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Everything You Should Know About Financing SR&ED Claims in Canada – More Exciting Than The History Of The Pencil!
OVERVIEW – Information on tax credit loans in Canada. SR&ED bridge loans monetize your refundable ‘ SRED’ tax credits , ensuring instant cash flow for your R&D Capital investment
Tax credit loans, especially a SRED loan under Canada's SR&ED program are arguably one of the best uses (maybe 'the best ‘? ) of the Canadian SR&ED program administered by Ottawa and the provinces. It's a solid way to more quickly recover on your firms r&d investment. Let's dig in.
Our view on SRED loans is pretty simple - it's a way to ' supercharge' your SR ED claim - generating an instant ' cash back '! The reality is that if you have filed a SR ED claim now you can immediately convert that claim into cash flow and working capital now for your business.
To us that's even more exciting than say... the history of the pencil! (In the mid-16th century, a storm uprooted a tree in England's Lake District. Clinging to the tree's roots was a shiny black substance - graphite! We don't know how much truth there is to that story, but we do know that just a few decades later, the site had been transformed into the first commercial graphite mine.
It's also not a secret why thousands of Canadian businesses utilize the program - it allows firms to stay competitive in today's ultra competitive environment - it's not secret everyone’s going global as an example.
In talking to clients we get two constant questions in the area of ' SR&ED"
" Why should we financing our SR ED claim
" How do we finance that claim?
Your firm’s ability to utilize a SRED bridge loan to inject working capital into your business is clearly the key advantage. Remember also that financing your claim is not the process of taking on more debt; you are simply cash flowing or monetizing that SR ED receivable now, in an effort to use that capital to continue and grow your business. Many firms we work with consider their SR ED claim as the largest receivable they will have that year.
We hear ' timing is everything'. If you have filed a first time SR ED claims it certainly would not be out of line to say that you might have to wait close to a year for your funds. Remember of course those funds are non - repayable. So if you have cash coming a year from now why, and its non repayable, why wouldn't you consider financing your claim and putting that cash to work now.
How do businesses typically use the proceed of their Sred loans? Most common uses include, but are not limited to:
" Reduce payables
" Purchase new equipment
" Invest in marketing
" Start your new Sr ed process for the next fiscal year
The reality is that its company's funds use them as you would another other injection of working capital. AKA ' any general corporate purpose'!
How are claims financed? The process, with an expert in tow, is simple. It involves a basic business application, the usual due diligence around any type of financing (info on your company, owners, etc) and the documentations that collateralized the SR ED into an asset to be financed.
To say that sred financing is a boutique and niche industry would be an understatement. Would you consider entering into a new business without the benefit of working with an expert? We don't think so, so seek out a trusted, credible and experienced advisor in your area to maximize your Sr Ed loan.
Finance loan amounts are typically in the 70% range of your total federal and provincial claim. Sr Ed is a national program and your sred claims can be financed in any province in Canada.
In summary, business owners should avail themselves of the SR ED program. They should also consider financing their claim which allows them to inject working capital immediately into their firm. Speak to an experienced credible advisor in the area and maximize the benefits of this great Canadian program.
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
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
' Canadian Business Financing with the intelligent use of experience '
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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