An R&D claim is real money with a bad delivery date. The spend went out over the last twelve months, the accounts have to close, the report has to be written, the return has to be filed, and only then does HMRC start its clock. For a loss-making company that can mean eighteen months between paying an engineer and getting the credit back.
This post is for founders at UK tech, deep tech, hardware and biotech companies with a claim coming and a runway that will not wait for it. It explains how an R&D tax credit loan is sized, what a lender needs to see, what it costs, and when it is the wrong answer.
The merged scheme, ERIS and what your claim is worth
At the time of writing there are two routes, and which one you are on drives the numbers.
The merged R&D Expenditure Credit scheme applies to accounting periods beginning on or after 1 April 2024. It pays a 20% credit on qualifying expenditure, above the line, and the credit is taxable. Net of tax the cash value is roughly 15–16% of qualifying spend, depending on your rate. A company with £1m of qualifying R&D can expect about £150k–£160k.
Enhanced R&D Intensive Support (ERIS) is for loss-making SMEs that spend at least 30% of total expenditure on R&D. It keeps the older mechanics: an 86% additional deduction and a 14.5% payable credit on surrendered losses, worth up to around 27% of qualifying spend in cash. The same £1m of qualifying R&D can be worth up to £270k. Most early-stage deep tech and biotech companies we see are on ERIS, and the difference matters when you are sizing a facility.
Two points that lenders care about more than founders expect. First, only qualifying expenditure counts, and the advisor's view of what qualifies is what we underwrite, not the total R&D budget. Second, HMRC's stated aim is to process 85% of claims within 40 days, but a claim that goes into enquiry can sit for many months. The enquiry, not the processing time, is the risk a lender prices.
How an R&D tax credit loan is sized
A loan against a tax credit is a loan against a receivable that does not exist yet. We size it in three steps.
- Expected credit. The advisor's report and computation, reconciled to the accounts, give the gross claim and the expected cash payment after the notional tax. That is the ceiling.
- Advance rate. We lend up to 80% of the expected credit. The rate sits lower where the claim is a first claim, the advisor is unfamiliar, the qualifying spend is dominated by subcontractors, or the company has had an enquiry before.
- Haircut for enquiry risk. If HMRC opens an enquiry, the payment stops until it is resolved. We look at claim history (two or three clean claims of similar size and shape make a big difference), whether the technical narrative is specific, and whether the claim's size has jumped without an obvious reason. Where enquiry risk is higher, the advance comes down or the term goes up.
The facility itself is short: typically the period from filing to payment, with headroom. Interest is priced in the teens per annum for a clean deal and is usually rolled up and repaid with the principal when HMRC pays. Security is a debenture and specific security over the tax credit receivable, sometimes with an undertaking that the credit is paid into a controlled account. No warrants, no equity, and personal guarantees are not typically required. Once documents are in, drawdown can be within a week.
Illustrative, round figures. A hardware start-up has a March year end and £1.2m of qualifying R&D spend, which is more than 30% of its total costs. Its advisor computes an ERIS claim worth around £320k in cash. The accounts and return are filed in July. The company has four months of runway and its next equity round is pencilled for the autumn, but the investors want to see the prototype tested first.
We advance £250k in July, about 78% of the expected credit, for a six-month term secured on the receivable. At an illustrative 15% per annum with interest rolled up, the cost is roughly £16k if HMRC pays in December, and less if it pays sooner. The prototype gets tested on schedule, the round closes with the milestone met, and the credit repays us when it lands.
Had the same company been on the merged scheme instead, the claim would be worth roughly £190k and the advance closer to £150k. Same spend, different scheme, different facility.
What a lender needs from you
A claim-backed loan is a documents business. The credit decision is quick if the file is complete. We will want:
- The advisor's R&D report and the computation showing the qualifying expenditure and expected credit
- Confirmation of the scheme (merged or ERIS) and the R&D intensity calculation if ERIS
- Filed or draft statutory accounts and the corporation tax return for the claim period
- Prior claim history: amounts claimed, amounts paid, any enquiries and how they were resolved
- Management accounts and a monthly cash flow through to the expected payment date
- Your advisor's contact details and consent for us to speak to them
- Group structure and any existing lender or debenture we need to sit alongside
If the return has not been filed yet we can still start; the facility simply draws when it is. Where a company has never claimed before, expect a lower advance and more questions about the advisor.
