Tag Archive for: Grant Loans

Are Grants Enough? When SMEs Should Add Non-Dilutive Loans to the Mix

Are Grants Enough? When SMEs Should Add Non-Dilutive Loans to the Mix

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Many UK SMEs use grants to fund early-stage innovation. Grants protect equity and support technical risk, and they can also demonstrate credibility with customers and investors. However, they can also leave gaps between when SMEs pay staff and suppliers and when grant cash arrives.

Non-dilutive loans give SMEs another way to fund delivery without issuing new shares. When SMEs use these loans alongside grants, they can keep projects moving, maintain teams and reduce delays linked to claim and payment cycles.

In this guide we explain when grants alone may limit an SME’s progress and how to decide whether to add non-dilutive loans to the funding plan.

Are Grants Enough on Their Own for Growing SMEs?

Many SMEs rely on grants because they reduce early financial pressure and help validate technical plans. As companies progress, the limits become clearer. Grant cycles move slowly, payments arrive after claims, and awards often cover only part of project costs. These timing gaps affect hiring and supplier commitments and can slow overall delivery. Even SMEs working with their first significant grant can face these pressures once project costs start to ramp up.

When Should SMEs Combine Grants and Non-Dilutive Loans?

There is no single trigger point. Instead, a few practical signals show when grants alone start to constrain delivery. The scenarios below show where non-dilutive loans can support delivery and growth while grants remain part of the funding plan.

What if you have a grant but lack upfront cash to start delivery?

Many grant schemes pay in arrears and use claim cycles to release funds. In practice, SMEs need to commit to payroll, materials and supplier contracts before they submit the first claim.

If the company does not hold enough working capital to make those commitments, the project can start later than planned or move forward in smaller steps than the original scope assumed.

Here, a non-dilutive loan linked to the grant can bring the timing of payments to staff and suppliers closer to the timing of grant income. For example, grant advance funding or an innovation loan can provide part of the project budget upfront, and the approved grant secures the facility. The SME can then hire the team and place orders according to the technical plan rather than the claims timetable.

What if your R&D programme depends on tax credits that arrive too late?

Some SMEs run ongoing R&D programmes where R&D tax credits form a material part of expected cash inflow. The work continues each month, but tax credit payments arrive after the financial year-end and after HMRC has processed the claim.

If R&D costs rise faster than other income, this timing gap can put pressure on cash balances, even if the underlying claim is strong. Management may respond by slowing hiring, reducing external work or pacing experiments to match available cash rather than the technical opportunity.

In this case, non-dilutive loans that draw on expected R&D tax credits can help. An R&D tax credit loan brings forward part of the anticipated credit so that teams can continue work at the planned pace. When HMRC pays the claim, the company repays the facility from that inflow.

How can you scale beyond what the grant covers?

Grant briefs often define specific work packages and reporting lines. As projects progress, SMEs may identify adjacent features and new use cases that sit outside the written scope, including early commercial pilots.

If management waits for a new grant call to cover these extensions, the company may keep product and market work on hold. Equity funding is one option, but it may not fit the size or timing of the opportunity.

Here, non-dilutive loans linked to innovation work can help fund related development and commercial activity that sits outside the grant brief. Innovation term loans can support this work alongside grant-funded tasks. The SME can move into pilots, customer trials or integration work while it continues to claim under the existing grant.

What if work slows or pauses between grant calls?

Some SMEs build their funding plan around grant competitions, whether they are applying for a first award or managing a sequence of projects. This can work in the early stages but may lead to periods where teams slow down or pause work while they wait for competition results or new calls to open.

Repeated pauses in work can affect staff retention, delivery quality and customer confidence. They may also make it harder to plan longer-term work because each new phase depends on a separate grant decision.

Non-dilutive loans can reduce these delays. Where a company has a history of grant success or regular R&D tax credit claims, facilities such as grant advance funding or R&D tax credit loans can provide a more continuous source of project funding. The SME can then plan programmes over a longer horizon, using grants as part of the overall funding plan rather than as the sole source of external support.

How Does SPRK Support SMEs Using Grants and Non-Dilutive Loans?

