Sr&ed Or Sred? – Call It What You Want But Take Advantage of SRED Funding Or Factoring!

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YOU WANT SR&ED FINANCING – FINANCING YOUR SR&ED CLAIM

SR&ED Financing: The Lifeline for Canadian Businesses

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Let us help your firm just like our hundreds of other satisfied clients.

        Financing & Cash flow are the biggest issues facing business 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

 Email us with any questions on Canadian Business Financing

                          EMAIL - sprokop@7parkavenuefinancial.com

 

SR&ED Financing: Canada's Best Kept Secret for Funding Innovation

 

Semantics, we tell clients. You can call it your SRED claim, your Shred claim (they use that a lot also!) or your SR and ED claim.  You can even throw in an ampersand and correctly write it as SR&ED.

 

INTRODUCTION

 

Have you ever wondered about the mechanisms the Canadian Government utilizes to bolster innovation and technological evolution across the nation? The key lies in an essential, albeit frequently underemphasized financial instrument named Scientific Research & Experimental Development (SR&ED) financing.

 

SR&ED, colloquially pronounced as "sred," is a tax incentive scheme orchestrated by the Canada Revenue Agency (CRA). This program stimulates enterprises of varying magnitudes and sectors to engage in research and development (R&D) within Canadian borders. The ultimate objective is to stimulate inventive thinking, catalyze technological progress, and fortify the nation's economy.

 

 

 

WHY  SR&ED FINANCING IS CRITICAL FOR CANADIAN BUSINESSES DOING R&D 

 

In today's intensely competitive landscape, innovation is the lifeblood of business sustainability and expansion. However, there's a caveat - research and development endeavours aren't cheap. They necessitate considerable financial commitments and carry associated risks. This is precisely where SR&ED financing enters the picture, serving as a crucial financial safety net for businesses, helping alleviate the monetary impact of their R&D initiatives.

 

Revolutionizing Business Growth with SR&ED Financing in Canada

 

So there is only one bottom line, so you aren’t considering financing your claim. Putting our semantics aside, many business owners and financial managers are inquiring as to the financeability of their claims. More often than not, they have been told by their bank that this type of claim is not financeable, and even though you are showing it on your books as a receivable, it cannot be margined for working capital and cash flow.

 

Canada's SR&ED Financing: The Fuel for Your Business Innovation

Two words. They are wrong, as SR ED claims can be financed in many situations. They are funded utilizing SR ED Canadian business financing advisors experienced in this niche area of Canadian finance.

We believe it’s always good to recap the basics and set the stage for our financing discussion.  The program is of course, a federal program, in concert with the provinces, that encourages small, medium, and, dare we say it, large corporations to research products, processes, etc.

How committed is the government to this program? Very we say, given that approximately 4 Billion dollars are doled out each year to the 1/3 of the companies that take advantage of the program.  That infers that 2/3 of eligible customers don’t use the program.

 

We have heard a litany of reasons why they don’t hear from clients - they include - we're too busy, it sounds complicated, we don’t want to get audited, our R&D spending is not large enough, etc.  These firms would be better off keeping it simple and saying, 'No, we don’t want funds that are non-repayable that reimburse us for our R&D' because that’s, in effect, what they are saying.

 

HOW DOES SR&ED FUNDING WORK?

 

While you anticipate the approval of your SR&ED claim from the CRA, acquiring third-party financing is an option. Such an approach can offer immediate resources, ensuring your R&D activities continue unhindered.

 

Though initially, the terrain of SR&ED financing might appear intimidating, mastery over it can transform the trajectory of your business.

 

The initial stage involves discerning whether your project meets the SR&ED financing eligibility. The CRA lays out detailed criteria centred around technological progression and uncertainties, systematic inquiries, and concrete evidence. The application for this tax credit can be initiated by completing designated forms in your corporate tax return.

