R&D Cash Flow Loans FAQ’s
The R&D Cash Flow Loans Initiative will provide up to $50 million in low-interest loans to eligible Victorian small-medium enterprises (SMEs) that are claimants of the Commonwealth Government’s R&D Tax Incentive.
No. Once the $50 million in total capital has been committed it will not be recycled. That means that in cases of early loan prepayment, or if some Borrowers elect a loan term shorter than 28 months, the capital will not be reallocated to new Borrowers within the funding period.
Invest Victoria reserves the right to exercise its discretion when assessing whether the activities of an applicant are consistent with the policies and procedures of the Victorian Government.
Applications received after the loan fund is expended will not be considered. Invest Victoria will make best efforts to keep the website updated with regards to funds committed, however reserve the right to return applications without assessing them, when funds are expended.
Evidence of receipt of a prior year’s refundable R&D tax offset is required to be eligible. Therefore, for the majority of companies the most recent receipt of a refundable R&D tax offset would be that of the 2019-2020 financial year (FY20).
If evidence of receipt of an FY20 refundable R&D tax offset is provided, a minimum of one year is required. However, if the evidence of receipt of prior year R&D tax offsets is before FY20, a minimum of two years is required.
Evidence of receipt of all refundable R&D tax offsets (including FY21) are to be provided to Invest Victoria . Failure to provide this evidence, or failure to receive a refundable R&D tax offsets due to a ruling by AusIndustry or the ATO, will lead to an event of default and trigger early repayment of the loan.
Furthermore, throughout the life of the loan companies are required to have a confirmation of expenditure letters also from R&D tax agents. Failure to comply will lead to an event of default.
No. The R&D Cash Flow Loans initiative is only available to companies who are claimants of the refundable R&D tax offset, and therefore have less than $20 million in group aggregate turnover.
The credit assessments will be conducted with the assistance of an independent commercial advisor appointed by Invest Victoria. The advisor will assess:
- financial risks;
- non-financial risks;
- R&D Tax Incentive specific risks.
Invest Victoria intends to undertake assessments and notify applicants of an outcome approximately four weeks from receiving the complete application. If the application is missing required information applications will take longer to process or may not be eligible for assessment.
An Offer will be made to successful applicants via the provision of a Loan Agreement. Returning a signed loan agreement via post will constitute acceptance of an Offer.
Incentives, grants and programs
In Victoria, the Privacy and Data Protection Act 2014 protects information held by Victorian Government Departments and Agencies. We protect the privacy of your information. We endorse fair information handling practices and use of information in compliance with our obligations under the Privacy and Data Protection Act 2014 (Vic). Loan Applications will be used only for the intended purpose.
Invest Victoria is the State Government of Victoria’s investment attraction agency, fostering long term economic prosperity by enabling business opportunities and job creation for Victoria.
There is no material impact for companies who work to a January to December financial year. Applicants will, however be encouraged to take a 24 month maximum loan term, as the duration of the program will only cover two financial years of R&D Tax Incentive claims.
No. The loan agreement follows a standardised format to ensure the program can be administered efficiently. The terms and conditions of the loan agreement may not be suitable for your business circumstances. Applicants are required to seek independent legal and/or financial advice before applying under the R&D Cash Flow Loans initiative, to ensure a thorough understanding of the potential legal and/or financial implications of entering in to a loan agreement under the R&D Cash Flow Loans initiative.
Assuming a loan execution and drawdown in , a 28 month loan term would seek to provide debt finance that covers the 2021-2022 financial year (FY22) and 2022-2023 financial year (FY23) periods of R&D expenditure, whilst allowing time for receipt of the FY23 refundable R&D tax offset, to most efficiently repay the principal.
Loans will have a minimum size of $250,000 and maximum of $4 million. Loans cannot exceed an 80% LVR, based upon forecast R&D expenditure.
Given the program will run over two financial years, Invest Victoria will require financials and renewed cash flow forecasts prior to the commencement of FY23, and reserves the right to make adjustments to credit limits if forecasts and current financial year expenditure indicate your company will be in breach of the 80% LVR covenant.
Invest Victoria will be responsible for administering the R&D Cash Flow Loan, whilst Treasury Corporation of Victoria (TCV) will be the lender provisioning the debt finance.
Loans provided are via a TCV 11am facility, which is an interest-only loan, renegotiated daily. Interest payments are due on the first business day of each next page month.
The LVR will be calculated based on forecast R&D expenditure, as expressed in your cash flow forecasts. However, if prior year refundable R&D tax offset amounts have been less than the amount claimed, the LVR will incorporate an adjustment to your LVR based upon the ratio of refund received to refund claimed.