What is R&D Funding?

If you’re a small business and interested in applying for R&D funding but are new to the topic, it can be a bit of a minefield to navigate.

There are four primary routes to research funding:

 

1. Research Grants:

This is our area of specialisation. For many years both the UK Government and the European Commission have been offering grants to small businesses to part-fund their R&D. Currently the two main industrial funding streams are through Innovate UK and Horizon 2020. They span a vast range of sectors and subjects, so you will almost certainly be able to find the right call for funding for you. A call for funding will be released periodically and will be a competed application. In recent years, this competition has got ever tougher due to higher numbers of applicants. As an example, UK success rates are typically around 15%, which is about the average success rate. For specific European SME funding calls, success rates are lower still, with the UK being around 10% and the average being only about 7.5%.

Due to State Aid rules, the funding bodies will not fund the total cost of the R&D. Typically, a small business can receive up to 70% of all eligible direct costs. Overheads are usually claimable at a flat rate of 20%. This means the business must find the remaining unfunded part through its own cash or reserves.

Applications can be (and usually are) difficult and time-consuming. It is very easy to spend a lot of time on an application only for it to fail. This is where our services come in. Not only can we find the right funding call for you and find the right team for your consortium, we will structure and write the document in such a way as to make it engaging and “hit the right buttons” with the assessors. This will maximise your chances of winning the funding in a highly competitive environment.

 

2. Innovation Loans:

These are a relatively new loan pilot scheme offered by the UK Government, which will end in 2019 (but will be reintroduced if successful). These are generally more suitable for near-to-market research rather than early stage research. The loan will cover 100% of eligible costs and are offered currently at an interest rate of 3.7%. The loan application is competed with other small businesses, so unlike conventional business loans, there is no guarantee that you will get the financing. We can bring our writing skills and funding knowledge to help maximise the chances of your application being successful. More information can be found here (external link to the UK Government website).

 

3. Business Loans:

These loans are not specific to funding research but are a standard practice by which businesses can borrow money from banks and building societies to support the growth of the business. This is not a service we offer.

 

4. SME R&D Tax Credits:

This is an indirect way of financing research and development and was introduced by HMRC. Essentially this scheme allows for 230% of eligible costs from R&D expenditure to be deducted from annual profits, thereby reducing the total amount of Corporation Tax paid. More information can be found here (external link to HMRC website).

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