SPRK works with UK SMEs that carry out innovation and rely on R&D tax credits or grants as part of their funding. SPRK designs its facilities to align cash inflows from these schemes with the timing of project costs.

SMEs can combine these non-dilutive loans with existing grants to build a funding plan that supports delivery and reduces timing gaps while preserving ownership.

Combine Grants and Non-Dilutive Loans for Timing and Scale

Grants remain a valuable part of funding for SME innovation. They help companies take technical risk and demonstrate quality without affecting equity. However, grant cycles and payment schedules do not always match the pace of project delivery.

Non-dilutive loans give SMEs another way to fund work that depends on R&D tax credits or grants, or to extend programmes beyond a specific brief. By reviewing how much of the funding plan relies on these schemes and where timing gaps appear, management teams can decide when to include non-dilutive loans in the funding plan.

If you want to discuss how non-dilutive loans such as R&D tax credit loans, grant advance funding or innovation term loans could support your projects, you can speak with the team via SPRK’s contact page.

This article provides general information only and does not constitute financial, legal or tax advice.

Your Grant Is Approved. Now What? Managing the Cash Gap After Innovate UK Awards

Your Grant Is Approved. Now What? Managing the Cash Gap After Innovate UK Awards

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Winning R&D grants changes your delivery plan, not the timing of cash. Innovate UK usually pays in arrears against eligible, evidenced costs. Fast‑growing teams still face payroll, upfront supplier payments and booked lab time before claims clear. This guide sets out what typically happens after an award and how to keep delivery aligned. It does not provide financial advice.

How do Innovate UK R&D grants pay out?

Most R&D grants pay after you incur and pay eligible costs, often on a quarterly cycle. In practice, you submit a claim that reconciles paid invoices, timesheets for eligible staff, brief progress notes and any outputs required by the offer letter. Each competition sets claim windows. Innovate UK can query or hold a claim until evidence is complete, which can move the cash date. Complete project set‑up before delivery. If set‑up slips, the first claim window moves, and early cash pressure rises.

When you consider start dates and eligibility, wait for the formal go‑live confirmation before starting delivery. Innovate UK usually treats costs before the confirmed start date as ineligible, which can force first‑claim rework.

Because Innovate UK pays only on incurred and paid costs, keep invoices, proof of payment and timesheets aligned to the eligible cost categories in your annexes. Clean records shorten review time and reduce queries.

Some Innovate UK R&D grants pay on milestone acceptance rather than calendar quarters. Cash still lands in arrears against eligible, defrayed costs, so align your internal dates to the scheme’s payment schedule.

To see current Innovate UK competitions, explore our open innovation programmes.

Who signs off your claim before Innovate UK pays?

Your Monitoring Officer reviews costs and progress before authorising R&D grants claims; clear records speed approvals. Prepare claims in your project portal, check them against the offer letter and annexes, then review them with your Monitoring Officer. Clean documentation, consistent timesheets and proof of payment reduce queries and shorten the payment timeline. Even with clear documentation, payment lands after costs; this is where the cash‑flow gap appears.

Where does the cash‑flow gap appear after an Innovate UK award?

Costs often fall before claims pay. Typical pressure points are payroll, upfront supplier payments, booked lab time and scheduled pilot trials.

The pressure points are payroll between sprints, upfront supplier payments and minimum order quantities, booked lab or certification time, and scheduled pilot trials with partners. These dates rarely move; miss them and acceptance can slip into the next quarter, which pushes revenue recognition and partner timelines.

Keep teams in place, secure components on time and protect facility bookings to keep the plan on track. Let dates drift and the roadmap will drift with them.

If timings or scope must change, raise a Project Change Request early. Innovate UK does not accept pre‑start amendments, and extensions late in a project are rarely approved. Submitting changes within project dates and with clear justification reduces disruption.

What is grant advance funding and when does it help?

