WELCOME !

Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.



Friday, November 8, 2019

Every Asked Yourself If Your SR&ED Tax Credit Can Be Financed ? Spoiler Alert - It Can !





PREPARE YOURSELF FOR CRITICAL INFO ON FINANCING TAX CREDITS !





SR ED/SRED TAX CREDIT FINANCING is an important method to of raising cash - primarily for younger or higher growth firms who can utilize the capital . Claims can be financed for approx 70% of their filed value .

The financing works more efficiently when the claim is prepared by a firm with a solid track record . The formal name for the program is the Scientific Research and Experimental Development ,( hence 'SR & ED' ) program .

The Canadian government allocations well over a Billion dollars to this program annually, and it can be a valuable source of financing for many firms, particularly those in early stage. Claims are generally in the 35% + range for all r&d performed. and can include portions of a firms overhead costs!

After filing a proper SR ED claim business owners can finance that claim with our assistance. 7 Park Avenue Financial encourages all its clients to file SR ED claims where applicable, and if financing those claims makes sense we will get the job done !


Can My Canadian Sr Ed Tax Credit Be Financed/monetized?

Many Canadian firms are not aware that they can finance their SR ED tax credit claims. Lets backtrack a little bit. The SR ED Tax credit program is a Canadian government program which allows Canadian privately controlled firms to recoup a very large amount of direct and indirect expenses related to their innovative business processes, research and development, and asset acquisition related to those very efforts.

Thousands of Canadian firms file such claims and the program has disbursed close to 2 Billion dollars annually to Canadian firms.

Funds received from the government, while taxable, are NOT repayable, we repeat, NOT repayable! Claims are generally prepared by one of two parties, either the firms accountants, or, more frequently, an independent SR ED preparation firm who are experienced in the writing of these claims, and have amassed expertise and bench strength in that customers particular industry. We note also there is a growing SRED industry around film and TV credits, digital media, and gaming.

We are continually amazed at the number of companies who are eligible for the program but in fact have never heard of the program. You can imagine the expression on the business owners faces when they are told they have been eligible for the program for years, and have in fact relinquished their rights to these funds.

As a technical matter companies can only claim funds for the last 2 years of r&d, business process development, etc. Furthermore the claims have to be file at the same time the firm files annual tax returns.

Let's get back to the financing of the Sr&ed  claim!

The financing of the claims is in effect a temporary loan against the SR ED claim, allowing the company to monetize immediately the incoming cash flow related to the SR ED claim. One of the key factors around the financing of the claim is the size. Generally speaking it makes sense to finance claims that are in excess of $200,000.00.

However, realistically many smaller Canadian firms file claims significantly below that amount. While these claims are somewhat more difficult to finance it certainly can and does makes sense in many instances. Our firm has worked with many customers who view the claim as one of their most significant cash inflows during that year.

 Typically it takes between two - four weeks to arrange for a proper financing of the claim. Proper due diligence around the general financial health and prospects of the firm is done, and typical credit assessment is done around the lenders ability to properly secure the claim vis a vis a collateralized registration against the claim.

Loans against the claim are typically made at approximately 70% of the total of the combined federal and provincial claim. Why 70%? A safety buffer is in fact created in the event that the claim is adjudicated by the government and a portion of the claim is downsized or disallowed. We have noted that this happens when customers or their consultants file claims that are too aggressive. The customers mentality seems to be ' I will file a claim for $300,00.00, if they knock it back a bit I will still get more funds than originally intended '. In general this is probably not a good strategy.

In summary:

* Companies should file claims if they are eligible * If cash flow and working capital is important the SR ED claim can be financed

* Customer should use their accountants and financial advisor to originate proper financing of the claim






7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8




Direct Line = 416 319 5769





Email = sprokop@7parkavenuefinancial.com




http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !
 




7 Park Avenue Financial provides value added financing consultation  for small and medium sized businesses in the area  of cash flow , working capital , and debt financing .



Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .





' Canadian Business Financing With The Intelligent Use Of Experience '





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.




No comments:

Post a Comment

Note: Only a member of this blog may post a comment.