Services
Funding / Loan Process
Three distinct prepayment offerings are available:
1. Prior year expenditure. This offering allows eligible R&D companies to receive a prepayment against their prior year’s expenses before registering their annual activities and lodging the company’s tax return.
2. Current year expenditure. The second prepayment offering allows eligible R&D companies to draw down the loan against the current year R&D expenditure on a quarterly or half-yearly basis.
3. Longer term – against a partially funded R&D plan and budget, backed by a positive Advanced Finding – whereby the prepayment loan will be provided at the commencement of a project or financial year.
Refer the R&DCP flyer for detailed examples of the above offerings.
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The R&D Tax Prepayment Process
1. The Company develops its R&D project plan (“The Plan”).
2. The Plan is written in compliance with AusIndustry’s R&D Tax Incentive Program.
3. The Plan is approved by TCF Services to determine the eligibility of the R&D expenditure.
4. The Company applies to R&DCP for the Loan using its standardised process.
5. R&DCP completes its due diligence, typically within 72 hours
6. The Loan Agreement is signed with R&DCP and upfront establishment fee paid
7. The Loan is drawn down as the Plan’s expenditure is made.
8. Monthly interest payments are made on each loan.
9. The Loan is repaid when the ATO pays the tax refund into R&DCP’s trust account and any balance refunded to the client.
Amount: $50,000-$3,000,000. Based on 80% of the amount of the projected tax return.
Funding: Secured loan documented in the R&D Tax Prepayment Loan Agreement.
Availability: Following the loan approval, the loan is available within two days of a drawdown notice confirming the eligible expenditure has been incurred. This can be drawdown on a monthly or quarterly basis.
Security: First ranked charge over the company registered on the PPSR.
Principle repayment: From the tax return or earlier if required by the Borrower.
Companies that invest heavily in research and development can face strategic problems when it comes to raising funds in the short term to keep cash flow healthy or to fund upscaling of the project without suffering the difficulty of equity dilution. However, there are financing options available that can overcome and bypass these difficulties and R&DCP are in pole position to facilitate such funding.
R&D tax incentive pre payment loans are simply commercial loans from a private lender that use expected forthcoming refunds from the government as collateral for the loan and as such are highly attractive to R&D companies, especially pre revenue businesses that invest heavily in research and development.
There are of course eligibility criteria and once you have made your application for R&D tax prepayment loan agreements, the specialised and experienced team at R&DCP will need to undertake due diligence to ensure that your operation qualifies by virtue of your annual turnover and eligibility for tax returns further down the line. In simple terms, if your turnover is less than $20 million pa you meet the first criterium and may be eligible for a loan of up to 80% of your anticipated rebate. Applications are accepted based on your previous year, your current year or on longer term strategy but once due diligence has been completed the transfer of funds can be expedited in as little as 48 hours.
If you are looking for funding or loans that can bring shareholder value and no dilution of equity or company ownership, talk to R&DCP today.