Bridging the Cash Flow Gap: The Value of SR&ED Tax Credit Loans

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Transforming Tax Credits into Cash: An Exploration of SR&ED Financing 

 

Your business success hasn’t been based on doing what your competition does, but if they are utilizing SR&ED financing to grow their business, doesn’t it make sense to investigate why CRA SRED claims, when financed, might put you a step ahead of the competition?

 

We think so, and if the Scientific Research and Experiment Development Program aka 'SR&ED') pours billions of dollars into Canadian company coffers every year to encourage Canadian businesses in r&d and to advance scientific knowledge in their industry - So why wouldn’t you want to accelerate the access to cash for those claims and maintain your competitive posture in your industry?

 

 

INTRODUCTION

 

In the rapidly changing business world, innovation is paramount. Yet, it can often be challenging, particularly for small and medium-sized enterprises (SMEs), to fund these innovation projects. The financing of Canada's Scientific Research and Experimental Development (SR&ED) solves this hurdle.

 

This government initiative offers tax incentives to businesses via eligible sr ed and who are engaged in research and development, fostering a culture of innovation.

 

But what if you need funding immediately for your projects? This is where SR&ED financing shines. It allows you to convert your tax credits from eligible expenditures into funding upfront, enabling you to expedite R&D projects, attract top-notch professionals, and embrace advanced technologies. This article will delve into the advantages of SR&ED financing tax incentive program,  highlighting its pivotal role in fostering growth and innovation for all businesses.

 

SR&ED program encourages Canadian businesses to undertake R&D activities by offering cash refunds or tax credits on qualifying expenditures. SR&ED financing allows access to these benefits upfront instead of waiting months for the Canada Revenue Agency (CRA) to process your claim.

 

This process typically involves lenders advancing a portion of your expected SR&ED refund upon claim submission, even before the CRA has reviewed it. Once the claim is processed and the refund issued, the loan is settled from these proceeds, with any leftover funds going to the business. This approach bolsters your cash flow and fuels your research, operations, and overall business requirements.

 

 

WHAT IS SR&ED FINANCING  

 

SR&ED financing is a unique approach enabling businesses to tap into their prospective SR&ED tax credits earlier. Rather than waiting for the government to process tax credits, firms can secure immediate funding to bolster their innovation efforts.

 

Providers of SR&ED financing assess a company's eligibility for these tax credits and typically offer a 75% loan to value of the anticipated credits as a bridge loan upfront.

 

This capital can be leveraged for various needs, including research and development projects, hiring of specialists, equipment acquisition, or business expansion and working capital.

 

This form of financing proves especially advantageous for small and medium-sized enterprises (SMEs), which might struggle to access conventional funding from traditional financial institutions such as bank loans or venture capital due to their size, inadequate collateral, or lack of a verified track record. SR&ED financing offers a solution geared towards their innovative operations, providing the necessary funds to drive their growth.

 

SR&ED financing is non-dilutive venture debt and does not affect owner equity!

 

DO BANKS FINANCE SR&ED REFUNDABLE TAX CREDIT CLAIMS

 

Conventional financing methods, like bank loans or equity financing, might not be the best fit for funding innovative ventures. Banks typically demand collateral and might be reluctant to back projects with unpredictable results. Simultaneously, equity financing requires parting with a degree of company ownership and control, a step many entrepreneurs may not prefer. It is in this context that SR&ED funding comes into play.

 

  

WHAT ARE THE BENEFITS OF SR&ED FINANCING  

 

There are several key benefits to consider when it comes to SR&ED financing:

 

• Quick Fund Accessibility: Bypass the long approval processes typical of traditional funding sources with SR&ED financing. It allows businesses to promptly commence innovation projects, keeping them competitive and ready to capitalize on market opportunities.

• Equity Retention: SR&ED financing facilitates companies to keep full ownership and control. Unlike equity financing, which demands a share of ownership for funding, SR&ED financing relies on tax credits, thus preserving business ownership.

• Flexible Funding Use: The freedom to allocate funds as required is a major advantage of SR&ED financing. It can be directed towards research and development, hiring skilled professionals, procuring equipment, or expanding operations, depending on what best serves their innovation goals and business needs.

