R&D tax credit loan

An R&D tax credit loan is a newer type of loan that uses your future R&D tax credit payments (from HMRC) as security. You first need to qualify for an R&D tax credit and you have to spend the money on research and development.

There are a growing number of finance providers who might advance funds to you against your R&D tax credit claim. It follows that you first need to qualify for an R&D tax credit before you can access an R&D tax credit loan. These loans are sometimes referred to as R&D advances.

The main benefit of an R&D tax credit loan is that you can access funds within a week of your first conversation with the lender. This is helpful because, by contrast, you could be waiting many months before you receive your tax credit from HMRC. 

While R&D tax credits – either SME R&D tax credits or Research and Development Expenditure Credit (RDEC) tax credits – are a great way of funding your business and getting expenditure back in the form of a tax credit, you might not see the money for up to two years. This is because you have to wait until the end of your company’s financial year before you can prepare your accounts and file for the credit. You then have to wait an extra 6-12 weeks (often up to 12 months) while HMRC processes your claim before (hopefully) paying your R&D tax credit. 

With an R&D tax credit loan, you don’t have to wait for HMRC. Like any loan, however, you have to pay interest and you might have to pay a fee.