A Bridge Loan For SRED Financing Or The Film Tax Credit : A Bottom Of Ninth Inning Solution

First And Goal By Financing Your Film or SR&ED Tax Credits


OVERVIEW – Information on achieving success in SR&ED and media ( movies / tv / digital ) government incentives . SRED Financing via a bridge loan for your film tax credit or SR ED claim provides valuable cash flow .. now







A bridge loan for a film tax credit or SR&ED R&D incentive credits allows you to finish the game a lot sooner, while winning at the same time. Our bottom of the 9th inning analogy seems a correct one - it's been a long game from the time the SR&ED or film tax credit process was started.

Financing via a bridge loan for either of these two finishes the game, and cash flow is declared the new winner. Let's dig in, separately for each type of credit, and then we'll bring the financing aspect for both in - a remarkable similarity exists for the finance solution to tax incentive claims.

SR&ED: From the business owner/financial managers perspective there’s a long game plan in place for research and development credits. As much as owners wish to accelerate the process several key issues always slow things down - sometimes a little, sometimes a lot.

And by the way, that includes the necessity to address recent dramatic changes to the program in the last few years. Those changes revolve around the actual filing of the claims, who writes your claim, and how the claim is calculated. A most regular or new claimants find out, it’s the ' SR ED Consultant ' that typically prepares a claim.

Aligning yourself with a qualified consultant allows you to both maximize the financial benefit attached to your claim, as well as minimizing or totally eliminating cost and risk associated with a research claim. That's because the majority of SR&ED consultants prefer to be paid on contingency - they take on. The risk and cost of preparing a good claim. Their compensation? They receive a negotiated portion of the refund as their fee for preparing a proper claim.

FILM/TV/MEDIA CREDITS:

No type of financing is more of an ' art ' than the complexity around a full finance package relating to a media production. Getting capital together in areas of equity, debt, and mezzanine financing is, at its best moments - seriously challenging.

The film tax credit incentives that are provided by the combination of provincial and federal incentives (typically combined) assist independent producers and production owners in filling gout a large part of that financing need. A healthy tax credit component to any project clearly and obviously eliminates some of the other financial risk associated with any project.

While a small handful of Canadian chartered banks play some role in film finance it’s the tax credit that becomes usually the corner stone of any financing. The role of the SR ED consultant now changes to the ' Film Tax Credit Accountant ‘. He or she has the same goal - maximize the amount you can claim and receive for Canadian content - which by the way can be in the form of co productions with other accredited countries. Labor, service and hard assets become eligible for healthy re-imbursement. Even where you film or produce gets you extra points/extra funding.

And we're not forgetting the ' digital ' aspect of tax credits - as many projects these days are ' Transmedia ‘in nature - i.e. Special FX, animation, etc. A separate (and again ' healthy ‘) tax credit exists for the digital world.


So, its ' first and goal ' for the owners of a SRED or film tax credit. The financing of either of these credits is similar; it’s done via bridge loan, and allows you to monetize your claim as fast as you are able to apply. Both credits are typically financed under the same structure - bridge loans with a 70% advance against the total amt of your claim. The monthly payments? There are none, as your loan is finalized when your claim is approved and funded by the government. At this point you receive the 30% balance of your claim, less financing costs.

New innovative SRED Financing / film tax credit allows you to cash flow your claim prior to filing it. This works best when you've got a track record but is not necessarily a strict requirement.

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success when your goal is to finance research and film incentives. A great way to successfully eliminate the 9th inning challenge!

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








Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:

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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '




















Stan Prokop

Funding The Film Tax Credit And CRA SR&ED : Inside Refundable Financeable Tax Credits

Can Film / TV & Animation And SR&ED Tax Credit Credit Financing Actually Be Fun?

OVERVIEW – Information on financing and funding refundable CRA SRED ( SR&ED ) credits in Canada . In additional to industry’s SR ED credits the Transmedia industry via the film tax credit, as well as tv and digital credits can provide valuable funding for project owners/producers





Film tax credit funding in Canada, as well as the financing of CRA SRED Credits - Could they actually be fun to finance? We suppose the book will always be open to that one, but there is no clearer path to cash flow success than the proper financing of refundable tax credits in Canada. Let's dig in.

