With a squeeze on early stage company’s cashflow, many businesses are looking at the options available to them. However, they are quickly finding that there are no simple answers. Too small for the Large Business Interruption Loan Scheme. Too many historic losses for the SME Business Interruption Loan Scheme. Not enough VC backers for Future Fund and the still unknowns about the Bounce Back scheme. And for bank debt...the dreaded personal guarantee from directors. So, what else should you be thinking about?
There are the obvious ones - business rates, VAT deferral, furlough staff. All probably done but still, there remains a burn rate on cash and your equity backers are not ready to provide a further injection. What else?
You can look at an Advanced Subscription Agreements or Convertible Notes (we have written about these here) which may provide some comfort but there are noted risks.
We are currently finding that HMRC are paying the majority of their R&D tax credits within the 28 days of submission. Will HMRC set off against PAYE as per usual? James Tetley at RSM recently wrote this helpful piece which confirmed that they will not offset VAT and as long as there is a deferment agreement in place.
You can therefore look to change the end of your tax year, get an agreed deferment and borrow against your anticipated net R&D tax credit from Finstock Capital which could see you in receipt of cash within weeks rather than months.
At Finstock Capital, we appreciate the struggles of companies we deal with on a daily basis. We are therefore continuing to look at ways to provide capital on a simpler and easier route for borrowing companies. We are also seeking ways to bring down borrowing costs to companies. If you have any questions about how we might be able to help you then please do let us know.
Q: How long does it take to get an R&D loan from Finstock Capital?
A: We aim to turn each loan around in 2 weeks depending on due diligence requirements.
Q: How much can you lend to early stage businesses?
A: We lend up to 75% of the net R&D tax credit rebate. We will lend from £50k to £2m.
Q: Do you require Personal Guarantees?
A: No, we do not require them but the loan will be secured against the R&D tax credit.
Q: Do you charge legal fees?
A: No, all external fees are included within the arrangement fee
Q: Do you only focus on a particular sector?
A: No, we are sector agnostic and will address each claim on its own merits.
Q: Do you only do R&D loans?
A: No, we work with VGTR lending, Theatre tax credit lending, TV, Film and other sorts of tax credit lending. We work with each company on a bespoke basis to make sure they have the capital they require. That might mean a combination of tax credits depending on their expenditure.