Walking a tightrope
That was how it worked until COVID-19 hit the scene. Since March, the pandemic has upended financial markets and consumer demand. This has left many businesses with R&D in a bind. Many investors have either fled or are far more cautious about decision making. So even for businesses that do successfully secure investment capital, it can be a long time between drinks for cash flow and this can trigger a pressure situation for their cash position. Recent positive announcements on vaccine trials are welcome. But they won’t bring an overnight solution to the health and economic crises. So let’s look at some new and existing ways to boost incoming cash flow. This will help you steer a course through the remainder of the COVID-19 pandemic and its economic aftershocks.
Zero on your funding options
From the generous, new look R&D tax incentive (RDTI) revealed in last month’s Federal Budget to the updated Modern Manufacturing Strategy, the Federal Government is rolling out additional support for businesses. Make sure you explore the latest updates to see if your business and your R&D programs are eligible. We’ve put together a snapshot of some of the Federal Government programs that might fit the bill. But keep an eye on additional incentives and support in your local state or territory. State and Territory Budgets have been rescheduled to this spring and summer. And the ones that have already been handed down have included grants and tax waivers to help local businesses.
The Federal Government’s Modern Manufacturing Strategy has three key programs: Modern Manufacturing Initiative (MMI), Supply Chain Resilience Initiative and Manufacturing Modernisation Fund (MMF). The MMF is the one you can apply for first. This fund is set to open before the end of the year. It offers grants of $100,000-$1,000,000 to companies that meet the Federal Government’s National Manufacturing Priorities and are on track to deliver jobs growth and upskilling for their employees. The Supply Chain Resilience Initiative will open for expressions of interest in the final quarter of FY 2020-21, with the MMI following hot on its heels on 1 July 2021. So if your business and R&D are in the manufacturing space, these programs could help shore up your capital and cash flow in a sustained way if you qualify.
The Government’s Boosting Female Founders initiative was awarded an extra $35.9 million in funding in last month’s budget. So if you’re a female founder and meet the criteria this initiative is worth exploring.
Following the October Federal budget, it is business as usual for the RDTI this financial year. From 1 July 2021, the generous refunds on each dollar of R&D invested by businesses with up to $20 million in aggregated annual turnover will remain. And there will now be no cap on the amount that can be refunded.
James Graham, Chief Executive Officer of Recce Pharmaceuticals, Sydney-based biotech has praised the government’s Federal Budget move.
“The R&D incentive helped keep our business going during our early development and has enabled us to take the risks necessary to build the globally-focused business we are today,” Mr Graham says.
“For companies like ours that are genuinely R&D driven, we think the new approach strikes the right balance.”
So if your business is R&D-focused, like Recce Pharmaceuticals, and you haven’t considered the RDTI, there’s never been a better time to do so.
Use R&D Advances to make your RDTI refund go further
Applying for your R&D refund is just one side of the equation. We recommend you bring it forward with a Radium Advance from Radium Capital. If you do this multiple times a year, it actually triggers additional refunds. Our clients that use Radium Advances in this strategic way can boost their R&D spend by up to 50%. This has clear benefits for their competitiveness as well as their R&D cash flow. And your business could be accessing this and the other upsides of Radium Advances too. So get in touch with one of our expert advisers to find out more.
To chat with one of Carbon’s experts in the R&D space, please give us a call on 1300 454 174 or get in touch and we’ll be happy to talk through any questions you have.