Bridge Loans for SRED: Turning Tax Credits into Cash Flow

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YOU ARE LOOKING TO MAXIMIZE SR&ED BENEFITS WITH SR&ED FINANCING YOUR SRED CLAIM

Maximizing Cash Flow: How Bridge Loans Supercharge Your R&D Projects

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Maximizing Business Growth with SR&ED Financing Bridge Loans | 7 Park Avenue Financial 

 

 

 

Accelerate Your Innovation: SR&ED Bridge Loans Demystified

 

Why consider SR&ED financing? Read on because we're about to show you how it can accelerate your R&D projects and boost your working capital

 

 

 

Unleashing the Power of SR&ED Claim 

 

Gimme a reason. That’s what clients often ask when we talk to them about the benefits of both filing an SR&ED claim and then considering SRED financing as a cash flow strategy around SRED funding for sr ed credits/sr ed projects in Canada for cash management and cash flow and working capital.

 

 

The SR&ED Program: A Valuable Resource 

 

You want reasons, and we have reasons for you to consider...Businesses of all sizes in Canada utilize the SR&ED program in Canada to be eligible to receive a huge portion of their expenses in R&D via a non-repayable tax credit.

 

  

Surprising Benefits of SRED Financing  

 

When we tell clients they can utilize an SRED financing strategy to increase cash flow and working capital via the R&D credit, well, frankly, they almost can't believe it.

  

 

Eligibility and Components of an SR&ED Claim  

 

There isn’t a day when the government issues cheques for millions of dollars on the Scientific Research and Experimental Development (aka SRED!) Program, so let’s all agree that you are eligible for your share. And if you're working on processes and products and redesign in your industry then the salaries, products and equipment and even some overheads are taken into account when you file an SRED claim.

 

  

SR&ED Claim Process  

 

The SR&ED claim process is tied to the Canada Revenue Agency. They receive your claim and process it at the same time you file your year-end tax return. If you are okay with 'waiting’... and most of our clients are not, you will get a significant cheque back from Ottawa in a number of months.

 

  

Accelerating Your SR&ED Refund  

 

Clients are always asking us how long they have to wait for a refund, and if there is any way to speed up the process. Far be it from us to be the ones to be telling someone from the government to speed up the process. But what we do advise clients to consider is to finance their SRED funding credit as soon as they file it.

 

  

 Financing Your Tax Credit   

 

Why would you want to finance a tax credit?

There are only two reasons, cash flow and working capital now! By monetizing your tax credit you are in a position to take the government rebate and put it to positive use within your company. And what are those positive uses? It's the basics - reduce your payables, buy new equipment, reinvest in your entire SR&ED claim process to increase your competitive advantage...and on it goes. Basically, use those funds for any worthwhile purpose.

 

  

Speed and Simplicity of Financing  

 

How long does it take to finance a claim and what's involved? That's not an atypical question. In our experience claims are financed within two to three weeks. And could the process be any more simple - it's all about completing a simple business financing application, utilizing your SRED claim as collateral, and undergoing any normal due diligence. Claims of any size can be financed, it typically makes sense to finance claims that are in excess of 100k... but smaller claims can be monetized also.

 

SR&ED Financing for Startups and Small Businesses

 

While larger companies often utilize SR&ED financing, it's less commonly known that startups and small businesses can benefit immensely from it. Startups can use SR&ED financing to accelerate their R&D initiatives, attract investors, and gain a competitive edge in their industries. This approach allows them to compete with more established players and secure funding while navigating early-stage challenges.

 

 Environmental and Sustainable SR&ED Financing 

 

In an era of growing environmental awareness, some businesses are focusing on R&D projects related to sustainability, renewable energy, and eco-friendly technologies. SR&ED financing can be used to support projects aimed at reducing carbon footprints, conserving resources, or developing sustainable products. This uncommon take aligns SR&ED claims with broader environmental and social goals, contributing to a greener future while benefiting from tax incentives.

 

  

Key Takeaways  

 

SR&ED financing is a working capital financing strategy that leverages the Scientific Research and Experimental Development (SR&ED) program in Canada to secure funding for research and development projects.

Bridge Loans: These are short-term loans designed to provide immediate funding while waiting for SR&ED tax credits. Bridge loans bridge the gap between filing a claim and receiving the actual credit.

SRED Claims: Refers to claims made under the SR&ED program, where businesses can recover a significant portion of their R&D expenses through non-repayable tax credits.

Cash Flow Management: Understanding how SR&ED financing and bridge loans can improve a company's cash flow, helping it meet financial obligations and invest in growth.

Canada's SR&ED Program: A brief overview of the Canadian government's program that incentivizes businesses to conduct research and development activities through tax incentives.

Collateral: SR&ED claims can be used as collateral for bridge loans, reducing risk for lenders and making financing more accessible.

Application Process: A simplified explanation of the process involved in applying for bridge loans, which typically includes completing a financing application and undergoing due diligence.

Timely Financing: The importance of financing SR&ED claims promptly to put the funds to productive use within the business.

 

Conclusion

Call 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor around SRED funding Canada claims for Canadian businesses.  And use that cash flow which you have achieved in a timely fashion to grow your business strategically and achieve  sales and profits.

 

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

What is SR&ED Financing?