R&D loan versus the alternatives
| Option | Cost | Speed | What you give up | Works when |
|---|---|---|---|---|
| Wait for HMRC | Nothing | Weeks to months; longer if enquired | Runway and, sometimes, a milestone | You have the cash to wait |
| R&D tax credit loan | Teens per annum for a few months | Days once documents are in | Interest and a charge over the receivable | A clean claim and a dated need for cash |
| Bridge to the next round | Teens per annum | 2–4 weeks | Interest; needs evidence of the round | The gap is bigger than the claim |
| Venture debt | Interest plus warrants of 5–15% of the loan | Weeks to months | Warrants, covenants, often a bank relationship | Longer-term growth capital post-Series A |
| Equity | Permanent dilution | Months | Ownership, and usually at a pre-milestone valuation | You need far more than the claim is worth |
The comparison to make is with the round you would otherwise be raising early. A few thousand pounds of interest to reach a milestone is usually cheaper than raising at a lower valuation because the milestone was missed. Where the gap is larger than the claim covers, an R&D advance can sit alongside an equity bridge between rounds rather than replacing it, and both can be documented together on our bridge finance terms.
When an R&D advance is the wrong answer
If a bank will give you an overdraft or term loan on workable terms, take it; we are cheaper than equity but more expensive than a bank. If the claim is already under enquiry, we will usually wait for the outcome rather than lend into it. If the claim is small relative to the cash need, the interest is not the problem, the shortfall is, and a tax credit loan on its own will not fix that. And if your advisor's report reads like a marketing document rather than a technical narrative, fix the claim before you borrow against it.
We have lent against expected tax credits across games, theatre, film and R&D since 2018, and the mechanics are the same in each case: a credible receivable, a clear payment date, a facility sized to the risk. The tax credit loans section of our homepage sets out the range we cover, and our note on VGEC loans for games studios shows the same logic applied to a different credit. Decisions are made by Oliver and me personally, and nothing here is tax advice; your advisor's view of the claim is the one that counts.
If you have an R&D claim filed or about to be filed and a runway that does not stretch to HMRC's payment date, send us the advisor's computation and a cash flow. We will tell you within days whether an advance works and what it would cost.
Frequently asked questions
How much can I borrow against an R&D tax credit claim?
Up to 80% of the expected cash credit, as confirmed by your advisor's computation. The advance rate comes down where the claim is a first claim, where subcontractor costs dominate, or where there has been a prior enquiry. On the merged scheme the credit is worth roughly 15–16% of qualifying spend net of tax; under ERIS it can reach about 27%, so the scheme you are on largely determines the facility size.
Can I get an R&D tax credit loan before the return is filed?
We can agree terms before filing, using the draft accounts and the advisor's computation, and draw down once the return is submitted. Lending before filing is possible in some cases but at a lower advance rate, because the claim is not yet a receivable HMRC has been told about. In practice, getting the return in is the fastest way to turn the claim into cash, whether you borrow against it or not.
What happens if HMRC opens an enquiry on the claim?
Payment stops until the enquiry is resolved, which can take many months. That is the risk the facility is priced for. We look at claim history, the quality of the technical narrative and the consistency of the claim with prior years before lending, and we will not usually lend into a claim that is already under enquiry. If an enquiry opens after drawdown, the term extends and the company works with its advisor to resolve it.
Does the loan affect the R&D claim itself?
No. The loan is a separate commercial arrangement between the company and the lender, secured on the receivable. It does not change the claim, the computation or what HMRC pays. The credit is paid to the company as normal, usually into a controlled account, and the loan is repaid from it. Nothing in this article is tax advice; your advisor is responsible for the claim.
How quickly can an R&D tax credit loan complete?
Once the advisor's report, computation, accounts and return are with us, drawdown can be within a week. The credit decision is made by the two co-founders directly, so the answer on whether we can lend, and roughly how much, usually comes within a day or two of reviewing the file. Delays almost always come from missing documents rather than from the lender.