ArchOver, the UK P2P business lending platform, aims to bridge the funding gap to enable businesses to continue to grow while waiting for their R&D tax claim to be repaid. ArchOver’s Research & Development Advance (RDA) service is reportedly the first provided by a P2P lender funding advances upward of £100,000. This bridging finance enables organizations to use their pending R&D tax credit, based on two years’ successful claims, to raise funds from ArchOver’s community of lenders.
“Investment in research and development is crucial not only to individual businesses, but to the wider economy as well,” observed ArchOver CEO Angus Dent. “While the government deserves praise for unlocking cash for R&D, the long wait for reimbursement puts this funding out of reach for many of the businesses that stand to benefit most.”
According to ArchOver, only 1.67 percent of national income is currently being spent on R&D compared to an average of over 2 percent across the EU. Government initiatives have been put in place to encourage further investment in innovation in the UK. Under the current system, UK businesses can claim cash repayments of up to 33 percent of their R&D expenditure, but it can take up to six months to receive payment from HM Revenue & Customs (HMRC). ArchOver aims to help qualifying companies to bridge this gap, and connect them with the money they need to invest in the products and services of the future.
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“ArchOver is committed to unlocking access to capital while providing new opportunities for investors,” Dent added. “With the RDA service, businesses no longer need to worry about having to wait for months to be reimbursed for R&D, which means they can start putting their investment plans into action immediately. That’s great news for individual businesses, and for the UK economy generally.”
ArchOver explained that its RDA service is a short-term loan that helps businesses overcome the cash flow problem associated with investing in R&D. Lenders that invest in RDA loans through the ArchOver platform will earn a solid return on their cash, with a rate of 10% p.a.. This service is available to companies that can demonstrate a history of successfully claiming R&D tax credits from HMRC, with at least two years’ successful claims. It provides a six month advance of up to 70 per cent of the estimated value of an R&D claim, with a minimum loan of £250,000.
ArchOver, a member of the Hampden group, is fully authorized by the FCA. The fintech platform currently offers five lending models supporting UK businesses. Each model aims to address security in different ways to suit the needs of the Borrowers and the appetite of the Lenders:
- ArchOver’s flagship ‘Secured & Insured’ (S&I) model allows lenders to invest in loans secured against a company’s Accounts Receivable, where those Accounts Receivable are insured.
- ‘Secured & Assigned’ (S&A) allows Lenders to invest in loans that are secured against a company’s contracted recurring revenue, with ArchOver taking assignment of the contracts.
- ‘Secured’ (S) loans are leveraged against either a company’s Accounts Receivable or contracted recurring revenue, with the main difference being that the Accounts Receivable are not insured and the recurring revenue is non-assignable.
- ‘Bespoke’ (B) loans are made on the same basis as S&I or S&A, with the sole exception being that the all-asset charge initially ranks second and will transition to a first charge during the loan term.
- ArchOver’s newest service, ‘Research & Development Advance’ (RDA) is unsecured short-term lending against an identified Research & Development claim payable to a company by HMRC.