Funding an R&D project in New Zealand: grant, tax credit, customers and a loan for the timing gap

Developing something new — a food product, a smarter piece of farm gear, a software platform, a better process on the factory floor — is where a lot of New Zealand businesses make their real leap. It’s also where the funding gets weird. The government will genuinely help pay for it. It just pays late.

That’s the whole trick to funding R&D here: every public piece arrives after you’ve spent the money. So the job isn’t finding one source big enough. It’s lining the tracks up by timing so the project keeps playing while the grant claims and the tax credit catch up.

What can actually pay for an R&D project?

Think of five channels on the desk, each with its own timing:

Piece	What it does	When the cash shows up
Paying pilot customers	A customer pays for a trial, early units or co-development	Upfront or by milestone — the earliest cash you’ll see
Owner money and equity	Your own funds, a shareholder loan, or a partner or investor	When you put it in
New to R&D Grant	Covers 40% of eligible costs for businesses new to R&D	Reimbursed after you spend and claim
R&D Tax Incentive (RDTI)	15% credit on eligible R&D spending	After year-end returns — often more than a year later
Equipment finance and a loan	Gear on its own finance; a loan or line of credit for the gaps	When approved, repaid over time

Notice what’s missing: a grant or credit that pays you before you spend. That’s why the borrowing piece in an R&D mix is usually about timing, not about the full project cost.

How does the R&D tax credit work in 2026?

Inland Revenue’s R&D tax incentive page sets out the core settings: a 15% tax credit on eligible R&D, a minimum of $50,000 of eligible spending in an income year, and a ceiling of $120 million. Before you can claim, your R&D activities need approval, then you file an R&D supplementary return.

Three details matter most for your cash plan.

The approval deadline moved

From 1 April 2025, general approval applications are due by the last day of the third month after the end of the first income year in the application. For a standard 31 March balance date, that’s 30 June. You can cover up to three years in one application. Inland Revenue’s due dates page is blunt about the cost of missing it: “We are unable to accept late applications.”

That’s the most expensive mistake in this whole guide. Miss the date and that year’s credit is gone, along with the slice of your funding plan that depended on it.

The credit lands late

The supplementary return is due within 30 days after your income tax return due date — or 30 days after your extended date if you file through a tax agent. Credits are only processed after both returns are in. Inland Revenue’s July 2026 regulatory impact statement says this “can be more than 14 months after the end of the income year” in which you spent the money.

So money spent in April 2026 (in the year ending 31 March 2027) could, on an extension of time, turn into credit around mid-2028 — roughly two years later.

Cash refunds have a cap

If you’re profitable, the credit reduces your income tax. If you’re in a loss, excess credits can be refunded — but the same statement explains the refund is capped at the labour-related taxes the business pays, such as PAYE. Inland Revenue’s credits page says leftover credits can be carried into the next income year if the company meets shareholder continuity requirements.

In plain terms: a lean start-up doing expensive development with contractors and a small payroll may find only part of the credit comes back as cash this year. Model that honestly before you count it.

Is the RDTI about to pay sooner?

Possibly — but not yet. The Taxation (Annual Rates for 2026–27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill was introduced on 10 September 2026 and includes amendments to the RDTI. The regulatory impact statement describes the Ministers’ preferred option: businesses with an approved RDTI application could choose to receive payments during the year, up to four times a year, capped at 80%, with a wash-up at year-end and overpayments recoverable with interest.

The intended start is the 2027–28 tax year, with first payments after 1 October 2027. The bill is at select committee, there’s an election in between, and details can change. It’s also worth knowing that an earlier temporary scheme to get R&D cash in-year was, in the statement’s words, “shut down early due to low uptake”.

How to use this in your mix: treat in-year payments as a fader you might push up from late 2027, not a piece you build the plan on. If it passes, it shortens your timing gap and the bridge you need gets smaller. If it doesn’t, your plan still works.

How does the New to R&D Grant fit?

For businesses doing R&D for the first time, the New to R&D Grant on business.govt.nz is the bigger early piece. It covers 40% of eligible R&D costs, up to $400,000, based on up to $1 million of eligible project costs excluding GST, over up to two years. You fund the other 60%.