Grant Advance Funding provides early access to a portion of awarded R&D grants, aligned to dated costs, and settles when claims pay. It helps when supplier windows are tight, lab schedules are locked or hiring depends on hitting milestones. You can draw up to 80% of the quarter or milestone at the start of the period. We map drawdowns to your dated plan and reconcile when the claim pays. Because advances are non‑dilutive, you retain ownership while meeting deliverables and evidence requirements on time.

What causes claim queries or delays, and how do you avoid them?

Typical issues on R&D grants include pre‑start costs, missing proof of payment, timesheets not mapped to eligible categories, late submissions and budget changes without a PCR. Use a short pre‑submission check against the annexes, claim windows and PCR rules to prevent rework and keep payment dates predictable.

If you need a quick sense check, use our grant eligibility checker.

Why are grants paid in arrears, and where does a grant advance fit?

UK public R&D grants operate on a cost‑recovery model. Payment follows evidence and claim review, which protects the fund but can leave delivery out of step with cash. Where evidence cycles delay liquidity, a grant advance can align funds to dated costs and reconcile when the claim pays.

How does SPRK structure grant advance funding?

We size the advance against your award letter and milestone schedule and align it to the relevant quarter or milestone. Have a project plan/Gantt with dates and a 13‑week cash‑flow ready so timing is clear. We agree the advance for each period and fund within 24–48 hours of signing; repayment follows your grant receipt. Interest is added to the principal and there are no interest payments during the term; you settle interest when the claim pays. Once the grant payment lands, you settle the advance within 48 hours. The minimum term is three months.

We take a first‑ranking fixed and floating debenture; if an existing charge is in place, we discuss options case by case. There are not early‑repayment fees. Once information is complete, we decide quickly and confirm drawdowns in writing against your plan. Grant advances can run alongside other tools when the use of funds is clear, and the cash profile supports repayment. For adjacent options, see Innovation Term Loans or R&D Tax Credit Loans.

How do grant advances differ from R&D tax credit loans?

Both bridge pre‑receipt costs, but repayment sources and use cases differ: a grant claim versus an HMRC R&D credit.

Both options address pre‑receipt costs, but they rely on different sources of repayment and fit different use cases:

  • Source of repayment: grant claim versus HMRC R&D credit.
  • Timing: both bridge dated costs ahead of cash‑in; mechanics differ.
  • Use case fit: grant advances for project delivery; tax‑credit loans for the incentive timing.

Grant advances settle from your R&D grant claim. R&D tax credit loans settle from your HMRC R&D credit and can provide up to 80% of the expected credit.

Why choose SPRK for an R&D grant advance?

Institutional capacity, innovation‑focused decisioning and clear scheduling aligned to your dates.

  • Institutional capacity: backed by a £20 million British Business Investments facility, supporting R&D grants drawdowns.
  • Innovation focus: decisioning mapped to R&D plans and milestones.
  • Clarity and speed: transparent terms and drawdowns confirmed to your dates.

Keep delivery moving between award and claim payment

If you have been awarded an Innovate UK R&D grant and need to keep delivery aligned to your plan, Grant Advance Funding can help. Tell us your next acceptance date and the costs between now and then. We will outline a non‑dilutive grant advance that fits those dates. Contact the team.

 

Improve Cash Flow with Grant Advance Funding

Improve Cash Flow with Grant Advance Funding

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Grant advance funding helps you fund supplier deposits, payroll, and milestone work on the dates you planned. Use claim reimbursements to step the balance down while you keep equity.

Before you pick a facility, run a 10‑minute audit: list the next two claim windows, the supplier ship dates, and payroll Fridays. If the dates don’t line up, grant advance funding turns the plan into a calendar you can actually run. That discipline improves cash predictability while you scale, without selling more of the company.

Turn your grant plan into a cash calendar

Grants pay after defrayal and evidence, which means your bank funds the work first. The gap sits between purchase orders, payroll, and the claim window, and that’s where dates slip. Grant advance funding maps cash to your milestone plan: you draw for near-term work, deliver and capture evidence, submit the claim, and use reimbursement to bring the balance down. This helps delivery stay on schedule, suppliers stay engaged, and you keep your cap table unchanged.