• Improved Cash Flow: Accessing SR&ED tax credits early enhances a company's cash flow, allowing them to settle immediate financial commitments, pay employees and suppliers, and manage operational expenses. A healthier cash flow can also cushion unexpected costs or market changes.

• Lower Financial Risk: SR&ED financing curbs the financial risk related to innovation projects. By utilizing anticipated tax credits for funding, businesses can lessen the risk of project failure or financial hardships, fostering peace of mind and focusing on driving innovation and growth.

 

WHAT  ARE THE ELIGIBILITY CRITERIA FOR SR&ED FINANCING

 

To qualify for SR&ED financing, companies must meet certain eligibility criteria. While the specific requirements may vary depending on the financing provider, there are some common criteria to consider:

 

• Qualified SR&ED Activities: The business must undertake scientific research and experimental development tasks that meet SR&ED tax credit qualifications. This typically involves systematic investigation and experimentation to create or enhance products, processes, or technologies.

• Residency in Canada: Eligibility for SR&ED financing requires businesses to be Canadian-owned and physically situated in Canada. This ensures that the funds support local businesses and the Canadian economy.

• Financial Stability: Financing providers might evaluate a company's financial solidity and creditworthiness to ascertain its capacity to repay the financing. Startups or firms with limited financial history may still qualify, but they must present a viable business plan and show growth potential.

• Documentation and Compliance: Firms must maintain adequate documentation and abide by SR&ED program's reporting prerequisites. This includes keeping track of eligible activities, costs, and providing supporting documentation for their SR&ED claims.

 

It's worth noting that while SR&ED financing providers assess a company's eligibility, the final determination on the amount and terms of the financing can vary. Companies are recommended to engage experienced financing providers who can guide them through the process and help optimize their funding potential.

 

 HOW THE SR&ED LOAN WORKS - SPOILER ALERT - NO PAYMENTS!

The financing of your SRED claim via what we could call an SRED bridge loan is a recognized and solid manner to recover working capital faster. The very essence of having an SRED claim filed, of course, means you will recover your funds, but doesn’t it make sense to recover them sooner, putting cash flow and working capital back to work for your company?

 

In business, it’s all about timing, and in case you haven’t noticed, things aren’t exactly moving slower in Canadian business today. So is it advantageous to get immediate cash for your sr&ed  claim instead of waiting several months, sometimes up to 9 or 12 months, for your funds? 

 

You probably don’t need e cash flow these days - therefore, we strongly recommend waiting for your cheque from the feds; it’s 'in the mail! However, if you're among the many clients we meet that could use additional cash flow today, you should consider financing your claim.

What are the mechanics of having your claim financed? Ask clients such as yourselves. To say that SR&ED financing is a niche industry requiring knowledge and expertise is a bit of an understatement. That is why we strongly suggest you work with a trusted, credible and experienced business financing advisor who will walk you through a fundamental process.

 

Unleashing Your Business Potential with SR&ED Tax Credit Loans

 

SRED financing will, nine times out of ten, get you approximately 75% of your total SR&ED filing as a cash flow bridge loan. Why 75%? It is simply because the remaining 25 %, which still belongs to you, is held back as a buffer to cover any adjustments the good folks in Ottawa might make to your claim, and it also helps to cover the actual financing charges.

 

However, it’s easy to see that if you have a claim, for example, of 300k, an immediate cash flow loan of 75% generates some real cash back into your firm. Which, of course, per the program, is, in effect, a non-repayable grant.

Could the benefits be any clearer - The Canadian government is reimbursing you with your R&D funds, and you are accelerating that reimbursement straight back into working capital. Use the funds for whatever general corporate purpose - pay payables, buy new equipment, reinvest in more R&D, it’s your call!

The mechanics of SRED finance are simple - have a claim prepared by a credible consultant or accounting firm via a final project report. Complete a simple business financing application, go through standard due diligence as you would any financing, and execute a financing document which, in effect, collateralizes the SRED tax refund for your SR&ED loan. The entire process can be completed within a few weeks with the right amount of commitment.

