of them.

We’re passionate about supporting businesses that are brave and bold in staying ahead of the curve and are creating economic growth and opportunities for our country. With SPRK Capital, you can get advance funding on your R&D tax claim.

Contact us today to find out if you’re eligible.