How To Survive The SR&ED Refund Waiting Game
OVERVIEW – Information on the benefits and advantages of financing SRED Tax Credits In Canada. A Bridge Loan for your SR ED Refund Claim monetizes your refundable tax credit and provides valuable cash flow .. today
SRED (SR&ED) tax credits have the ability to create a certain amount of anxiety in Canadian business owners who utilize the program, if only for the fact that from the time you start your annual claim (many businesses file year after year successfully) a major waiting game starts! The way to eliminate that wait and shorten the cycle? Finance your SR ED refund claim. Let's dig in.
For the thousands of firms that successfully claim their share of billions of dollars funded annually by the fed/prov got vis a vis the SR&ED program the cash flow derived from those ' refundable tax credits' place a huge role in the ongoing financing of their company. It's interesting to note that many firms that file claims are actually in start up mode or pre-revenue/early stage revenue.
These tax credits come in the form of a cash refund. The problem? Time! Many, many months, in some cases a year, can transpire before your R&D is completed. Along the way you've worked with your SR&ED consultant to prepare and document the claim, ensuring it will pass the proper tests for expenditures under the spirit of the program.
The whole issue of financing your claim revolves around the fact that you are able to monetize an intangible asset for cash flow/working capital needs today! As an example typical reviews of your claim after submission may take 3-4 months. Naturally any follow up on the claim for clarification of issues simply... you guessed it... adds more time/waiting!
Recent changes to the program force business owners/managers and their Sred consultants to fit a years work of research into a very tight technical narrative. For example you're only allowed 350 words to describe the technical nature overview of your annual claim, which can often be in the hundreds of thousands of dollars.
When you finance a SR&ED claim its a very basic process - reduced to a simple business application, a copy of your claim and who prepared it , and potentially some other financial info around your business . Here it's important to stress that the real collateral of your claim is simply the SR ED refund itself. One can see therefore the important of eligibility and the credibility attached to your SRED consultant. These folks work on contingency and are specialized in the industries they do claims in.
What does the structure of a SR&ED bridge loan look like? It clearly maximizes the total benefits of your refundable tax credit, in that the financing is structured as a bridge loan with no payments made during the duration of your wait for the refund. The most typical advance under the financing is 70% of the total value of the claim. The other 30%? You receive that as soon as your claim is approved by the govt, less financing costs.
If you're looking for some ' calm ' to prevail in your waiting game for SR&ED refundable tax credits consider financing your claim. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with funding your claim.
P.S.
Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
7 PARK AVENUE FINANCIAL = CANADIAN SR&ED LOAN FINANCING EXPERTISE
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Stan Prokop
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