R&D Tax Credit Loans

Developing new products and services has never been easier. Businesses are now able to access more information that ever before and it helps in many different ways. If you are in the throes of developing a new product or service, you can search online catalogues around the world to check patent applications and whether anything that you are considering has already ben considered. You can also use the same services to look for potential avenues of advancement; by examining what has been patented, you may find that there is something that has been developed that could be used to forward one of your own ideas or products.  You can even use the vast mass of online information to jog your mind into imagining new ways of doing things. 

But having the idea is only the first step in the design process, and once you have had the initial thought, talked it through with your design and senior management team, carried out some initial research, and tested the viability of your notion, it’s time to take it forward. However, this is where you need to consider spending money, and you may not have enough in your company to drive the project forward. That can be unfortunate, because your idea may have the potential to net your company huge profits, if only you could carry out the initial R&D and prove the idea.

Gaining funding can be a problem. Banks or other sources of potential income may now wish to lend against a simple idea, no matter how well you present it. The risk may be too great and banks will never want to take on something that is considered to be too risky or may not offer a big enough return. Private investors may take the same view, leaving you with a potential shortfall in funding.

You may have applied for R&D Tax Credits form the UK Government to help pay for your business investment, but even if you are applying for these through a professional R&D Tax Credit advisor, you may still have to wait a fairly long time to actually start receiving them, and that can eat into your precious development time.  But help is at hand, and you may be able to secure an R&D Tax Credit Loan to tide you over in the short term.

An R&D Tax Credit Loan is a type of financial instrument that uses a company’s future R&D tax credit payments as collateral for a debt facility. This mans that you may be able to borrow money immediately against the future payments that the Government will give you to develop your new product or process. For a company to be able to access these kinds of payments for it has to:

• Spend money on R&D in the current financial year
• Wait until the company’s financial year end comes around
• Prepare the accounts
• File the R&D tax credit claim as part of the CT600 form
• Wait from 6–12 additional weeks for the R&D tax credit application to be processed and paid out by HMRC

In other words, an R&D Tax Credit loan is simply factoring for expected “invoices” from the government, in this case, from HMRC.  This will give you the funds that you need to develop immediately, so that you can get on with the important work of creating your new idea rather than having to wait for funding to come in.

The R&D Tax Credits systems was introduced in order to make UK businesses more competitive in and increasingly tough world, but sometimes the credits system takes longer than usual to get the money to you. If you find yourself in that position, talk to your R&D Tax Credits Consultant and see about organising an R&D Tax Credits Loan to help you get started on your project straight away.