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Funding your innovative ideas can be tricky, especially in the current economic climate. The good news is there are still plenty of options available
At Myriad Associates, we’re proud to support our clients in identifying and accessing the cash they need to innovate. Here we look at some of the main funding options available to UK businesses.
A range of UK, regional and European grant funding schemes are on offer, all designed to increase business competitiveness, job creation, growth and sustainability.
The most significant grant funding stream is via Innovate UK, which specialises in research grants for SMEs, start-ups, collaborative projects and larger companies too. It also encourages companies to work together with research organisations and academia to help solve the biggest technological and scientific challenges of our time.
R&D grants typically support the creation of a commercially viable product, service or process from start to finish. The innovation doesn't necessarily have to be a huge breakthrough, but in order to achieve support the change needs to be more than ‘routine’.
Grants are available to support most types of innovation and can help fund things like:
To find out more, why not take a look at our R&D Grants page.
The grant funding programme offered across the European Union at the moment is Horizon 2020. The programme was launched in 2014 and is set to run until the end of this year, before being replaced by Horizon Europe.
The extent to which the UK will be able to access EU grant funding from the 1st January 2021 is still being finalised. However, organisations should not let that discourage them from trying to obtain an EU innovation grant, as UK-led projects have been known to win European research funding even since the referendum.
Besides the grant options mentioned above, there are also a number of ways to raise the cash required for R&D. These include:
Many businesses choose to go down the route of bank loans and it’s a popular way of funding a range of innovative projects. Don’t forget, if your small business has been affected by coronavirus then a government-backed Bounce Back Loan may also be an option. Of course, make sure you do your research beforehand so you understand the lender’s rates, fees and criteria.
For many micro businesses and start-ups, family and friends can be a good source of ready cash. It’s a good way of funding smaller projects without worrying about strict repayment terms or more formal funding.
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are both backed by HMRC and are highly tax-efficient. When investors buy shares in your business they can receive the tax back, plus more if their investment makes a loss.
We’ve seen this a lot recently with things like Go Fund Me. Essentially you set up a page on a peer-to-peer lending platform and people can either lend you money or buy a stake in your business. It’s not a quick fix and often means promoting yourself well, but it’s handy for businesses with an amazing proposition that will grab plenty of attention.
Angel investors are wealthy individuals who offer funding (and usually their own expertise) in exchange for business shares. Some investors will go into individually, whilst others will be in a group. It’s a fantastic way to achieve larger sums as well as the backing of a big name in the industry, but is not ideal for those businesses owners wanting to retain total control.
This one is open to all UK companies regardless of size. It’s particularly valuable too, and with average UK claims now hitting £65,000 even the smallest of companies can benefit.
The R&D Tax Credits scheme is a government-backed incentive that encourages businesses to innovate and grow. It works but covering a range of projects types and costs, from R&D-related staffing costs to materials and overheads and much more.
Typically, SMEs can claim back as much as 33% of eligible R&D expenditure (we told you it was generous!) Larger companies and those who have previously received state aid will need to claim under the RDEC branch of the scheme, allowing up to 11% of your qualifying R&D expenditure back. It’s less amount, but claim values under RDEC tend to be much higher.
R&D Tax Credits put a portion of your company’s R&D expenditure back in your pocket. The relief can be paid as cash (for loss-making companies) or can be used to reduce your company's tax bill if you made a profit.
Generally speaking, projects which qualify for R&D Tax Credits will have involved making an advancement in science and/or technology. The outcome must have been uncertain when work started, and must contribute to the wider field with new products, services or processes.
This all sounds great (and it is) but the problem is that applying for R&D grants and R&D Tax Credits can be a minefield. It’s not always obvious which costs are applicable, making over or under-claiming incredibly easy. There are also times when it appears you should be claiming under the SME branch of the scheme, when in fact it should be RDEC.
As if that wasn’t tricky enough, there’s then the technical report to complete, where you need to demonstrate fully to HMRC why you believe your company’s claim is valid. It needs to show that you are creating an advance in science or technology in an environment of scientific or technological uncertainty.
When you work with our expert R&D team, we will help you identify all the costs and put together a fully maximised, accurate claim. We can also work with HMRC on your behalf, and answer any questions along the way.
If you would like to find out more about funding your innovation projects, contact us today or call us on 0207 118 6045.