The fine print shapes the mix:

• You must be new to R&D — under $150,000 of R&D spending in the past three years and under $5,000 of government R&D funding.
• Your 60% can’t come from other government money. Owner funds, customers, investors and borrowing are the usual sources.
• It’s a reimbursement. You submit claims at least every quarter and Innovation Services pays you back. Each quarter, you carry the spend until the claim is paid.
• It’s first come, first served, and you talk to Innovation Services before applying. The grant functions moved from Callaghan Innovation to MBIE, so older advice may point you to the wrong door.

The grant is designed as an on-ramp to the RDTI. Ask Innovation Services and your adviser how grant-funded costs and an RDTI claim interact, and plan as if the same dollar can’t be counted twice. Our grants and support page keeps the wider picture in one place.

Where do customers and investors come in?

Customer money is the best-tasting track in any R&D mix because it’s early, it’s not a loan, and it proves demand.

• Paid pilots. A customer pays to trial the prototype on their site or farm. Even a modest fee changes the cash curve.
• Co-development. A larger customer funds part of the build in return for early access or favourable supply terms. Get the IP ownership written down before anyone starts.
• Pre-orders and deposits. Once you’re close to a saleable product, deposits fund the first production run. See customer deposits for terms that stick.

On the owner side, money you put in can sit as a shareholder current account rather than vanishing into the company. And if the project is bigger than the business, bringing in a partner or investor may be the right fit — R&D upside is exactly what equity is for.

Already lined these up and still looking at a hole? Check your options with a real person — asking won’t touch your credit file.

What does an R&D funding mix look like?

Illustrative example only — not a real business.

A Canterbury food business with a 31 March balance date plans an 18-month project to develop a shelf-stable version of its chilled product. Eligible costs are about $600k, starting April 2026. It has never done formal R&D.

Here’s how the owner lays the tracks:

1. The grant. It secures the New to R&D Grant at 40%, worth about $240k over the project — claimed quarterly, paid in arrears.
2. A paying pilot. A distributor pays about $50k to co-fund trial runs in exchange for first supply rights.
3. Owner money. The directors put in $80k, recorded in their shareholder current accounts.
4. Equipment on its own finance. A new retort and testing gear go on equipment finance, kept outside the project budget so the gear pays its own way.
5. The timing gap. Even with the grant, the business funds 60% of costs, plus roughly a quarter’s grant share while each claim is processed. After customer and owner money, that leaves a gap of around $270k, drawn down over the project.
6. A loan sized to the gap. A cash-flow facility covers it, with repayments tested against current trading — not against the new product succeeding.
7. RDTI next. Once the grant period ends, the owner diarises the 30 June general approval date for the first RDTI year and plans that credit as a late-arriving repayment source, not working capital.

The loan ends up as one track among six. Slide your own numbers through the funding remixer, then pressure-test what’s left with size your funding gap.

How should you size a loan for R&D?

A few rules keep the borrowing honest:

• Borrow for the gap, not the dream. Map every expected grant payment and credit by month, then borrow only what covers the dips.
• Test repayments on today’s trading. R&D can take longer or fail. The loan should be repayable even if the new product never launches.
• Use flexible pieces for lumpy timing. A line of credit as a buffer suits the quarterly rhythm of grant claims better than a single lump sum.
• Keep gear separate. Lab, testing or production equipment usually fits equipment finance. Our tech and systems upgrade remix covers the software-heavy version.
• Don’t count unapproved money. Most lenders won’t treat a hoped-for credit as security. They’ll look at your turnover, bank statements and any property.

Unsecured and cash-flow facilities typically run from $5,000 to $500,000, sized on turnover. Larger projects may use property-secured funding from $20,000 to $5,000,000. Bad credit and IRD debt are looked at case by case.

Ready to fund the gap while the grant and credit catch up?

Backing your own R&D is one of the boldest moves a New Zealand business can make, and the public support is genuinely worth having. The catch is simply timing — and that’s exactly the part we help with.

If you’ve mapped your grant claims, customer money and owner funds and there’s still a gap, let’s get started. The enquiry takes about 60 seconds, and there’s no credit check when you first enquire — your credit score isn’t affected just for asking. We won’t send your details to a pile of lenders, so there’s no spray and pray and no stream of calls from strangers. A real person reads your situation, looks at the project and your trading, and calls you to talk it through.

Please fill the form in accurately — the project cost, what the grant or RDTI is expected to cover and when, your turnover, and any IRD balances — so the first option we put forward is the right one.

Find out where your R&D funding stands →