If your SRED claim was prepared by a consultant who did it on contingency, you could even pay them out of the financing - at that point, everyone is happy!

 

  

CASE STUDIES   

 

At 7 Park Avenue Financial, we have worked with many firms working on groundbreaking technology in areas such as the environment, healthcare, and software development. Their ability to access sr&ed financing and secure additional business capital and cash flow allowed them to accelerate research and build company valuation.

Software companies we have worked with often use these funds to attract technical talent and sales and marketing staff.  

The bottom line - sr&ed funding helps fuel innovation!

These case studies demonstrate how SR&ED financing can provide the necessary funding to fuel innovation and help companies achieve their growth objectives. Whether you're a startup or an established organization, SR&ED financing can be a game-changer in accelerating your innovation initiatives and staying ahead of the competition.

 

  

 CONCLUSION  

 

Innovation fuels business growth, but funding such endeavours, especially for SMEs, can be daunting. Here, SR&ED financing emerges as a solution. By converting your SR&ED tax credits into upfront funding, you can expedite R&D projects, recruit skilled personnel, and invest in advanced technology.

 

The benefits of SR&ED financing include immediate access to funds, equity preservation, funding flexibility, improved cash flow, and reduced financial risk. It's a powerful tool for companies aspiring to propel innovation and growth.

 

To fully leverage SR&ED financing, understanding its eligibility criteria, application process, and benefits is crucial. Collaborating with reputable financing providers, maintaining documentation for SR&ED activities, and crafting a robust business plan can help maximize your funding and drive your innovative initiatives. Keeping abreast of program updates and exploring complementary funding sources to SR&ED financing is also advised.

 

Whether you're a startup or an established firm, SR&ED financing could be instrumental in funding your innovation and staying competitive in today's dynamic business environment. Harness the potential of funding SR&ED to power your innovative pursuits.

 

Choose an experienced SR&ED financing provider with a comprehensive understanding of the program requirements. They can guide you through the application, help you optimize your funding, and ensure you comply with the SR&ED program.

 

 

Your competition probably finances their CRA SRED claim - why not increase your cash flow and maximize your refund for the best uses your company can utilize? That’s a competitive financing strategy that works! Call 7 Park Avenue Financial, a trusted, credible, experienced Canadian Business Financing Advisor who can assist you with your sr&ed financing and other business finance solutions.

 

  

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

  

 What is The application process for SR&ED financing

The application process for basic research funding in  SR&ED typically involves the following steps:

 

• Initial Consultation: Companies can engage with SR&ED financing providers to grasp eligibility requirements, funding alternatives, and the projected financing amount. This preliminary discussion assists companies in determining if SR&ED financing aligns with their needs and objectives.

• Application Process: Should a company opt for SR&ED financing, it needs to apply to the financing provider, detailing the company information, its SR&ED activities, financial history, and forecasts. The application is then reviewed to assess the company's eligibility.

• Assessment and Due Diligence: The financing provider performs an evaluation and due diligence procedure to scrutinize the company's eligibility, financial soundness, and growth potential. This could involve reviewing financial statements, income tax return, and SR&ED documents, and potentially conducting interviews or site visits.

• Finance Agreement: Once the company fulfills the eligibility criteria and completes the evaluation, a funding agreement detailing the financing terms and conditions is drafted. This agreement outlines the financing amount, repayment terms, interest rates, and any additional applicable fees or obligations.

• Fund Disbursal: Post the signing of the funding agreement, the financing provider disburses the agreed funds to the company. These funds can be immediately deployed to bolster the company's innovative initiatives and growth strategies.

 

What are typical  misconceptions about SR&ED financing?

 

Despite its benefits, several common misconceptions about the sred investment tax credit and how  SR&ED financing of sr ed tax incentives can deter companies from exploring it. Let's address some of these misconceptions:

 

• Exclusively for Large Companies: SR&ED financing isn't limited to big corporations. It's particularly beneficial for SMEs, any Canadian controlled private corporations,  providing them with funding avenues that might be inaccessible through traditional methods, thus enabling them to compete with larger industry counterparts via their work in scientific or technological advancement.