SR&ED credits, as well as ' film tax ' credits (they include movies, documentaries, television, and digital animation) are among the most popular incentives provided by Provincial and federal bodies in Canada. There are other financeable incentives, but these two refundable credit programs account for billions of dollars of funding that makes its way into Canadian industry as well as the entertainment industry.

Some of the changes that have been made in the SR&ED tax credit program , viewed as negative by some, in fact are positive when it comes to the cash flowing of these programs. Take for instance the extreme scrutiny that the preparers of these applications (‘SR&ED Consultants) came under. Since the quality of the claim is one aspect of the financing of CRA SRED CREDITS who prepared it, and what compensation they received is quite simply a positive aspect in the successful financing of your claim.

While the folks that prepare the actual claim submission are not regulated in any manner the scrutiny they came under simply made things more competitive in terms of your firm, the recipient of the benefit!

One factor in the financing of a SR&ED claim is the amount and accuracy of the claim. Previous filing history also helps, but is not a necessity.

Even if your CRA SRED CREDIT is part of a normal audit it is still of course 100% financeable.

The documentation required to properly finance a SR ED is as basic as any business credit application. It includes financials, owner information, previous filing history, and a copy of your filing. While in years gone by a SR ED claim could only be financed after it has been filed recent trends ( positive by the way !) include the ability to cash flow r&d expenses prior to filing the actual claim. It's almost ... fun.

FILM TAX CREDIT FINANCING:

Some ( not us ) might argue that nothing is more ' risky ' than the world of film, /TV/animation relative to financial success . We disagree... with a caveat... meaning that when it comes to film tax credit finance you're as close to a sure thing as you can expect to be .

The key aspect to film tax credit funding is understanding that its only one aspect of the financial structure of a film type project. Other aspects include equity funding, distribution, pre sales, ' gap ' finance, receivable finance, debt, bonding etc.

Not every producer/project owner has the capability to minimize risk within a group, or ' slate ' of projects.

Financing the tax credit involves ensuring all of the other parts of a project are in place. It might be a 100% Canadian production, or a legitimate ' co production' with another country. (Tax credit financing is still available in Canada for approved co productions).

Similar to SR ED R&D credits billions await projects in film/TV/animation. While loans and grants are available a huge per cent age of a production in often financed by the cash flowing of a tax credit.

It’s essentially a point system based on your spend in production, salaries, and even geography (where you film or produce) plays a role. The role of the ' SRED CONSULTANT ' is in the case of film replaced by a film tax credit accountant - with good ones maximizing legitimate claims.

So tax credit financing is fun? We'll let you be the judge of that, but if you wish to get on the ' inside ' of proper tax credit funding seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you maximize refundable tax credit finance claims.




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 TAX CREDIT FINANCE SOLUTIONS





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:

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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Overcoming Canadian Movie & Digital Media Finance Challenges – Let Film Tax Credit Financing Be the Final Piece of the Puzzle!

Use Canadian Tax Credits For Film, Tv and Digital Media to Maximize Production ( or co-production ) Success


Information on film tax credit financing in Canada and how the monetization of your movie television, or digital media tax credit can enhance your production finance strategy .



Looking for one of the biggest understatements in town? How's this ... Financing movie, television and digital media productions is a challenge. Can you beat that one?!

Rather than talk about the challenges, clients tell us they want solutions! No surprise there. So let’s talk about one of the most obvious solutions - utilizing film tax credits for your projects in movies, TV and digital media.

Canada continue to be the beneficiary of what many industry pundits call ' Runaway ‘productions ... simply speaking ... they are shown all over the world but made and financed here in Canada for some great reasons.

Film tax credits reduce the cost of your project. It's as simple as that. Call it a government subsidy, call it a non repayable grant, but call it! There are a number of factors that make Canada a great place to product and finance your production - our focus today is the film tax credit but clearly things like foreign exchange, our geography, skilled media labour... etc all fall into place with respect to Canada's current success .

