Tag Archive for: R&D Tax Credit Loans

R&D Tax Credits

The Hidden Challenges of R&D Tax Credits and Grants

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There is a myth that it’s not possible for one business to benefit from both R&D tax credits and grants. The reality is that these two funding sources actually have different purposes and are designed to provide a different type of support. As a result, they can work really well in tandem. However, if your business is looking to benefit from R&D tax credits and grants then there are some hidden challenges that it’s important to be aware of.

How do Grants and R&D Tax Credits Work?

  • Grants. A type of funding that can be used to offset the costs of projects that are in the pipeline. Usually, grants are made available where there is a particularly innovative product of service being designed and created. Grants are usually applied for in advance. The funding can often be accessed more quickly with a Grant Advance Loan.
  • R&D tax credits. A much broader spectrum of funding that is intended to be available to any business that is carrying out research and development. There is no requirement for that research and development to result in commercial success for R&D tax credits eligibility. The tax credits are claimed retrospectively.

Is it Possible to get Both?

If your business is eligible then yes it’s entirely possible to benefit from both a grant and R&D tax credits. However, it’s important to note that one can affect eligibility for the other in certain circumstances. What’s really key to have clarity on here is whether a grant you’re applying for (or have applied for) is classified as notified state aid. Because, where that’s the case, this excludes a claim under the SME R&D tax credits scheme. An R&D tax credit claim could still be made if the grant received was project specific. However, this would need to be made under the RDEC scheme, which is the less lucrative of the two.

What are the Hidden Challenges of R&D Tax Credits and Grants?

● Making the right applications. The first, and most obvious, challenge is to ensure that you’re not applying for a grant that could mean your business isn’t eligible to make an R&D tax credit claim under the SME scheme as a result. Whether a grant counts as notifiable state aid can be a complex area and it’s important to make sure you get the right advice so that you’re able to secure the funding that your business needs. If you’re not sure where you stand, it’s always best to seek expert advice.
● The timing of funds received. The second challenge is to ensure that the funding you received is being paid into your business at a time that will be beneficial. Grants are applied for in advance of the project beginning while R&D tax credits are paid out retrospectively. Getting the timing right on this can be critical to ensuring that you have the cash flow you need, when you need it. A Grant Advance Loan can be a simple way to solve this problem, as it allows for a proportion of the future funding to be paid to your business now.

Utilise Advance Funding

Grant funding and R&D tax credits have a lot to offer any innovative business. Hidden challenges exist but can simple to solve. Solutions such as SPRK’s R&D tax credit loan, or Innovation Term Loans can enable greater access to capital. Get in touch, and not only can you get assistance from our trusted advisors, but you can learn more about easing cash flow struggles with our R&D advance funding.

 

 

r&d tax credit loans

Are you eligible for R&D Tax Credit Loans?

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R&D tax credit is a UK government initiative that is designed to encourage innovation – and reward those companies that are investing in it. R&D tax credit loans help your business’s cash flow by providing greater levels of control/access to this capital. Rather than waiting for cash to be received as part of this process, R&D tax credit loans provide an upfront advance so that this can be accessed now.

How to Claim R&D Tax Relief

R&D tax relief is claimed through the process of submitting a corporation tax return on behalf of the company at the end of the financial year. It’s possible to still make a claim up to two years after the end of the financial period that the claim relates to. Once the claim has been agreed by HMRC then the process of delivering the funds can be started.

How can you get R&D Tax Credit Loans?

Your business will need to be eligible for R&D tax credits. This type of tax relief is generally available to businesses that are carrying out innovative activities that are designed to develop new products or services – or enhance existing ones. Success with R&D tax credits requires that an activity is part of a specific project that is focused on science or technology and that its goal is to try and create an advance in knowledge or capability that resolves a current uncertainty.

Once you have done this, R&D advance funding can give you greater access to capital on an ad hoc, quarterly, or annual basis – it’s entirely up to you and what works best for your business.

Two key criteria for eligibility

● Activities that qualify. If you’re going to be successful with R&D tax credit loans then the R&D activities that your business is paying for need to be eligible for R&D tax credits. There is a long, and specific, list of the types of activities that this funding is designed to encompass. These include new process creation, research (e.g. discovering the right materials, solutions or requirements), routine analysis, improving current processes or creating an advance, developing and testing new products and prototypes, creating new services that compliment existing capabilities, testing and developing technological advances.
● Costs that qualify. The costs that will be covered by R&D tax credit loans include certain types of expenses that relate to R&D. For example, project management fees are included as well as the staffing costs of any staff that are working on the project. Other costs that qualify include outsourced or external workers – such as contractors or freelancers – the software costs of a project and the materials and utilities that the project has used. It’s worth noting that staff costs are often one of the biggest costs in R&D.

Which industries can apply for R&D Tax Credit Loans?

There is no specific industry requirement and this is not limited to obvious R&D areas like technology. In fact, businesses from any sector can – and have – successfully applied for R&D tax credit loans.

