Funding Glossary: Key Terms Explained

An HMRC form that must be submitted with every R&D tax relief claim, describing the projects and costs. A claim made without it is invalid.

Repaying a loan's capital in regular instalments over time, usually monthly or quarterly, rather than in one lump sum at the end.

The yearly value of a company's subscription or contracted recurring revenue. Lenders use it to size venture debt facilities.

A one-off fee, usually a percentage of the facility, charged by the lender for setting up a loan. Also called a facility fee.

How much cash a company spends each month beyond what it brings in.

A table showing who owns a company's shares and options, and in what proportions.

Paying a warrant holder the cash value of their warrants at an exit, instead of issuing them shares.

A grant payment method where you spend first, then claim the costs back after the period ends. Most Innovate UK grants pay this way.

A group of organisations delivering a grant project together, usually led by a coordinator who receives and distributes the funding.

A promise in a loan agreement that the borrower will, or won't, do certain things. Breaking one can trigger a default.

The company tax return filed with HMRC. R&D tax relief is claimed on it.

A legal document giving a lender security over a company's assets, usually through fixed and floating charges.

The reduction in existing shareholders' percentage ownership when a company issues new shares.

Taking money from an agreed loan facility, in one amount or in several tranches.

The checks a lender or investor carries out on a business before committing funds.

Enhanced R&D Intensive Support: the R&D relief for loss-making SMEs that spend at least 30% of total expenditure on R&D. It can pay a credit of up to 14.5% of the surrenderable loss.

A situation set out in a loan agreement, such as missing a payment or breaching a covenant, that lets the lender demand repayment.

A fee some lenders charge when a loan is repaid, usually a percentage of the amount borrowed.

Funding that helps a company win, fulfil or grow export sales, from working capital loans to trade finance and guarantees.

The total amount a lender agrees to make available to a borrower under a loan agreement.

A covenant tied to a number, such as minimum cash, revenue or EBITDA, tested at set intervals.

Security over a company's assets: a fixed charge over specific assets and a floating charge over the rest, such as stock and receivables.

A UK Export Finance scheme that partly guarantees lenders' working capital facilities for UK exporters, without tying them to specific contracts.

The share of eligible project costs a grant pays, set by company size, project type and the competition rules.

A promise by a third party, such as UKEF, to cover part of a lender's loss if the borrower doesn't repay. It protects the lender, not the borrower.

A formal compliance check HMRC can open into a tax return or R&D claim. Payment is usually held until it closes.

The EU's main research and innovation funding programme. UK organisations have been able to take part as full participants since 1 January 2024.

The UK's innovation agency, part of UK Research and Innovation (UKRI), which funds business-led innovation through competitions.

An agreement between lenders to one company setting out who is repaid first and how security is shared.

The first months of a loan when the borrower pays interest but no capital. In venture debt it typically lasts 6–18 months.

The group within a lender or fund that approves each deal.

A bank's promise to pay an exporter once agreed documents are presented, reducing the risk of the buyer not paying.

The share of a grant project's costs the company pays itself, because the grant covers only part.

A loan clause letting the lender act if the borrower's business or prospects worsen significantly.

The UK R&D expenditure credit that applies to accounting periods starting on or after 1 April 2024, at a rate of 20%.

The person Innovate UK assigns to a grant project to review progress and approve claims.

Funding that doesn't involve selling shares, such as loans, grants and tax credits.

How long a customer has to pay an invoice, such as 30, 60 or 90 days.

A company's value immediately after new investment is added.

An advance payment at the start of an EU-funded project, before costs are reported.

The R&D costs that count towards relief, such as staff, subcontractors, software, consumables and some data and cloud costs.

A UK tax relief that reduces tax or pays cash to companies spending on qualifying research and development.

A loan repaid as a fixed share of monthly revenue, so repayments rise and fall with sales.

How many months a company can operate before running out of cash at its current burn rate.

Debt that is repaid before other debts and equity if a company is wound up.

The price per share at which a warrant can be exercised, usually set at a recent or upcoming funding round's share price.

R&D costs also funded by a grant or other subsidy. How they are treated depends on which R&D scheme applies.

A short, mostly non-binding summary of a loan's or investment's key terms, agreed before full legal documents.

One portion of a facility drawn at a specific time, often linked to a milestone.

The UK government's export credit agency, which helps UK companies export through guarantees, loans and insurance.

A term loan for venture-backed companies that aren't yet suited to bank lending, often with a small warrant attached.

The right to buy a set number of shares at a fixed price in future. Many venture debt lenders take warrants as part of their return, though not every loan includes them.

The value of a lender's warrants expressed as a percentage of the loan.

The cash a business needs to run day to day, funding stock, staff and the gap before customers pay.