If You Haven’t Heard Of SR&ED Refundable Tax Credit Financing .. You Will !
OVERVIEW – Information on SR&ED loan financing in Canada. R&D tax credit loans provide cash flow and working capital funding for your SRED claim. Here is your why and how!
SR&ED loan financing is the funding of your Canadian sred r&d tax credit. It brings the uniquness of factoring, or invoice discounting as it is also called to the Canadian governments SR&ED Tax credit - which most business owners know is a non repayable cash grant for your firms research and development activities. And non repayable cash from the Canadian government is a good thing, right?!
Not all business owners and financial managers in Canada are aware of the total amount of funding that is going on this great Canadian program. Each year well over 10,000 firms participate in the program and the total cash from the government is approaching the 2 Billion dollar milestone.
If your company is private, does r&d around new products, processes, etc you probably qualify and you should be talking to your accountant or a qualified SR&ED preparation firm about getting your share of that almost 2 Billion dollars .
Once you have filed the claim why not take advantage of a great financial strategy to in effect 'monetize ' than claim into cash flow and working capital now. That is done via a form of factoring or discounting of your claim.
Claims are financed in the 70% range on what we can call a SRED loan to value process. That is to day that on successful factoring of your calim you receive immediately, on claim funding, approximately 70 cents on the dollar now for the value of your tax credit.
The entire same process also applies to film tax credit also, but that is a subject for another day, lets focus on the Canadian SRED tax credit only for our discussion purposes.
Many firms that inquire about sred financing often think their claim can’t be financed if the company is still in an early growth stage, but that is not the case. It certainly does help though, if you are an early stage company, that your claim is prepared by a knowledgeable SR&ED preparation firm, or if you have in fact filed previously and been successful via the government’s paper and technical audit. We've worked with many firms that are in effect still pre-revenue and very eligible for sred financing based on the nature, size and quality of the claim.
Would anything stop your claim from being financed? We can categorically state that one key ' deal breaker ‘is if your firm has tax arrears with Canada Revenue. However, the good news is that your claim can actually still be financed if you approve the direct payment to Canada Revenue of the tax arrears our of your SRED credit.
SR&ED factoring, or SRED financing generally takes 2-3 weeks to complete, and is quite frankly like any other business financing you would be entering into. So basic business principles apply - there is an application form, which is backed up by your SRED claim of course. The claim has to be filed and most Canadian business owners and financial managers know that the sred credit is filed when you file your annual tax return. In cases of your sred credit you can actually file for your tax credit non repayable grant for the last two fiscal years, so that’s a great bonus for the many firms we encounter that have just heard about the program . They have in effect just doubled the amount of cash they can claim and receive!
So what’s the bottom line of SR&ED Financing. It’s quite simple:
- The Canadian SR&ED TAX CREDIT is non repayable and one of Canada's great government business assistance programs
- You can finance your claim once it is filed - What wait 3-6 months or longer for your funds
Discover the benefits of factoring/ funding this receivable, and get the cash flow and working capital into your firm today for any worthwhile business purpose.
That’s a great Canadian alternative financing strategy! Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you monetize your claim.
Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com
7 Park Avenue Financial
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
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