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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.



Saturday, February 11, 2023

The SR&ED Loan Process - Financing Simplified! Unlock The Benefits Of SR&ED Tax Credits - Cash Flow!





YOU ARE LOOKING FOR SRED TAX CREDIT FINANCING

INVEST IN R&D WITH CONFIDENCE VIA THE BENEFITS OF SRED LOAN FINANCING

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today

   ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Or Email us with any questions on Canadian Business Financing

                                      EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

THE SECRET TO MAXIMIZING SR&ED TAX CREDIT -  A SHORT-TERM BRIDGE LOAN

 

Is it possible to combine the benefits of SR&ED with the benefits of SRED tax credit financing for an SR&ED loan that makes sense?

It sure is and let’s help you understand some of those basics for Canadian companies. Let's dig in!

 

"The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." - Ronald Reagan

 

Well,  not Canadian, but Ronald Reagan might have had it right, given Canada's commitment to helping subsidize r&d in Canada. Canada's  Scientific Research and Experimental Development (SR&ED) tax credit are one of the 2 most popular government programs in Canadian business ( the other one is the Canada Small Business Financing  Loan Program !), demonstrating Canada's commitment to helping customers with innovation and economic growth goals under a government incentive program that works.

 

It's important to note that companies who qualify for SR&ED eligibility claims are candidates for the sr&ed loan process to capitalize on government financial incentives - That ability to cash flow their tax credits via the collateral of the SR&ED claim allows a company to receive cash in advance of filing the claim, or even prior to filing their claim based on accrued work in their r&d process.

 

WHAT IS SR&ED TAX CREDIT FINANCING AND HOW DOES THE SR&ED LOAN PROCESS WORK?

 


If you are either filing an SR&ED claim for the first time or if you're a repeat "offender" - translated = you have experienced SRED claim success for years... then why not combine financing power with your claim and recoup your funds faster. In today’s world it seems always about speed it seems, so if the Canadian government is paying you to do research, and you can recoup and deploy those funds even faster by financing your claim, well, why wouldn’t you? Advance funding is always better than waiting.

 

 

HOW DO SR&ED TAX CREDITS WORK? 

 

Companies performing r&d  via the tax credit program can utilize their qualified sr&ed expenditures to access the refundable r&d credit under the sr ed claim process. Canada Revenue Agency/CRA sets some basic requirements for a business to qualify for the tax credit,  It's a 4 part test around ensure that the purpose of the work is focused on new functionality in performance and reliability and quality of the firm's products or services.

 

As well the company must demonstrate the elimination of uncertainty via a process of experiments that are technological in nature.


Our focus here in our shared information is financing your eligible claim... so we assume you are fully aware that if your firm is developing new products and services, manufacturing prototypes, improving processes, developing software, or advancing manufacturing... well ... We think you get the point! This is simply because your firm is a poster boy for SRED financing and an SRED loan and you should be filing to recover in the range of 35-40% of all your expenses.



Your credit is a non-repayable credit, so your ability to monetize your claim and get that cash flow working into your firm's operating cycle is key.



So how can those SRED tax incentives be monetized? Simply speaking it’s the ability you have to use your SRED receivable, because it is an account receivable, and finance it in a manner that you would just as if it were any customer - except that in this case, the customer is a pretty good paying client... i.e. the federal and provincial government.



Sound complicated? Nothing could be simpler. Let’s cover the basic process and focus back in on those benefits.  That cash advance for your r&d refund becomes a predictable source of cash flow without diluting owner equity. A business's ability to manage cash flow is key in early stages, so the ability to ensure cash flow that is recurring under r&d helps a customer grow.
 

 

 

 

HOW DOES THE SR&ED LOAN PROCESS WORK - WHAT STEPS ARE INVOLVED

 


To finance a claim you have to have a claim. It makes sense so far, right? Claims can be prepared by either yourself or someone that is commonly called an SRED consultant. We wouldn’t be perfectly honest by telling you that claims prepared by outside respected consultants carry far more weight than claims prepared internally by yourself or your accounting firm. It’s simply a case of relying on expertise.

 

We're often asked - Do I need a SR&ED Consultant ? That is up to you as the business owner or financial manager when it comes to technical reports and demonstrating applied research - these consultants play a large role in the Canadian sr&ed industry. They assist in preparing claims from a technical content and financial point of view and work closely with Canada Revenue Agency and provincial authorities where required. They play a key role in the sr&ed tax credit calculation work required under the program under CRA SR&ED and sr&ed credits accounting treatment.

 

Consultants in this area can assess claim eligibility as well as helping to file the claim. Consultants with relevant experience in your industry will usually be the best choice - Most sred consultants work on a contingency basis, which transfers the risk of  sred project to the consultant - some firms work on claims at typically accounting firm rates on an hourly basis. Industries that are common for r&d projects include alternative energy, medicine, oil and gas, software, life sciences and environment and renewal energy.

 

 

 

ELIGIBILITY CRITERIA FOR SR&ED FINANCING - DOES YOUR BUSINESS QUALIFY? 

 

What are the eligibility criteria for SR&ED financing and how do I know if my company qualifies?