It’s quite obvious that film tax credit financing in movie, TV and digital media has played a large part in the growth of the industry, aka ' Hollywood North. In the real Hollywood, aka California there is even a movement afoot to abolish film tax credit s.

So why are these tax credits available? Simply because the combined federal and provincial government authorities have made a long term commitment to the industry... they might call it strategic... we're just grateful.

Film tax credits are available in 9 out of the ten Canadian provinces. New Brunswick, one of Canada's ten provinces is phasing out the credit.

Unlike the U.S. the Canadian structure and types of credits do not vary significantly... they vary somewhat but we wont quibble about a few per cent here and there. The bottom line is that the Canadian film tax credit is non repayable, and generous.

In British Columbia alone the film TV and digital media industry is a solid 1 Billion dollars of the gross provincial economy. Naturally the better known centres of production in Canada are Vancouver, Toronto, and Montreal. Using Vancouver as an example the B.C. tax credits reimburse over 35% of your labour cost. Productions that qualify for Can Con (Canadian content) receive 25% of labour costs from the federal portion of the tax credit. Over 200 Millions dollars has been awarded in recent times.

Ontario as an example has a 20% computer animation and special effects tax credit and a 40% interactive digital media credit.

We hate to be called ' game players ' but guess what, digital media tax credit financing is growing, and quickly. The industry is predicted to grow 20% a year for the next few years! Canada is the third largest digital media and game producer of talent in the industry. Financing of the Digital Media Tax Credit is a key factor in the growth of the industry.

The maximum tax credit for film and TV in Quebec is 65%!

One key element of the industry that is growing rapidly is the digital animation and special effects via interactive digital media content.

Another noteworthy trend is that European and Canadian co productions are growing. Many U.S. and European producers find funding in Canada to round out the financing of their projects.

As independent film productions continue to grow... in budget size! it of course makes more sense to use the generous Canadian film tax credits. England, France and Germany have long had co production treaties with Canada. Producers are well encourage to further investigate co production treaties in place, allowing them to access valuable an solid Canadian funding for their project via the film tax credit .


Bottom line; consider both investigating and financing your film tax credit and digital media credits. Financing can be achieved via a financing of your approved credit, or in many cases an accrual type of financing can be utilized to accelerate the cash flow during production of your project. And in our experience that tax credit financing enhances your ability to complete the debt and equity portions of your project. Speak to a trusted, credible and experienced Canadian business financing advisor for tax credit finance assistance... today!




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 80 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 re: Canadian business financing & contact details :


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

Dear Abby - Can I Really Use The Canadian Film Tax Credits (credit ) For 30 - 45% Of My Film Finance Projects ? Signed - 'Anxious '

Dear Anxious - Look northward - to Canada that is, and you'll find that with all the turbulence in U.S. film finance as it relates to tax credits that the Canadian tax credits as they relate to film televison and digital animation will provide you with a tremendous sense of relief. Often the Canadian tax credits can finance anywhere from 30 - 45% of your entire project (sometimes more) based on proper certification of your credit and a solid finance plan completed by yourself as producer.

Ontario, British Columbia, and Quebec have historically been the dominant geographies for film, TV and animation production in Canada - but tax credits are available in all provinces. On many occasions the geography that is best suited to your project is often the most sensible with respect to that provinces tax credit program.

It comes as now surprise to anyone in the industry that film finance is a journey. The challenge is maximizing the true value of your project via a potential theatrical release, and of course the pre requisite DVD, downloads, and broadcast and international rights. All of those will create your future revenue streams, but unfortunately won’t get you the cash flow you need today.

We’re assuming you are the owner of a Canadian project in our aforementioned genres of movies, TV, and digital media. There are what we can call 4 pillars of financing your project. They are grants, debt, equity, and of course our favorite - the film finance tax credit sponsored by the combination of federal and provincial government.

We're going to have to let you take care of grants, debt, and equity - but, and its good news, the Canadian tax credits on your project can cover anywhere from 30-45% of your project. In many cases even a higher amount is available, which comes into play due to certain factors such as shooting or production being held farther away from major centers such as Toronto, Vancouver, Montreal, etc .

