Frequently asked questions

What is Advance Funding of R&D tax credits?
The R&D tax credit is an incentive program run by AusIndustry that entitles companies to claim up to 43.5% of their eligible expenditure in the form of a corporation tax reduction or a cash payout. This money can only be accessed after the completion of the fiscal year in which it was incurred. This is where Fundsquire comes in – we can advance up to 80% of a future R&D tax credit up to 12 months before the company is eligible to claim the funds from AusIndustry.
What companies qualify for the R&D tax credit?
Checking if you qualify for an R&D tax credit is somewhere between an art and a science, but companies that have strong investments in complex technology almost always qualify. The Australian Government’s page on R&D tax credits explains qualifying activities and spending in a bit more detail.
What are the application criteria for Fundsquire’s R&D tax credit loans?
We look at a company from two angles: the R&D tax credit itself and the company’s overall health. On the level of the R&D tax credit claim, we work with a series of partners and external consultants to ascertain the size of the potential tax credit. The minimum size for a Fundsquire fundable R&D tax credit is around $60,000 at this time. The other criteria relate to the company’s overall health in the next year. This means we’ll take a closer look at a cash flow forecast, the P&L, the balance sheet, and the management accounts. This is usually enough information to lead us to a Term Sheet decision. After signing the Term Sheet, in the credit review, we will ask for a few additional clarifying and identifying documents.
How long does the application process take?
The application typically takes around 1-3 weeks depending on complexity and how fast you are able to provide the needed documents.
Must my business be profitable?
No, we work with many pre-profit, and even pre-revenue companies.
Can I repay early?
Yes, and there is no penalty in early repayment.
How much can I borrow?
At the moment we can offer loans between $60,000 – $3,000,000 but higher loans are negotiable on a deal-by-deal basis as well.
What sectors do you lend to?
We lend mostly to companies in the technology space, but we are not strangers to manufacturing either. Essentially, any company eligible for an R&D tax credit can be eligible for R&D tax credit Advance Funding.
Do you take personal guarantees?
No, we do not take personal guarantees.
Our business has a registered PPSR charge already, does that exclude us from qualifying?
This is not a knock-out criterium, but we will have to register a first ranking charge at least for the R&D tax credit. This can be negotiated with your other charge holders and set in place through a Deed of Priority.
I want to borrow – why should I choose Fundsquire?
Fundsquire has extensive experience in understanding both the R&D tax credit and the factoring process. This is why we can advance your R&D tax credit earlier and more cost-effectively than any other player in this space. We understand your technology, your eligibility, your funding roadmap, and your particular needs.
I’ve paid the first part of the facility fee – is it refundable?
Our facility fee is refundable if: Fundsquire declines the loan for any reason. Our facility fee is non refundable if: The client chooses not to go ahead because they changed their mind or chose another provider after going through due diligence with Fundsquire. The first half of the facility fee is charged for our time spent assessing and approving the loan.
When is the rest of the facility fee paid?
The remaining facility fee is either paid at the initial drawdown that is planned at a specific date, and it is deducted from the drawdown amount. If no drawdown is planned, we can set a date within the next 5 days where we ask for the remainder to be paid. The benefit of having paid the facility fee is that the borrower has the peace of mind knowing they can access the funds anytime from approval until the tax return is repaid, usually within 2-5 days. So, if an invoice needs to be paid or a hire needs to be made, we can provide the funds in a few days.
How do I pay interest and repay the loan?
The interest and principal will be paid off when you receive the payout from the ATO. We work with holding and/or escrow accounts and the difference between Fundsquire’s fees and principal and the ATO payment will be sent to your account.
Where does the funding come from?
The funding is a mixture of Fundsquire’s own capital and funding from a broad participation network of individual and institutional investors.
Post-funding, what happens?
Once the Loan Agreement has been signed and payments have been made, the loan enters the Monitoring phase. This is a monthly check-in with a credit specialist who will ask for updates and revised documents. This will continue until the loan is paid back upon repayment by the ATO.
Why is Fundsquire a smarter source of growth?
Fundsquire lets you make the best use of your resources at the time that you need them. We don’t just issue R&D tax credit loans, we seek to understand your business, your technology, and your vision. Most of our clients have become long term partners because they trust Fundsquire, and we trust our clients.
How much of the future claim can you lend? What is your LTV?
We typically lend between 50-85% of the estimated value of the future claim, depending on our familiarity with the processes of the claiming specialist and your particular funding needs.
What security do you take?
A debenture with a fixed and floating charge.
Do I need to work with an R&D Tax Credit advisor?
Though you do not need to work with an R&D advisor, we will need a Funding Eligibility Review document completed by a specialist consultant or accountancy.
Do I need to change my R&D Tax Credit advisor?
No, we can work with most R&D Tax Credit advisors, but the LTV(Loan-to-Value) rate might differ depending on our familiarity with the specialist. The LTV represents the percentage of the approximate claim value that we can lend out.
What happens if the R&D Tax Credit claim is delayed?
We set a short stop date at the expected time of repayment, then a long stop date after 2 months, on average. Until the long stop date, the same interest is incurred, after that 4-6% are added, annually. We try to work with our clients to set a reasonable payment schedule if these delays drag out for longer.
What happens if the R&D Tax Credits claim is not paid?
As part of our due diligence, we work with reputable consultants who will be able to estimate a claim size relatively accurately. Given our specialist approach, it is next to impossible for the ATO to not pay out a claim, but it is possible for them to amend the claim size. We manage this risk through the Loan-To-Value rate. In the extreme case that no claim is paid out, we will engage other avenues to receive payment, working with the client to create a reasonable repayment schedule.