• Complex and Time-Consuming Procedure: The SR&ED financing application process may require certain documentation and due diligence, but seasoned financing providers can simplify and navigate the process for companies. They are well-versed with the SR ED credit program prerequisites and can aid companies through the complexities and assist in documentation around payroll records, purchase invoices for the sr ed  project  etc.

• Limited to Specific Industries: SR&ED financing isn't industry-specific. Firms from various sectors engaging in innovative activities, including software development, manufacturing, biotechnology, clean energy, and others, are eligible for SR&ED tax credits and can access financing based on those credits for their work around scientific and technological uncertainty. Note that the commercial production of new or improved material does not qualify for sr&ed, as do not sales promotion, quality control, market research, etc

• Prohibitively Expensive: The cost of SR&ED financing depends on factors such as the financing provider, company eligibility, and the specific terms of the funding agreement. Despite potential costs, the advantages and immediate funding access to conduct research often surpass these expenses in sr ed projects.

 

However, it's important also to consider potential downsides:

 

Cost: SR&ED financing can be pricier as interest rates may exceed those of traditional bank loans due to the inherent risks involved.

• Dependence: There's a risk of companies becoming excessively reliant on SR&ED financing, which could lead to issues if their SR&ED claim is scaled back or rejected.

• Reduced Net Benefit: Given that the loan is paid off using the SR&ED refund, the company ultimately derives a lesser net benefit from the SR&ED program.

•  

It's vital for businesses to thoroughly weigh their options and consult with financial advisors around sr ed eligibility criteria before opting for SR&ED financing. They should also ensure a strong SR&ED claim and a comprehensive understanding of the program's requirements.

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The SR ED And Film Tax Credit Evolution . Financing Industry Credits for R and D and Media In Canada

The Debunk On Tax Credit Financing In Canada For The R&D SR&ED And Film Credits

OVERVIEW – Information on issues affecting financing for the SR&ED tax credit and media industry tax credits in film, animation and television





A Debunk on the SR&ED tax credit and film industry credits in Canada? When it comes to both applying for, as well as financing federal and provincial tax credits in ' research' and ' media ' is a ' debunk' really required ?

We thought that term was appropriate because it of course means ' exposing a false or exaggerated claim' ; and having spoken to clients for years on this subject there is a lot of misinformation as well as a thirst for knowledge around these two somewhat fantastic program that fund Billions of dollars in these two industry segments. (Research / Media) Let's dig in.

Let's first focus on film tax credits as they relate to the government incentives in this area. Knowing which tax credits to access can make or break a production in film/ TV, or animation.

Not everyone is aware that the province you complete your production in can change the amount of your tax credit claim. Foreign producers will be most familiar with completing projects in Toronto, Vancouver, or Montreal.

Using the province of Ontario only as an example (almost all provinces offer a provincial component of the tax credit) you can actually get more credit (and therefore more funding!) by filming TV and movie projects outside of Metro Toronto. Another interesting fact is that a first time producer is eligible for additional credit on qualified labor expenses under the program.

The fastest growing sector of the ' Media' credits is probably the area of animation and special effects. There must be minimum ' Canuck' content with the ability to maintain licensing control. It's common for producers to create a separate legal company for each project, often called an SPE, or Special Purpose Entity.

Before addressing the actual financing of SR ED or film tax credits let's focus on some key areas of SR&ED credits. The last couple of years have been somewhat ' tumultuous’ in R&D credits. Late breaking news seemed to be ' breaking ' all the time. This included a new online application form (the 'T661).

The ' upshot' of the new form was a simplified application process, as well as brings the actual people who prepare these claims (SR&ED CONSULTANTS) out from behind the curtains.

These folks typically charged fees of anywhere from 15-35% of the total claim, and many felt that the government funding of these claims wasn’t necessarily moving Canadian innovation along, as opposed to enriching the good folks known Sred consultancies.

Many viewed the elimination of ' CAPEX' expenditures as a blow to the program, but Billions of dollars are still funded through the program.