If a date moves, shift the later draw instead of stretching cash across two milestones. Lock the plan to real artefacts: POs, supplier pro formas, payroll dates, and claim windows. Put them on one calendar and pin draw dates to those events. For a facility built around this calendar, see our grant advances. Not sure on fit? Try the grant eligibility checker.

When should we use a grant advance?

Grant advance funding is for work that starts before reimbursement when you can evidence defrayal on schedule.

  • Supplier deposits for hardware, tooling, or labs
  • Payroll for specialist hires that need to start before claims land
  • Milestone spend where defrayal occurs ahead of submission windows

When not to use it: skip it if scope is unclear, evidence is missing, or milestones keep slipping.

How does grant advance funding improve cash flow?

Grant advance funding maps cash to milestones: draw → defray → claim → reduce so payroll and suppliers stay on date.

Work the loop in order: draw for the milestone, pay and capture evidence, submit the claim, then use the reimbursement to bring the balance down. That way, claim payments step the balance down without squeezing minimum cash. A weekly forecast and evidence run keeps suppliers confident, can improve terms, and helps payroll land on time. For multi‑year predictability, consider Innovation Term Loans.

Want a draw plan you can model this afternoon?

Share your award letter and milestone calendar. We can propose an indicative draw plan and show how repayments step down after claims, subject to diligence and credit approval. Contact the SPRK team.

What will a lender ask for?

Approvals move faster when you bring a clean pack that reconciles invoices ↔ bank proof ↔ deliverables for the next claim window.

Bring a clean, consistent pack so approvals move quickly:

  • Grant letter or award and any amendments
  • Milestone plan with dates, deliverables, owners, and amounts
  • Cost summaries that match the grant categories
  • Eligibility and status confirmed
  • Evidence plan for invoices, bank proof of defrayal, and deliverables
  • Management accounts and a 12‑month forecast
  • Bank statements (3–6 months) and AR/AP ageing

That reduces diligence back‑and‑forth and can bring the first draw forward.

Pro tip: maintain an evidence matrix mapping each cost line to the invoice, bank proof, and milestone output. Each cost line should have an invoice number, a bank transaction ID, and a deliverable link. If anything is missing, leave the line out until it’s complete.

How do repayments work with claims?

Repayments follow a fixed schedule. When a claim reimbursement arrives, prepay to reduce the balance and lower future repayments. If a reimbursement lands at 50% or more of the drawn amount, prepay that week to step repayments down. Confirm early‑repay terms and how claim funds flow so the process stays straightforward. Price this off the low case so the step‑down still clears in the trough month.

Micro‑math example: Draw £250k for a supplier deposit on Milestone 2. If the claim pays 60% about six weeks after submission, a £150k reimbursement lets you prepay so the next repayment steps down. If the claim slips by two weeks, the staged draw still protects payroll.

How big should the advance be?

Grant advance funding should be sized to the next 1–2 milestones and the low case on timing; stage draws if lead times stretch.

Size the facility to the next one or two milestones and to the low case on timing. Add buffer for payment lags and supplier lead‑time changes. If lead time exceeds eight weeks, stage the deposit draw and shift the balance to the week the parts ship. Confirm that repayments fit your trough month even if a claim moves right. Hold two months of burn above minimum cash; if you can’t, cut the facility or shorten availability. The buffer absorbs slips in lead‑times or claim dates.

Note: Some programmes (for example, Horizon Europe) provide pre‑financing; size any advance with that tranche in mind. If your plan also includes an HMRC R&D claim, read R&D tax credit advances.

Decision rule: stage the facility across availability windows that match milestone dates. If a date slips, push the later draw so minimum cash stays above your buffer.

What costs and risks should we plan for?

Price on all‑in cost to maturity and plan buffers for claim and supplier timing.

Costs: interest, an arrangement fee, legal and diligence costs, and any maturity or prepayment terms. Compare on all‑in cost to maturity, not the headline rate. Grant advance funding benefits from transparent pricing and simple terms.