SPRK Capital: We’re here to help

R&D Tax Credit Loans make it easy to access the cash you will receive via R&D tax credits sooner, rather than later. We understand the process can be daunting, so why not reach out to us? Our trusted advisors will get you on the right track towards maximising your business’ financial efficiency.

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.

A Guide To R&D Tax Credit Loans

Our Guide to R&D Tax Credit Loans

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What are R&D tax credit loans?

R&D tax credit loans are based on the R&D tax credits scheme set up by the government to support more innovation in the UK. They provide a way to access a percentage of your tax credits paid in advance so that your business can use this vital funding source when it’s needed the most, as opposed to waiting for the payment to be made. This additional working capital can provide vital support for many businesses and take the pressure off your cash flow.

You have probably heard of the R&D tax credits scheme – you may even have already made a claim under it. For businesses that are investing in innovation, the scheme provides key support through claims that allow for up to 33% of R&D costs to be recouped. There are huge advantages to making an R&D tax relief claim an annual part of your enterprise’s processes if you are an innovative business with an R&D budget. However, there is one obstacle for many organisations, and that’s the amount of time it can take to receive the payment relating to the claim – up to nine months in some cases.

How do R&D tax credit loans solve this problem?

By giving you access to the payment early. The period between building the claim for R&D tax credits and actually receiving payment can be very long. This is especially so as more and more businesses look to take advantage of the increasingly beneficial structure of the scheme. As that time passes, your organisation may be under financial pressure that could be eased by receiving the payment earlier – or missing out on opportunities due to problems with cash flow. What R&D tax credit loans do is provide you with the payment that is due under your claim early so that you don’t have to wait for it, and you can start using it in your business now.

Reinvest your business when it needs it the most

Cash flow is vital to any enterprise, and it can be really problematic if this stalls. Having a reliable source of investment can make all the difference in growth. R&D tax credit loans make the financing you can get via R&D tax credits much more accessible because the payment can be made to your business up to nine months in advance. That’s nine months to avoid cash flow struggles and instead put resources into more innovation and growth. Once you’ve received an R&D tax credit loan, when the payment comes in from HMRC, you’ll be required to use this to pay back the loan. R&D tax credit loans are essentially a quick and effective form of debt financing that takes the worry out of borrowing.

The SPRK Advance

If your business is making a claim for R&D tax credits, it makes sense to look into whether you could receive any payments sooner through R&D tax credit loans.

Our R&D tax credit loans, a ‘SPRK Advance’, can support you with access to capital on either an ad hoc or quarterly basis – it’s entirely up to you and what works best for your business. The process is easy, fees are straightforward, and you have even the chance to make your R&D funding go further.

SPRK will receive the advanced amount directly from HMRC once your claim is processed, removing any debt against the loan; you can apply here.

R&D Tax Credits for Software Development Companies

R&D Tax Credits for Software Development Companies

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Can software companies claim R&D tax relief?

The government’s R&D tax credits scheme rewards businesses committing time and resources to innovation. Software development companies are ideal candidates for support under the scheme and can benefit significantly from making a claim. The incentives under the scheme can allow software development companies to fuel growth and further innovation, making it a smart choice to move the business forward.

How do R&D tax credits work for software development companies?

The R&D tax credits scheme rewards businesses that are pushing into fields such as technology and seeking to tackle uncertainties, taking risks to solve technological challenges. There are many different areas that any software development company might be involved in that could count as qualifying activities.. These include AI and machine learning, data processing and storage, IoT, cloud computing, robotics and augmented reality. R&D tax credits reward many different types of businesses involved in software development, from those supporting other businesses in their software projects to enterprises providing Software as a Service (SaaS) and companies involved in bespoke software development projects.

Qualifying software development activities

Software development activities likely to qualify will seek to advance overall knowledge or capacity in the field, not just the knowledge and capacity of the individual business. Here are three examples of projects that could fall within the scope of R&D tax credits:

  1. Software is being developed to tackle scientific or technological uncertainty, focusing on the difficulties and challenges that competent professionals in the field have yet to overcome. For this to succeed, the knowledge acquired must not simply have come from other freely available knowledge.
  2. Creating new products or systems, such as new software capability to improve the speed of a system that integrates different technologies.
  3. Improvements to existing systems, such as adapting bespoke systems for integration with new hardware or devices.

It’s important to emphasise that R&D tax credits aren’t designed to apply only to new software but also to improve existing software and overcome challenges. Plus, activities may still qualify even if part of the project has standard elements in it and isn’t R&D.

Expenditure that counts under R&D tax credits

Claims made under the scheme are based on specific expenditures to support innovation. This includes the direct costs of employing staff for the R&D project, as well as the cost of any externally provided staff. Expenditure on consumable items (such as energy) that have been part of the R&D process will also count. As do the costs associated with creating prototypes. Job roles, such as project managers, software engineers and senior management, could all be eligible for relief under the scheme.

R&D tax credits are ideally suited to software development companies and can generate significant rewards for investment in innovation. SPRK Capital are a leading provider of R&D tax credit loans, which advance the funding from your claim to you when needed.

Contact SPRK Capital today to apply for an R&D tax credit loan or to learn more about how we support innovation within UK businesses.