Yes, SR&ED and film tax credits have evolved over the last several years. Is there one constant? If there is it might just be the financing of these credits. Whether you are a first time claimant for R&D or Media credits or have filed previously any claim that you are making is financeable.

So how are SRED and Media tax credits financed. Despite being different programs they are financed in a similar manner. Claims are typically financed at 70% loan to value - the 30% remainder is viewed as a buffer or a holdback of sorts. Loans are structured as ' bridge loans'; with no payments made during the duration of the loan. A ' hot ' trend in tax credit financing is the ability these days to finance claims that haven’t fully been filed yet, generating even more cash flow much earlier for your projects.

If you're looking for the ' scoop ' on tax credit financing for R&D or film industry credits seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you maximizing cash flow in the tax credit evolution in Canada.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

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 90 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial = Canadian SR&ED And Film Tax Credit Financing Expertise





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' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Your Company Qualifies For A sr ed tax credit financing - Can you factor sred? Yes you can!

Many companies in Canada taking advantage of the sred program (formally called the Scientific Research and Experimental Development) are surprised to find that they can in effect ' cash flow ' or 'monetize' that claim into the liquid gold business calls cash flow.

So, does sred financing make sense for your firm - by the way, we think it does... and how can you ensure you qualify? Let's ensure we cover off some of the basics around those issues in order for you to determine if sred finance makes sense for you.
If we go back to square one it all comes down to knowing what the program is, ensuring you qualify, and then having a claim to submit. SRED claims are submitted when you file your year end tax return.

If you have never filed a sred claim 2 key points immediately are a focus of discussion when we meet with clients - first of all you have to have the technical expertise to prepare a claim. Secondly, in the last year or so the government has altered the program in order to make submission more expeditious. You of course need to be aware of the new format guidelines, which in effect simplify your preparation and filing process.

In our opinion, and most agree we are quite sure, you want a sred consultant to prepare your claim. These are folks in private industry who specialize in preparing claims, and more often than not they have done work in your industry. We are quite sure we have your agreement than an expert in any industry is better than a rookie.
Technically your accountant could prepare you claim, but we're often surprised to hear clients tell us that their accountant was not even aware of the program!

In order to receive funds for your sred credit - and by the way these funds are non - repayable (yes you heard us correctly) you simply need to file a qualified claim.

Waiting for your refund is what sr Ed tax credit finance is all about. Sred financing is based on the premise that your firm could use the cash flow today, instead of waiting for weeks, months, or even a year in some cases.

So how do you factor, or discount, or cash flow, or monetize that sred claim. (All those terms mean the same thing). It’s a simply process; locate a specialist in Canadian business financing who can assist you in preparing a simply application that includes your sred claim and basic financial application info. Claims are generally financed at 70% loan to value, meaning the 30% is held back as a buffer. No payments are made on the financing and the final cheque from the government is netted against your advance.

In the meantime you can make use of those funds for any general corporate purpose.

So - do you qualify for a sred tax credit financing - if you have a claim you do? Should you consider a factor or finance scenario around your claim - that’s for you to decide and for us to suggest. And by the way, if you don’t need cash or working capital, then don’t finance the claim - but who is in that position these days?

--

Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/sr_ed_tax_credit_sred_financing_factor_sred.html

Your Competitors use SRED Financing to Cash Flow Their CRA SRED (SR&ed) tax credit claims for Working Capital

Your business success hasn’t been based on doing what your competition does, but if they are utilizing sred financing to grow their business doesn’t it make sense to investigate why cra sred claims, when financed, might put you a step ahead of the competition?

We think so , and if the Scientific Research and Experiment Development Program , aka " sr & ed ) pours billions of dollars into Canadian company coffers every year why wouldn’t you want to accelerate the access to cash for those claims and maintain your own competitive posture in your industry .

The financing of you sred claim, via what we could call a sred bridge loan is a recognized and solid manner in which to recover working capital faster. The very essence of having a sred claim filed of course means you will recover your funds, but doesn’t it make sense to recover them sooner, putting cash flow and working capital back to work for your company.