Risks: milestone slips, evidence gaps, and supplier delays. Mitigate with staged draws, an evidence matrix, and a weekly owner on claims. Keep a buffer so one slow month doesn’t create pressure. Freeze scope two weeks before each claim window and maintain a claim calendar. Reconcile the bank feed to your evidence weekly and leave out any line you can’t evidence. Ensure the claim workbook and the evidence folder match line for line.

Can we combine grant advances with other non‑dilutive tools?

Yes. Grant advance funding can sit alongside other non‑dilutive tools if cash flows do not compete and security is clear. Common pairings:

Assessing a grant path? Use our grant eligibility checker to sense‑check eligibility.

What will improve approval speed?

Grant advance funding moves faster when you set clear scope and keep evidence clean. Align purchase orders to milestone lines, reconcile bank payments to invoices, and keep the evidence folder current. Fix cross‑project issues first; Innovate UK can pause payment if another project is out of compliance. Share the milestone calendar with us and we’ll stage draws against it.

Two typical scenarios we see in practice: A life‑sciences team missed a claim window by three days; we staged the next draw, payroll cleared, and the claim calendar moved a week earlier. A robotics supplier slipped on lead time; we pushed the second draw, resequenced the evidence, and minimum cash stayed above buffer.

Fund milestones on schedule and keep ownership

Grant advance funding works when it follows your programme. SPRK maps draws to milestone dates, ties evidence to spend, and keeps documentation simple so your team can focus on delivery. We size to the low case and plan buffers for payment lags, which helps protect payroll and supplier commitments without giving up equity. If a milestone moves, we adjust the draw schedule and keep the claim loop clean.

If you want a lender to meet you at the operational level of dates, amounts, evidence, and repayments, contact the SPRK team. Email the board pack and milestone plan today. We’ll return two facility sizes, the first amortisation month, and a draw schedule pinned to your claim calendar so you can decide quickly.

 

innovation grant funding

What to Expect when Applying for Innovation Grant Funding

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If you have a cutting-edge idea for innovation, grant funding can help you take it to the next level. Whether the grant funding comes from the government, or another organisation, this cash flow can be a key part of ensuring that you’re able to make your project happen. But what can you expect during the process of applying for innovation grant funding?

 

The Timeline

One of the most important details to grasp about innovation grant funding is how long this is likely to take. You can expect the process of preparing the application to take around six weeks. In terms of waiting to find out whether the application has been successful, this can be anywhere between one and three months. It’s important to make sure that you factor these timings into your application process.

 

What’s Involved in the Application?

  • The process will usually require a written application to be submitted, often followed by an interview or interviews.
  • Administration. One very important part of the application will be the administration element. This is where you will be able to provide a background summary of the innovation that your project is based on, as well as manage any relevant online portal and invite collaborators.
  • Budgets and finances. If you’re going to be successful when it comes to innovation grant funding then you need to have a solid grasp of the numbers that are involved in making your innovation happen. Assessors tend to focus in detail on finances and budgets, looking at whether these are reasonable as well as how much value components deliver. Those components should include overheads, labour costs, travel, subcontractor costs, and the cost of materials.
  • What’s the problem – and what’s your solution? This is going to be a basic element in any innovation grant funding application. It’s an opportunity to set out clearly the challenge or problem in your market that drove you to develop your innovation. It is also where you get to outline the solution that you’re providing, including the unique selling points of a service or product and the ways in which it is better than competitors.
  • Project team. It’s essential to clearly set out your project team during the application, including who will build and test your innovation and any other partners or collaborators you may have.
  • The project plan. These are the stages, goals, and objectives that are going to bring your project to life. It should combine milestones, resources, deliverables, budgetary requirements, and a timeline.
  • Commercialisation and marketing strategy. This is all about being able to clearly identify both the target market for your innovation and the business model you’re going to use to exploit it. You should be able to show a route to market, as well as plans for early revenue generation and mitigating any risks to this.

When you’re applying for innovation grant funding you can expect to have to provide data and information to support everything, from the financials to how the innovation is going to be monetised.

 

Innovation Grant Funding Expertise

Applying for innovation grant funding can be intimidating. Here at SPRK Capital, we understand the challenges of fast-growing businesses and are here to support you. Contact us today, and we can progress your funding together.

grant funding

Is there a right time to apply for grant funding?

