Prototype costs
Materials, fabrication, testing and specialist contractor costs can create lumpy R&D cash requirements.
Engineering R&D
Fund engineering development while the evidence and tax cycle are still progressing.
Engineering businesses may incur substantial design, prototype, testing, technical labour and contractor costs before an anticipated R&D tax benefit can be claimed.
What matters
Start with the commercial reality.
Funding should address a defined business need and sit within a credible plan for the company after the facility is advanced.
Technical records
Design iterations, test results, uncertainties and contemporaneous engineering records support both project management and the company’s R&D process.
Commercial pathway
Funding should connect technical work to a credible business plan, customer opportunity or production pathway.
Map projects and milestones
Prepare each significant engineering project, technical objective, stage, expected completion and the expenditure still required.
Document technical work contemporaneously
Keep design records, calculations, test outcomes, failures, modifications and project decisions as the work occurs.
Connect expenditure to the expected R&D position
The company and its advisers should have a clear reconciliation from payroll, contractors, materials and project costs to the anticipated R&D claim.
Assess the whole company
The lender also considers revenue, existing contracts, liabilities, working capital, security and the ability to repay if the anticipated R&D benefit changes.
Official sources & further reading
General information only. This page does not constitute legal, tax, financial or credit advice. SME Capital Partners is in pre-launch and is not currently offering or approving credit through this website.