The enhanced tax credits come back to you as a cheque - a true non repayable tax credit. The add on good news is that your film tax credit can be monetized or cash flowed, thereby securing automatically a very large percentage of your budget. The government in Canada supports the program strongly; having determined it’s a major overall economic benefit in employment, tax generation, and culture benefits. Bottom line - it’s a direct cash subsidy to your project.

In order to maximize your film finance utilizing the Canadian tax credits you simply need to ensure you have a proper production budget and finance plan. An experienced entertainment tax accountant will help you maximize the total amount of funds applied for in your credit. You will want to ensure you have valid title to your project, and that you have a properly legal entity set up to capture all the revenue and expenses of your project.

A special point system around any Canadian producers and key personnel will further enhance the total dollars you receive. There is data to suggest that 80% of the films that leave the U.S. for production in other geographies end up in Canada.

Your Canadian special purpose vehicle for your project must be Canadian owned, and pay special attention to the points system for creative positions such as director, screenwriter, etc.

So in summary dear ' Anxious ' you can definitely use Canadian tax credits as a key part of your finance plan. Applications can even be made online 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/canadian_tax_credits_film_finance_film_tax_credit.html

Information on the Film tax credit for Canadian Independent Productions in Film and Television and Digital Animation

Canada’s film tax credit (by the way that includes productions in television and the rising category of digital animation) is becoming an intrinsically important method of financing independent productions in Canada.

When discussing these credits around Canadian film productions with clients it seems increasing evident that three key factors are driving the tax credit issue. Let’s quickly recap what we believe those three factors are, and then let’s discuss your ability to monetize those tax credits into valuable cash flow and working capital.

First of all Canada’s tax credits slowly seem to have risen to the top of the popularity pile – there isn’t a day these days when we don’t read about U.S. states either considering lowering the state film tax credits, or in some cases abolishing them altogether. A very Fox newsclip discuss the potential total abolition of film tax credits, which have long driven the industry to a certain degree. Secondly, he Canadian tax credit program on the other hand is considered more generous a better run. (We suspect that might be also because we only have 10 provinces as opposed to 50 different state laws around such credits!)

Another key factor is that after the 2008 world wide financial implosion debacle industries such as film, TV and animation are just slowly crawling back to normal, given the manner in which productions were financed previously.

As a general rule labour costs have traditionally been about 50% of a productions cost. By in essence having close to doubled the Canadian tax credits in provinces such as Ontario, Quebec and B.C. The current tax credits in effect were almost doubled when production tax credit per cent ages allowed was increased.

We don’t want to get into a Canadian geography lesson here, but the government also had the foresight to enhance the credits further for your production when you should outside of such major cities as Toronto, Vancouver and Montréal. As an example and case in point, we recently had a client develop a script around an Indian Bollywood type film – by shooting the project about 45 min west of Toronto in a suburban environment our clients tax credit situation was enhanced even further . More tax credit equals more cash flow and working capital for your production. The government appears to like the fact that about 250,000 people work in the industry in Ontario alone, and unlike the U.S. the Canadian government views the industry as an economic driver, not a cash drain.

Working with clients on various projects in film, TV and digital animation gives on an insight into how difficult and challenging it can be to put the financing of a film together. Pre production planning and financing is critical, as the current environment forces you to consider revenue solutions around theatrical release, DVD sales, cable and TV rights, etc.

Utilizing tax credit financing allows you to enhance the overall equity, return and financial risk and reward around your project. The film tax credit should be utilized to generate cash flow to assist in completing your project, or in many cases, allowing you to start work on the next one. We are also amazed at when talking to owners and producers as to how long they have been planning certain projects, and the overall financial undertaking they need to invest in vis a vis their time .

Monetizing (i.e. financing) your tax credit will take away a lot of the uncertainty around your productions success. If you have an upcoming project in Canadian film, TV and digital animation speak to a trusted, credible and experienced film tax credit advisor in the area of tax credit breaks. Consider financing your credit to enhance the cash flow and return on capital in your project. That’s a solid film finance strategy!