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Applying for grant funding can feel like a challenging process. However, receiving that funding can be transformative for a business and well worth the effort. There are lots of benefits to applying for grant funding, no matter what your industry or the type of business that you have. If you’re considering making an application then it’s going to be vital to make sure that you get the timing right.

 

Why apply for grant funding?

  • Accelerate project timeframes – If you’re successful in applying for grant funding this can provide you with vital resources that significantly speed up existing project timeframes. It could help to reduce the time to market for a product or service and put your enterprise ahead of the competition as a result. There are lots of obvious advantages to this, from increasing the commercial returns – and the speed at which they are accessible – to reducing financial risk. This funding also helps to improve business growth by allowing for more ambitious projections and plans without the need to give away any equity.
  • Access collaboration – The right grant funding will also open the door to collaborations that might be vital to delivery, whether that is with industry, academic or research partners. Collaborations can be beneficial for enterprises at any stage, especially as they tend to open up access to new technologies, expertise, processes and techniques.
  • Cover a broad spectrum of costs – Typically, grant funding can be used to cover a broad spectrum of costs, including staff costs at a rate of up to 70%. This can be essential cash flow, especially as it doesn’t come with the requirement to make repayments, pay interest or give away any equity in order to be able to access the funds.

 

What is the right time to apply for grant funding?

The main reason that it’s key to consider timing when it comes to grant funding is because the process of application can be months long. In fact, it usually takes around six months to apply for grant funding. So, if you’re looking at grant funding for your business it’s essential to factor in the time that it’s going to take to apply for the grant and to receive it into the business. Research, completing the application and waiting for a decision will all be part of this process. It’s also worth remembering that the timing of grant funding could also have an effect on how impactful your project is able to be. Getting your application in well in advance could mean that you receive grant funding at exactly the right moment to access beneficial factors in the external environment. It can also trigger connections with potential partners at exactly the right time and accelerate project growth.

Timing is as important for grant funding as ensuring that you pick a grant that is going to be the right fit. Give yourself plenty of time to complete the application process and time it so that the benefits will land at just the right moment to accelerate both the project and future growth.

 

Grant Advance Funding through SPRK Capital

SPRK Capital are a leading provider of R&D tax credit loans and grant funding loans in the UK. We support innovative SMEs by giving them access to their capital when they need it.

To find out more about how we can advance your grant funding to you, visit our ‘Grant Loans‘ page.

Woman learning about grant funding

What is Grant Funding?

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Grant funding is where an individual or organisation receives a sum of money from a third party, such as a foundation or a government. It can be made available for a variety of different reasons but always provides a form of cash flow that does not have to be repaid. There are lots of benefits to being able to obtain grant funding, from the financial income to the opportunities it opens up for collaboration.

The different types of grant funding

There are generally two types of grant funding available: capital grants and research and development grants. A capital grant is designed to cover the cost of specific items, such as equipment and buildings. The idea behind a capital grant is to enable more impactful projects to be created by taking away the pressure on capital expenditure. Research and development grants are slightly different in that the cash is provided for a specific purpose, aim or project. This type of grant is typically used to support high-risk technology projects that have a lot of growth potential.

What kind of funding is available?

Most grants are paid out in arrears, which means that expenses need to be paid for upfront and then recouped under the grant. The amount of the costs that a grant will cover usually depends on the grant. If it is a capital grant then this will usually be somewhere between 20% and 40% of project costs. For a research and development grant, it could be anywhere from 50% to 100%.

Find out what grants you can apply for by using our Opportunity Checker.

Why apply for grant funding?

There are lots of benefits to successful grant funding, including:

  • This is non-dilutive funding – This means that there is no requirement to give away equity in the business in order to obtain the funding. As a result, no control is lost.
  • Obtaining grant funding can boost what can be achieved by a project and also accelerate time to market – This is a huge advantage for any organisation looking to be first-to-market with a specific product or service.
  • Grants don’t involve any debt – So, there is no interest to consider and no requirement to make repayments either.
  • Grants can open the door to collaboration with expert partners – This can provide access to expertise and insights, as well as networks and technologies.
  • There is the potential to have a big impact – Grant amounts are typically between £50,000 and £4 million so the funding received can be truly transformative.
  • Grant funding can also make a project more attractive to investors, as it reduces risk.