In business it’s all about timing, and in case you haven’t noticed things aren’t exactly moving slower in Canadian business today. So is it an advantage to get immediate cash for your sred calim instead of waiting several months, in some cases up to 9 or 12 months for your funds? You probably don’t need exactly cash flow these days - therefore we strongly recommend waiting for your cheque from the feds, it’s ' in the mail ' so to speak. However, if you're among the many clients that we meet that could actually use additional cash flow today, then you should be considering financing your claim.

What are the mechanics of having your claim financed, ask client such as yourselves? To say that SR &ED financing is a niche industry requiring knowledge and expertise is a bit of an understatement. That is why we strongly suggest you work with a trusted, credible and experience d business financing advisor who will walk you through a very basic process.

Sred financing will, 9 times out of ten, get you approximately 70% of your total sr&Ed filing as a cash flow bridge loan. Why 70%. It is simply because the remaining 30%, which of course still belongs to you, is held back as a buffer to cover both any adjustments the good folks in Ottawa might make to your claim, and it also helps to cover off the actual financing charges. However, it’s easy to see that if you have a claim, for example, of 300k that an immediate cash flow loan of 70% of that amount generates some real cash back into your firm. Which of course, per the program, is in effect a non repayable grant.

Could the benefits therefore be any clearer - The Canadian government is reimbursing you with your R&D funds and you are accelerating that re imbursement straight back into working capital. Use the funds for whatever general corporate purpose - pay payables, buy new equipment, re invest in more R&D, it’s your call!

The mechanics of sred finance are simple - have a claim prepared by a credible consultant or accounting firm. Complete a simple business financing application, go through standard due diligence as you would any type of financing, and execute a financing document which in effect collateralizes the sred for your sr&Ed loan. The entire process can be completed with a couple of weeks with the right amount of commitment on your part.

If your sred claim was prepared by a consultant who did it on contingency you can even pay them out of the financing - at that point everyone is happy!

Your competition probably finances their cra sred claim - why not increase your own cash flow and maximize your refund for the best uses your company can utilize. That’s a competitive financing strategy that works!
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/sred_financing_cra_sred_sr_ed_tax_credit.html

How To Finance Your Business With a SR ED SRED Tax Credit Secured Loan

Can you actually finance your Canadian business via the monetizing of a sred tax credit secured loan? Absolutely, positively... maybe. We say maybe because if you don’t have a SR&ED tax credit then it is of course not possible. However, if you participate in Canada's primary R&D tax credit program then you're potentially on your way to increased cash flow and working capital.

Recent articles in the Canadian business press have criticized the need for the government to even further increase these tax credits. Typically most Canadian business owners and financial managers think that the sred tax credit applies only to manufacturing, which is the farthest thing from the truth. A recent article in the Globe and Mail , one of Canada's premier business publications, stated clearly that firms in the resource, services and technology sector also participate vigorously in the program .

If your firm in fact innovates and spends money on R&D the last thing you can be criticized for is under investing in your future. Therefore monetizing your tax credit after it is filed (it can also be cash flowed prior to filing! in certain circumstances) makes great financial sense.

Is monetizing your tax flow credit risky in any sense of the word? Our clients hardly think so, as you are simply ' cash flowing ‘, or ' discounting' your claim today , and you are not even adding debt to your balance sheet . Think of the sred credit as a current asset, in fact it’s a receivable, and you are simply collateralizing a bridge loan against your sr&Ed claim.

SR&ED tax credits are more often than not prepared by an external consultant, although some firms choose to prepare the claim itself - we suspect it's because they think that they have a better handle on the nature of the claim. The reality is however that you gain an additional ' brownie point ' - if we can call it that by having the claim prepared by a professional sred consultant. Many firms in Canada aren’t aware that these consultants will even prepare your claim on a contingency basis - so if they are prepared to take the risk of time and expense on your claim you can quite rightly assume they feel it will be approved , as professional rarely choose to work for free!.

While the Globe and Mail survey indicated that 70% of Canadian business thought the tax credits currently in place were not as generous as they thought they should be , lets be honest and cant we agree that receiving 40-50% back of every dollar you spend on r&d isn’t that bad a start! And you if can turn your spent funds into instant cash flow by monetizing your claim doesn’t that give you a leg up on your competition . We certainly think so.

