SRED Credits Canada . Considered Monetizing Your Tax Credit Via SR ED Bridge Loan Factoring Finance?

Made A Mistake By Not Considering SR&ED Tax Credit Financing?


OVERVIEW – Information on the financing of SRED credits in Canada . A SR ED bridge loan or factoring arrangement monetizes your R&D into positive cash flow and working capital .



SRED Credits in Canada can be monetized. Simple as that. It's done via a SR ED (SR&ED) bridge loan, in effect a factoring or discounting of your SR&ED tax credit. We hear the term ' monetization ' a lot these days; it comes down to simply meaning ' converting a debt into currency '.

That debt of course is in fact the debt of the federal and provincial government via the refundable tax credit they owe your firm for your R&D projects for the current fiscal year.

Those claims are sometimes prepared by your own firm based on your expertise in the area, but 99% of the time they are prepared by a SR & ED consultant ; someone who specializes in the ' nuances' of research and development claims . Some of these consultants are accountants, some have worked for CRA previously and know the program, and others simply have industry expertise and know what they are doing!

A key point to be made around the type of consultant that prepares your claim is that it often plays a factor in the ability to get your claim financed. That’s because the consultants typically work on contingency, so the importance of presenting a quality claim can’t be over estimated.

In 2011 along almost 4 Billion dollars was ' doled out ' under the program and the majority of these claims were prepared by the consultants we have mentioned.

When a tax credit is financed or monetized /factored into a bridge loan there is of course no 100% assurance the claim will be approved, and that is why the quality and reputation of the consultant often helps to get your claim approved and financed quickly. It's all about ' the expert'!

Never has a program come under more scrutiny that in the past year, when the Scientific Research / Experimental Development (aka ' SRED') seemed to be in the news all the time. The dust has finally settled and many things changed, but one thing did not - SR&ED financing is alive and well. In fact even more innovative solutions are on the buffet table for you to choose when it comes to monetizing and cash flowing that claim.

The standard R&D claim financing has typically been as follows - funds are advanced to your firm for up to 70% of the total of the federal and provincial claim. That financing becomes a bridge loan with no payments made by yourself for the life of the loan, which is typically a few months up to a year depending upon several timing factors, whether you're a ' first timer' , etc.

The balance of the funds is remitted to your firm when the government pays the claim, less the financing costs. And the good news - no payments are made during the loan, it’s a financing that has one balloon payment that in effect closes the transaction.

So whets new in SR and ED finance? A fair bit actually. If your firm qualifies you are eligible for SR_ED accrual financing, allowing you to monetize next years claim today as you spend. Even a formal SRED operating credit line can be set up outside your other business financing commitments, allowing you to draw down on funds as you require based on your R&D work.

So while the pundits, economists, and lobbyists around this tax credit program continue to talk about the merits and future of the program remember that savvy Canadian business owners and managers continue to every day enter into Sred bridge loans to help them with their working capital and cash flow needs in today’s ultra competitive environment .

7 PARK AVENUE FINANCIAL
CANADIAN SR&ED BRIDGE LOAN FINANCING


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/sred-credits-canada-sr-ed-bridge-loan-factoring.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com




















Stan Prokop