How to apply for grant funding

Every funding body will have a different application process and it’s important to get familiar with this before starting an application. Especially vital will be the timelines involved – it can take six months from application to receiving grant funding so it’s essential to factor this into any plans that you have for the funding.

Grant funding is a potentially transformative source of income for any business, either to support capital or research and development costs.

Grant Advance Funding through SPRK Capital

SPRK Capital are a leading provider of R&D tax credit loans and grant funding loans in the UK. We support innovative SMEs by giving them access to their capital when they need it.

To find out more about how we can advance your grant funding to you, visit our ‘Grant Loans‘ page.

Grant Loans for UK Innovation

Grant Loans – A new way to finance UK innovation

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Sprk Capital is the leading provider of Innovation Grant Loans, but what are they and how do they work?

“Our mission is to accelerate UK innovation-led growth for SMEs through smart funding solutions.” – Dom Peasley, CEO Sprk Capital

Sprk launched its Grant Advance product into the UK market in 2022. We have seen huge demand from SMEs and the advisor community, so wanted to highlight how it can benefit you and your company as it engages in innovation.

  • Innovation Grant Loans (also known as Grant Advance Loans) are a new way to finance your innovation grant
  • Grant awards are typically paid quarterly or against milestones and cover ~70%+ of your project expenditure
  • Companies must finance their innovation project spending from the start of each grant award period until the grant body pays that period’s claim
  • With claims typically paid one to two months after the period end that means SME can be waiting 5 months+ before they receive any positive cashflow from the grant award

That’s where Sprk comes in. We finance 80% of your Grant Eligible Expenditure on Day 1 of each Grant period.

  • SMEs benefit from a lower cash/equity requirement to finance their project
  • No interest or capital paid during the life of the Sprk Grant Advance
  • Simple and transparent fee structure detailed on our website.
  • Grant Advance eligibility checker launched for SMEs
  • Repayments are simply made when the grant body pays out on that period’s grant award

Example:

  • Biotech Company A has received an Innovation Grant for a £1m project over 12 months
  • Company starts the project in Q1 and deploys their own cash reserves to fund the first quarter of their grant award, funding £250k from their balance sheet
  • Second quarter starts and they begin to finance Q2 of their grant award
  • 2 months after the end of Q1 (after spending another £167k) the Grant Body pays their claim for their Q1 Grant Eligible Expenditure, at which point the Company has spent £417k to date and gets a first payment for £175k (70% of Q1’s £250k).
  • Their ‘peak’ negative cashflow on a £1m grant is therefore -£417k before the first grant receipt

Now use a Sprk Grant Loan:

  • Sprk finances 80% of Q1’s Grant Eligible Expenditure (£250k x 70% Grant x 80% Advance) = £140k
  • The Company now only has to find £110k through Q1 and not £250k
  • At the start of Q2 the company draws down from the Sprk Grant Advance facility another £140k to finance Q2’s project expenditure.
  • At the end of month 5 the Grant Award body pays £175k (70% x £250k) and the SME uses this to clear the Q1 grant Advance of £140k plus accrued interest of £9,600, leaving a positive balance of £25.4k
  • The Company’s peak negative cashflow moves from £417k (£1m * 5/12 months) without the Sprk Grant Advance to £137k with the Sprk Grant Advance (£417k peak Project Spend – Q1 Sprk Advance £140k – Q2 Sprk Advance £140k)
  • This cycle of drawing down from the Sprk Grant Advance facility at the start of each grant period then continues over the life of the grant award

“Sprk has simply moved 80% of the quarterly grant award payments to the start of each quarter, freeing up your cashflow.”

Freeing up capital can extend your cash runway, accelerate investment, help you bridge between funding rounds or just simply fund your project expenditure on time and on budget. A truly non-dilutive source of funding.