Cash for research tax credits is not a complicated process. A short overview is as follows - have your claim prepared in a manner that suits the government’s current filing process. File your calim with your tax return. Seek out a trusted, credible and experience business financing advisor who will work with you to complete a SRED financing application - it is not dissimilar to any other business financing application you have ever filled out. Include your sred claim as additional back up, as it is in effect the collateral for your sred loan. Claims can be financed in two to three weeks after some basic due diligence.

Financing sred puts you in line with other firms to get your share of the 3 Billion (yes that’s billion!) dollars of non repayable cash grants. Turning your claim into a cash infusion makes great sense if you are a small to medium sized firm with need for additional working capital.

Monetizing your claim will drive cash flow which will no doubt inspire your firm to further innovation.

---

http://www.7parkavenuefinancial.com/sred_tax_credit_secured_loan.html

Is It Smart To Finance Your SR&ED TAX CREDIT via a Sred Loan ?

You decide. Does your firm want to consider the benefits of a SR&ED tax credit loan? If you participate in Canada's sr&Ed program you are immediately eligible to consider financing that claim. Lets looks at why that might make sense, what are some of the benefits of monetizing your sred grant, and, finally, how exactly do you do that?

Any firm that has filed a sred claim via their own preparation, the utilization of a sred consultant, or through the use of their accountant has probably quickly picked up that billions of dollars every year are allocated to this program.

By participating in the program your firm is eligible for the non repayable grant on which the entire program is based.

So you have filed a claim. You are now in the waiting game process, as your claim has to be acknowledged, audited, and then processed for a refund cheque. When we talk to clients about what they will use the funds for a number of scenarios emerge - some firms hire additional staff, others , not surprising re invest in the entire r&d process to maintain their competitive posture within their industry .

In sharing our information on our sred subject we are making the assumption your firm knows about and is maximizing the program. As a sr&Ed claimant your firm develops or improves existing products, develops new ones, or invested in various process improvements via a trial and error type scenario.

So where are we at - we've simply re enforced the fact that your firm is aware of the program, it participates, and, via your sred consultant or accountant you are maximizing your eligibility for the maximum refund possible.

Cash is king, and you have spent a lot of your cash on the actual R&D involved in the program. Your firm has the option of financing your credit, as soon as it is filed. Clients are often confused about the financing of their claim - basic questions always seem to be - how much does it cost, is my firm incurring debt that I do not necessarily want to take on, and how long the process takes to finance such a claim and whats involved.

Let’s cover off those key points, which should allow you determine if you should consider financing your claim. We'll also throw in a few tips around maximizing your financing should you choose to proceed.

SRED financing of your sr&Ed tax credit is somewhat of a boutique finance industry in Canada. It is very rare that your bank will finance the claim. We certainly don’t agree with that, because in effect it is an account receivable, and they do finance receivables, don’t they??! Anyway, your firm will have to have a strong borrowing relationship with a bank to finance your claim. The reality is that this type of financing is best and more quickly achieving via a sred financing specialist.

Rates for sred financing vary, and factors that affect the rate tend to be size of claim, your company's current financial position ( many sred claimants are early stage, pre revenue, etc ) , as well as the perceived quality of your claim .

A sred loan is not debt per se, that’s important to understand, you are simply monetizing, or ' cash flowing ' one of your receivables, in this case the sred . Sred loans are structured as no payment loans and the final financing charges are simply deducted from the final cheque you receive from our good friends in Ottawa.

Sred financings can be processed, and funded in as little as two weeks - very standard application paperwork is involved, and the main collateral is or courses the sred itself.

Here’s some final tips we promised - have your sred prepared by someone who knows what they are doing, sred consultants are the best in this area as they are specialized. Count on receiving at least a 70% advance on your claim. Also, did you know that under certain conditions your sred can be financed prior to filing?

We’ve e shared some tips and procedures that will allow you to consider financing your claim. If additional cash flow and working capital are important considerations speak to a trusted, credible, and experience business financing advisor to validate your sred loan options.