After your claim is filed you complete a simple financing application consisting of info about our firm, your current financial situation, as well as providing the actual technical claim and tax filing copy. SR ED tax credit financing relies on your claim being filed - in certain special situations you can actually finance the claim pre-filing - but we'll leave that one for another day.

 

 

 

BENEFITS OF SR&ED TAX CREDIT FINANCING VERSUS OTHER BUSINESS FINANCING OPTIONS

 

 
The ability of many firms, particularly start-ups and tech firms that burn through a lot of cash, to recoup SRED funds is a key driver in the whole SRED loan process. Understanding the SR&ED loan process is easy - That cash flow in many cases is seen by our clients as the lifeblood and in some cases the largest amount of cash they will receive in the current year.



Many business owners don’t know that you can file for two years, which of course simply means you’re doubling the amount of cash you can claim and that claim is financeable when it comes to the benefits of sred financing via the bridge loan process.

 

  

COMMON CHALLENGES FOR SR&ED .. AND THE SOLUTION

 

Many smaller filings these days for SR&ED claims seem to be coming through faster in the form of cash refunds... If you have a larger or first-time claim it can take many months, potentially calling for a technical review of your project.

 

 

 

HOW MUCH CAN YOU GET FOR YOUR SR&ED CLAIM - UNDERSTANDING THE LOAN-TO-VALUE RATIO & REPAYMENT

 

 


That’s where an SRED loan and SRED tax credit financing come in because 75% of the SR&ED claim is generally advanced in the form of a bridge loan. You make no payments on the loan and the loan is, in effect settled when your final refund comes in from Ottawa. That allows you to utilize those funds for working capital, equipment, ongoing SR&ED work, and just any general corporate purpose.

 

Understanding the eligibility criteria for sr&ed financing and the  sr&ed loan process and how to secure the sred loan is easier than you think - allowing your company to maximize the benefits of sred loan financing at very competitive rates. Canadian banks and traditional financial institutions are not the SR&ED tax credit loan providers in Canada.  And yes, you can finance your claim if you have not filed it yet.

 

Maximizing the sr&ed tax credit financing solution is easier than you think when it comes to fuelling growth -  with funding often provided in a matter of a couple of weeks - Talk to the 7 Park Avenue Financial team about the benefits of SRED financing versus waiting for your tax credit refund. We'll show you easy it is to navigate the sr&ed loan application process.

 
CONCLUSION - GET AHEAD OF THE R&D GAME WITH SRED TAX CREDIT FINANCE TO OPTIMIZE CASH FLOW



Speak to 7 Park Avenue Financial,  a trusted, credible, experienced Canadian business financing advisor in the SRED tax credit financing area.

 

This will increase your chances of a successful and timely approval, with most financings for an SRED loan happening within a 15-20-day period.  That’s an SR&ED cash flow optimization strategy that makes sense for Canadian businesses via innovative funding needs that accelerate one of Canada's best funding programs for business. right?

 

 
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION 

 

What is SR&ED financing?

 

SR&ED financing is a tax incentive program under the Scientific Research and Experimental Development program. Businesses that are Canadian-controlled private corporations performing r&d  in scientific or technological uncertainty are eligible to access financial support that helps in cash management in their r&d work.

 

The tax refund is in the form of a refundable tax credit and allows the company to access capital as it strives to overcome a technical challenge in its industry, Eligible expenditures can be financed after claims have been filed, or accrued sr ed work in the current fiscal year and can also be financed for eligible projects.  Focusing on technological advancement and technological uncertainty - with many companies working in software development.

 

WHAT ARE SOME IMPORTANT TECHNICAL TERMS TO UNDERSTAND IN SR&ED & SRED FINANCING

 

There are some key terms that will help business owners better understand the SRED program and the sred loan process -


Eligibility criteria: Companies must meet certain conditions to be eligible for sred approval and sred financing -  The Canadian government provides billions annually under the sr ed program for Canadian and foreign-owned businesses in Canada.

 

Tax Credit: this is a credit against income taxes owing or a refundable tax credit

R&D Activities: research and development activities   is work done in experiment development and investigating and technological development

Claim Preparation:  SRED claims must be filed  under a certain process  that allows a company to receive the tax credit

Tax credit rate: a certain percentage of r&d expenses are eligible for sred

 Loan-to-value (LTV) ratio  SRED Loans are advanced at a value of the total claim and are typically in the 75% range - Loan repayment is structured as a short-term bridge loan with no payments being made during the term of the loan - the loan collateral is the sred claim itself -  In the underwriting process the sr&ed lender asses general eligibility for sred financing

 Underwriting: The process of evaluating a company's financial situation and creditworthiness to determine its eligibility for the SR&ED loan. While there might be other financing options for a company to access capital  ( term loans, working capital advances) these forms of financing can be expensive and can add debt to the balance sheet.

 

What are the requirements for R&D credit?

There are 4 key requirements for Canada's r&d credit - businesses must show a qualified purpose around improving a part of the business through performance, reliability, etc. Additionally, the focus must be on eliminating uncertainty via the process of experimenting in a technological manner.
 

 

 

 
 

Click here for the business finance track record of 7 Park Avenue Financial

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