Switching R&D Lenders: How a Payout and Refinance Works

By Alex Knight, Founder and CEO, Advanced

Every few months we get a call from a founder whose R&D lender has just told them something they didn't expect. Funding has paused. A second facility isn't available this year. The renewal they assumed was coming is suddenly a maybe. Their first thought is usually that they have to start the whole process again from scratch, with a new provider, from zero.

That's not how it works, and it's worth knowing the mechanics before you're the one making that call.

Why R&D lenders pause or restrict funding

An R&D advance is a loan against your R&D Tax Incentive refund, calculated at 43.5 cents for every eligible dollar of R&D spend for companies under $20 million in turnover. That advance is only as reliable as the capital sitting behind it. Some lenders fund these facilities from their own balance sheet. Others rely on a wholesale funder further up the chain, and when that funder's own conditions change, the lender's ability to write new facilities changes with it. Sometimes overnight, and often with no notice to the founders already mid-facility.

This isn't a comment on any one lender's intentions. It's a structural fact about the industry: your R&D financier's reliability depends on where its own money comes from. Founders rarely ask this question at the start of a relationship, and then find out the answer at the worst possible time.

What a refinance actually involves

Moving your R&D facility from one lender to another is closer to a standard debt refinance than founders expect. It isn't a fresh application built from nothing.

A comfort letter from your existing lender. This confirms your current facility balance and status. It's a routine document, not an adversarial one. Most lenders provide it without friction, even when they're the ones stepping back from the relationship.

A payout statement. This sets out exactly what's owed to close out the existing facility, so the new lender knows precisely what it's refinancing and the existing lender knows exactly when it gets repaid.

Re-sizing the facility. A refinance is a natural point to adjust the amount. If your eligible R&D spend has grown since the original facility was written, this is when you ask for more against it, rather than waiting for a separate top-up later. Loan-to-value ratio (LVR) matters here: a lender capped at 80 to 85% LVR has less room to move than one able to go to 100% of your anticipated refund.

Timing around the incumbent's maturity date. If your current facility has a maturity date approaching, that date becomes the natural target for the refinance to complete. Lenders on both sides plan around it, which gives the process a fixed point to work backwards from instead of an open-ended timeline.

None of this requires the new provider to reassess your R&D eligibility as if you were a brand-new applicant. The activities were already eligible. What's changing is who is financing the receivable, not whether the receivable exists. For a broader look at folding your refund into your overall cashflow planning, see our guide on R&D Tax Incentive cashflow strategy.

What to check before you sign with anyone

The question founders ask us most often isn't about rate. It's some version of "what do you need from me, and how fast." That's the right instinct, but there's a question underneath it that's worth asking directly, and it's the one founders rarely think to ask until they've already been caught out by not asking it.

Where does your R&D financier's own capital come from? A lender funding from a stable, direct balance sheet behaves differently under stress than one dependent on a wholesale facility it doesn't control.

How many deals has this lender actually funded? A track record across a meaningful number of facilities tells you more than a rate sheet does.

What happens to your facility if that funding pauses halfway through? This is the question that matters most and gets asked least. A specific answer is a good sign. A vague one is itself the answer.

Most lenders will talk happily about rate and turnaround time. Fewer will talk specifically about what backs their own ability to fund you. Ask anyway.

How Advanced approaches a refinance

We fund R&D advances at up to 100% of the anticipated refund, for a $950 setup fee and 16.5% per annum, fixed. There are no monthly repayments. The advance is repaid when your ATO refund lands. No equity, no personal guarantees, secured against the receivable itself rather than a blanket charge over the business.

For a refinance specifically, we work from the comfort letter and payout statement your current lender provides, size the new facility against your current eligible spend rather than the original facility amount, and time completion around your existing maturity date where one exists. A credit decision typically comes back within 48 hours of having what we need, with funds following in 5 to 8 days.

The point of all this

A timing problem and a reliability problem often arrive dressed the same way. A founder needs cash for R&D spend already incurred, and the money that should be covering it is stuck somewhere in the system. Whether that's the ATO's own processing calendar or a lender whose own funding has paused, the fix follows the same logic: structure the capital properly, and stop treating a temporary gap as though it demands a permanent solution.

Refinancing an R&D facility isn't a sign anything went wrong with your original claim. It's a normal part of managing capital that's tied to a government program with its own timeline, financed by a private lender with its own constraints. Founders who understand the mechanics ahead of time move through it in days, not months.

If you want to work out what a refinance would look like against your current position, get in touch and we'll walk through the numbers.