 

 

R&D Tax Credit Loans VS Business Loans

R&D Tax Relief VS Business Loans

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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.

R&D Tax Credit Loans: How can they help businesses?

R&D Tax Credit Loans: How can they help your businesses

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Any innovative business investing in R&D activities may be able to access R&D tax credit loans. This offers a quick and simple route to funds that is much cheaper, and less time consuming than going out and seeking equity. There are lots of advantages for businesses when it comes to applying for R&D tax credit loans, from the resources this makes available to the incentive it can provide for further innovation.

What are R&D tax credit loans?

 

Businesses that are undertaking eligible R&D activities may be able to claim 33% of the spending on those activities back from HMRC as a cash tax credit. This is available as R&D tax credit loans to any business that meets the eligibility criteria. It can provide a vital source of funding for accelerating the growth prospects of a business and create a source of financing for R&D investments. R&D tax credit loans are available to loss-making companies and can be a very valuable source of working capital cash flow.

 

How can R&D tax credit loans help businesses?

 

  • The opportunities to invest further in vital R&D activities – The funding and opportunity to focus more on R&D can transform this aspect of a business, pushing it up the list of priorities, providing vital financial resources and minimising risk. Being able to focus more on R&D can be transformative for the future fortunes of an organisation.
  • No need to wait until the end of the year – The benefit of R&D tax credit loans is that they are available upfront so there is no need for a business to wait until the end of the tax year to receive the cash credit. This means any business can make a difference to cash flow now and extend their cash runway.
  • An opportunity to accelerate growth and bring forward commercialisation plans – R&D tax credit loans support business growth and transformation, not just by being a source of funding but also by driving the most innovative part of the business.
  • Accessible income at a lower cost – For any business that has gone looking for funding in the past, there is no doubt that venture capital and equity funding can be time-consuming and costly. There is also no guarantee of success, no matter how appealing the business and its prospects. R&D tax credit loans offer a much more reliable option when it comes to income and can be substantial – up to 33% of eligible R&D spending. There are so many ways in which this can contribute to ongoing growth for any enterprise.
  • The freedom to focus on R&D – Especially for entrepreneurs and emerging businesses, it’s vital to be able to focus on R&D and the way that this can contribute to ground-breaking progress and discovery. R&D tax credit loans make that possible.

 

R&D tax credit loans are available to every innovative business engaging in eligible R&D activities – and provide help in a myriad of different ways.

 

Find out if your business is eligible here.

 

SPRK Capital is an innovative online provider of R&D Tax Credit loans, called the SPRK Advance. We can help you access your capital quicker. Our team would love to hear from you. Apply Now!

How can businesses utilise R&D grants

How can businesses utilise R&D grants

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When it comes to innovation, R&D grants can be a vital source of financial support and momentum. They are available to organisations in the UK where innovative new products, services or processes are being developed and are available from a range of different sources. If you’re looking to utilise R&D grants then here are some tips on how to do it.

 

Get clear on what R&D grants are for

 

This will usually be an innovative product, service or process that is being developed for commercial purposes. This is not necessarily reserved for big, breakthrough moments, as it could be used to fund a range of other changes. Grants are often used for something like a feasibility study, developing a prototype or enabling collaboration with other businesses, for example. Grants tend to be available for time-limited projects, as opposed to those that are simply ongoing and will typically provide a percentage of financial support – rather than funding for an entire project.

 

UK Research and Innovation grants

 

There are various funding options available from UK Research and Innovation and new funding competitions are announced all the time. This might include, for example, projects that are tackling one of the key challenges that have been identified in the government’s industrial strategy or those that are supporting government institutions with their own innovative ideas. Most government support for R&D funding is delivered as R&D tax relief, which can be either a payable credit or a percentage reduction in a company’s corporation tax bill.

 

R&D tax credits

 

Although these are not strictly speaking R&D grants, these tax credits are often used in the same way and can provide a similar level of financial support and opportunities for innovation and growth. Profitable companies are able to use R&D tax credits to reduce their end-of-year tax bill and there is also the option to receive a payable tax credit. These pseudo-R&D grants work on the basis of allowing businesses to claim the costs of eligible R&D activities where those activities are focused on innovation and advancing science and technology. For small businesses to claim R&D tax credits, the company must be trading as a limited company with fewer than 500 employees. There are also limits on turnover – below €100 million or total assets below €86 million. This can be claimed through the business’ corporation tax return and is based off 230% of eligible costs.

 

Other options for R&D grants

 

Most limited companies in the UK that are engaged in eligible activities will be able to claim R&D tax credits. However, there are also other R&D grants available, including regional grants in England, Scotland, Northern Ireland and Wales and the option of working with larger companies that may be interested in funding SME innovation. Professional and trade associations can also be a useful source of R&D grants, as well as incubators and business accelerators.

 

From tax credits to regional funding there are many ways for businesses to utilise R&D grants today. SPRK Capital is an innovative online provider of R&D Tax Credit Loans which can stretch your R&D grants further, simply find a partner and we can help you access your capital faster.

 

If you’d like to speak to an expert, then please contact us today.