But here’s the thing — if you’re eligible for the R&D Tax Incentive (RDTI), you already know the rhythm: spend money now, claim later, wait a long time. Sound familiar?
R&D finance is all about not waiting, and bringing forward that R&D cash you’re entitled to anyway.
Increasingly part of the Australian funding scene, we see it as a smart way to access cash, and should be considered as part of any startups fundraising efforts. Done right, you can use R&D finance to either raise less through equity (keeping more in founders pockets) or still raise the same amount, and have more left over for going to market.
The Wait Is Real
Here’s how it usually plays out: You spend on R&D throughout the year. Even if you’re on the ball (we lodged two R&D claims before breakfast on the 1st of July!) the soonest you can expect the cash is around September … this is at least 12 months after you spent it … and that’s if the AusIndustry review and ATO don’t sit on it (which can add weeks or months if you’re unlucky).
Now imagine bringing that refund forward. That’s what R&D finance is all about — unlocking your refund before the ATO gets around to paying it.
What Is R&D Finance?
In a nutshell, R&D finance lets you borrow against your future refund. The R&D Tax Incentive is an entitlement (not a risky grant), so lenders are typically willing to front you up to 80% of the amount you’re due — assuming your claim is legit and verified.
As Remco Marcelis (our CFO-for-hire at Standard Ledger) puts it: “We call it spend and lend. You spend $100k on eligible R&D this quarter, you’re due $43.5k back, and you can borrow around $35k right now instead of waiting 12 months.” Lenders are typically turning around applications in 2-4 weeks. Repeat, each quarter.
That’s game-changing for runway, hiring, product dev, or just plain ol’ stress reduction.
Why Not Just Get a Bank Loan?
Ah, if only. Traditional banks rarely lend to startups — and if they do, they’ll ask for director guarantees, which most founders (and VCs) don’t want to touch. R&D finance, on the other hand, is typically secured only against your refund, not your house or personal assets.
That makes it low risk and low hassle – especially when you’re in growth mode.
Let’s Talk Costs
Now for the juicy stuff: What does it cost?
- Interest Rates: These vary over time, and could vary based on the lender’s risk assessments, but at the time of writing, R&D finance sits around 15% per annum.
- Application Fees: Most lenders charge a small one-off fee to process your loan.
- No Monthly Repayments: Interest accrues until your refund lands — then it’s repaid all at once from the refund itself.
So, if you borrow $35k today, you won’t make any payments until your $43.5k refund hits. The lender gets repaid (plus interest), and you keep the rest. That’s why they only lend 80% — to leave room for interest and avoid over-lending.
Remco’s tip? Don’t borrow more than you need. Work quarter by quarter, keep good records, and don’t overestimate your claim — because yes, you’ll still need your R&D consultant to verify the eligibility and spend.
What Do Lenders Look For?
Not much, actually. They want to see:
- That your R&D claim is genuine (✅ — that’s where we help)
- That you’ve actually spent money on eligible activities
- That you don’t have major ATO debts (like unpaid BAS’)
That’s it, just numbers and documentation. Turned around in 2-4 weeks.
We work with most of the lenders, and they’re all great – including Advanced, Kashcade, Radium Capital and Tractor Ventures – hit us up if you’d like an intro.
So, Is It Worth It?
If you’re a startup spending heavily on R&D, and in particular using (expensive) equity to fund that development, absolutely. R&D lending is now the #1 debt tool for early-stage startups in Australia. It gives you flexibility, keeps equity in your hands, and fills the gap between effort and reward.
Whether you’re bootstrapped, angel-backed or VC-funded, it’s worth exploring how R&D finance can stretch your dollars and reduce dilution.
💬 Want to dive deeper?
Check out our video breakdown with Remco and John: Watch here