Case Study:

Energy Storage Company (“ESC”)

ESC was awarded a £4m Innovation Grant with specific milestones to meet to release their Grant Award tranches. Their aim was is to commercialise a revolutionary new efficient way of storing energy, part of the Government’s Net Zero agenda.

The timing of expenditure between each milestone meant that ESC had peak expenditure of £1.5m on their project. The company was looking to raise equity to fund this expenditure.

“The worst point to raise equity is before you’ve completed a project and valuations are typically higher once you’ve finished your development.”

Sprk was able to arrange a £3m Grant Advance facility for ESC to draw down against through the life of the grant, working with them through the Grant approval process.

In Q1 of the project alone this cut ESC’s cash requirements by £1.2m, avoiding the need for a dilutive funding round at a critical stage in their growth journey.

Sprk has arranged and funded Grant Advance facilities from £50,000 to £5m and even works with businesses ahead of their grant submission to provide funding term sheets to support their applications.

You can apply/contact us online or simply give us a call on 0800 002 5100. A helpful Q&A can be found here.

Alternative Sources of Non-dilutive Funding for Businesses

Alternative Sources of Non-Dilutive Funding

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R&D tax credits are a fantastic source of funding for innovative SME’s, but with the HMRC tightening its grasp on the R&D tax credit scheme, many businesses are looking for additional sources of non-dilutive funding. Luckily, in the UK, there are other sources of funding that companies should also consider.

Sources of non-dilutive funding:

  • Grants: Government bodies and industry associations often provide grants to businesses for a variety of purposes, such as developing new products or services, creating jobs, or investing in technology. These grants are non-dilutive, meaning that businesses do not have to give up equity in exchange for funding. However, the application process can be competitive, and businesses need to demonstrate that their projects align with the grant’s objectives.
  • Loans: Many banks and financial institutions offer loans to businesses that do not require them to give up equity. These loans can be used for a variety of purposes, such as expanding operations, purchasing equipment, or investing in new technology. However, businesses need to be able to demonstrate that they have the capacity to repay the loan.
  • Angel Investors: Angel investors are high-net-worth individuals who invest in early-stage businesses in exchange for equity. While this may involve diluting the ownership of the business, angel investors often provide non-financial support such as mentoring and industry connections that can be valuable to businesses.
  • Crowdfunding: Crowdfunding is a way for businesses to raise funds from a large number of people. Platforms such as Kickstarter and Indiegogo allow businesses to pitch their ideas to a broad audience and receive funding in exchange for rewards such as early access to products or exclusive merchandise. This can be a good way for businesses to test the market for their products and raise non-dilutive funding.
  • Accelerators and Incubators: Accelerators and incubators provide support and resources to early-stage businesses, such as office space, mentoring, and access to funding. Many accelerators and incubators offer non-dilutive funding in the form of grants or loans that can be used to support the development of new products or services.

Why non-dilutive funding?

Businesses should take advantage of non-dilutive funding because it provides them with access to funding without diluting their ownership or control. By securing non-dilutive funding, businesses can retain their equity and avoid the risk of losing control of their company. This can be especially important for early-stage businesses that are still building their operations and may not have a significant asset base to use as collateral for traditional financing.

Non-dilutive funding can also provide businesses with greater flexibility in terms of financing options. By accessing non-dilutive funding sources such as grants, loans, and tax credits, businesses can tailor their financing to their specific needs and requirements. This can help businesses to reduce financial risk, improve cash flow, and support their growth and development without sacrificing their ownership or control. Ultimately, non-dilutive funding can be a valuable source of support for businesses looking to accelerate their growth and achieve their goals.

Sprk Capital Advance Funding

Sprk Capital are a leading provider of R&D tax credit loans and grant advance funding. We help businesses access their capital quicker, without waiting on delays from the provider. We receive the advanced amount directly from HMRC, or another provider, once your claim is processed, removing any debt against the loan.

The process is easy, fees are straightforward, and you have even the chance to make your R&D funding go further.

If you think you could benefit from our advanced funding services, contact us for more information or simply apply here.