SR&ED financing involves using bridge loans to access immediate funds while awaiting tax credits for research and development efforts for eligible expenditures in Canada. The goal of the program is to support research and encourage Canadian businesses to invest in R&D  and overcome technical challenges in their respective industries. Software development firms are a large part of sred claims filed in Canada.


How do Bridge Loans Benefit Businesses?

Bridge loans bolster cash flow, enabling companies to invest in growth, fund material costs, and reduce payables, and stay competitive while waiting for the tax incentive and SR&ED refunds.


Can Any Business Apply for SR&ED Bridge Loans?

Yes, businesses eligible for SR&ED tax credits can apply for bridge loans, typically with claims exceeding 130k being the most viable candidates. Work in areas such as sales promotion quality control, etc does not qualify under the program and is not true ' technological advancement'.


How Quickly Can I Secure SR&ED Financing?

In most cases, the SR&ED financing process takes two to three weeks, offering a swift solution to cash flow challenges. Accrued sr ed work can also be financed prior to a final filing of your claim with your income tax return.


What's the Role of Collateral in Bridge Loans?

SR&ED claims often serve as collateral for bridge loans, reducing risk for lenders and making financing more accessible to businesses.


Are there tax implications for SR&ED financing?

SR&ED financing is generally tax-neutral for Canadian controlled private corporations,  as it involves accessing your own tax credits early, but consult your tax advisor for specifics.

What is the typical interest rate for bridge loans?

Bridge loan interest rates can vary but are often competitive, and they provide valuable benefits to many businesses beyond traditional loans via the tax refund itself.


Can SR&ED financing impact my eligibility for future tax credits?

Generally, SR&ED financing doesn't impact eligibility for future credits, but it's wise to consult with experts for tailored advice around your work in sred and scientific and technological uncertainty to ensure you have furthered technical knowledge in your r&d efforts to achieve technological advancement and avail your business of tax refunds.

Are SRED  bridge loans only for large companies?

No, bridge loans can benefit businesses of all sizes, especially those with substantial R&D expenditures seeking cash flow optimization.


What if my SR&ED claim is smaller? Can I still apply for financing?

Yes, even smaller SR&ED claims can be financed under the sr ed investment tax credit program for work in scientific and technological advancement-   it depends on your business's unique financial needs and goals.




 

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Should You Finance Your Sred Tax Credits Via Sred Consultants On Your SR&ED Claim?

Information on sred tax credits and if you should finance your sr&ed claim via sred consultants that prepared your claim

Should you, or shouldn't you?

We're talking about your sred tax credits , filing the actual sr&ed claim for financing purposes, and the role of ' sred consultants' in the whole process .

A basic primer never helps, as we still today run into many clients that don't even know what the whole cra sred program is, let alone use it, and let alone use the proceeds for working capital financing .

If you're a speaker they say it’s good to know about your ' target audience '. Well, our target audience is very clear! Whether you are a start up, or an established Canadian company, and if you are spending any money at all on research and development costs, then, guess what - you're our target audience today.

And, if you can utilize the program the ability to finance your claim for immediate cash flow and working capital improves your balance sheet immediately, certainly from a liquidity viewpoint - and cash is always king we are told.

Let's cover off who those sred consultants are, because they are a key process in the filing, and to a certain degree, financing of your claim. That claim of course allows you to get your firms share of the 3-4 Billion dollars of annual cheques that are written to your competitors, and our goal with our information is to get that funding into your hands as soon as possible.

Sred consultants are private individuals and firms, somewhat boutique in nature, that specialize in writing and filing your sred claim. Filling out any government form for us has always been a daunting task, but to miss the opportunity in a sred filing and getting approval isn’t just embarrassing, it could cost your firms thousands, or tens of thousands of dollars in missed refunds. So these consultants tend to be very experienced in sr&Ed calim process, and have the ability to maximize your sred tax credits to bring you the most dollars possible.

Who isn’t interested in a non repayable credit from the government? Certainly no one we speak to. So we think you would agree that the ability to ' get with the program ' so to speak, when it comes to a sr&Ed claim is beneficial to any firm. And by the way, only privately owned Canadian firms can benefit in this manner from sred tax credits.

So your firm is eligible - you're either a first time filer, or you have been doing this for years. What else could you possibly benefit from in this program? The answer is, we think, that you should consider financing your claim. Why does that make sense? To us maybe its too obvious, but the ability to cash flow your sred tax credits into immediate working capital puts you one step ahead of the game when it comes to your business growth.

Financing the claim is a very simple process. Locate a Canadian business financing advisor that is trusted, credible and experienced in sred tax credit financing. That person will help you understand the basics of the financing - which is essentially a bridge loan collateralized by your claim. In effect you're financing or monetizing a government receivable. Your receive approximately 70% of the valued of your filed claim, now, which we think is better than waiting, 3, 4 or even 12 months for your claim to be approved and to receive your funds via the government .

Claims can be financed within a matter of weeks, and the process is simply a business application supported by the information around your sr&Ed claim. Having your claim prepared by one of those qualified sred consultants just simply lends credibility to your filing. So, should you or shouldn’t you. Our recommendation - file a sr&Ed claim if your are eligible. Finance it if you want cash flow and working capital now. It's as simple as that.



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 100 Million $ of financing for Canadian corporations .


7 Park Avenue Financial

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Direct Line = 416 319 5769

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Email = sprokop@7parkavenuefinancial.com

' 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.


Stan Prokop