 

HOW MUCH FUNDING CAN YOU RECEIVE WHEN YOU FACTOR YOUR SR ED CLAIM

 

If you have a valid claim prepared by either an experienced internal party, more preferably, a true SRED consultant, then you can finance your claim. Funds for approximately 75% of the claim value are provided to your firm, with the SR ED receivable collateral.  Of course, you can wait 3, 6, or 12 months to receive your funds, but why not consider putting that valuable cash flow and working capital back to work in your business?

 

  

THE BENEFITS OF FACTORING YOUR SR ED CLAIM   

Clients who finance SR&ED claims typically use the funds for general working capital, further R&D, new equipment, marketing, etc. The bottom line is that you choose the use of the funds.  And by the way, that other 25% of your claim is still yours; of course, it’s returned to your firm, less financing costs when the government sends your cheque.

 

And get the news gets any better, but no payments are made on the SR ED loan. Interest accrues and is calculated at the end of the financing.
 

 

Having dissected how SR&ED works, it's time to understand its benefits. Besides the obvious financial relief, SR&ED financing offers numerous other advantages.

 

Enhanced Cash Liquidity: The SR&ED tax credits notably amplify your cash flow, enabling you to utilize these funds for procuring advanced equipment, onboarding proficient professionals, or supporting your next R&D endeavour.

1. Risk Deterrence: R&D investments inherently carry risks. SR&ED financing helps diminish these risks by compensating for some of the expenses, encouraging businesses to pursue innovation without the stress of financial constraints.

2. Expedited Innovation: By mitigating financial anxieties, companies can devote more resources to fostering innovation, heightening their competitive position in the market.

 

 

 

ELIGIBILITY CRITERIA FOR SR&ED

 

SR&ED financing isn't universally applicable to all projects or businesses. It's crucial to comprehend the qualifying conditions, which predominantly focus on technological evolution and associated uncertainties. If your company is engaged in creating novel materials, devices, and products or enhancing existing ones through R&D, the likelihood of qualification is considerably high.

 

THE COMMON MISCONCEPTION ABOUT THE SR&ED PROGRAM

 

Erroneous beliefs surrounding SR&ED financing can sometimes discourage enterprises from availing their rightful incentives. A common fallacy is that SR&ED is exclusive to tech or science-related fields. Contrarily, any industry striving for progress via R&D activities can be eligible.

 

Canada's Scientific Research & Experimental Development (SR&ED) program is industry-agnostic and is not limited to specific sectors. However, certain industries frequently participate in the SR&ED program due to the nature of their operations, which often involve extensive research and development activities.

 

These include, but are not limited to:

 

1. Technology & Software Development: Many software and technology firms constantly innovate to stay competitive. This often involves developing new software, refining algorithms, or creating more efficient systems.

2. Pharmaceuticals & Biotechnology: Companies in these industries often conduct rigorous R&D activities, developing new drugs or refining existing ones, leading to potential SR&ED claims.

3. Manufacturing: Process, materials, or equipment innovation can lead to significant technological advancements. Manufacturers often engage in such activities, making them eligible for SR&ED incentives.

4. Agriculture & Agri-food: Innovation in crop yield improvement, farming methods, or food processing technologies can qualify for SR&ED.

5. Environmental & Clean Technology / 'Cleantech": Companies in this sector often develop new, more efficient technologies to solve environmental issues, making them potential SR&ED claimants.

6. Aerospace & Defense: These industries involve high engineering and technological innovation levels, making them good candidates for the SR&ED program.

 

Please note that these are just examples, and many other industries could also qualify based on their specific R&D activities. It's essential to check with a tax professional or directly with the CRA to determine eligibility.

 

KEY TAKEAWAYS ON SR&ED

1. SR&ED Overview: The Scientific Research & Experimental Development (SR&ED) tax credit is the Canadian federal government's largest single source of support for business-led R&D projects. It annually provides over $3 billion in tax incentives to over 20,000 claimants.

2. Funding Amount: SR&ED tax credits cover up to 69% of labour and overhead costs, 36% of contractor costs, and 45% of material costs. All expenses must be directly related to the company's scientific research and experimental development activities.

3. Eligible Applicants: Applicants eligible for the program must be engaged in basic research, applied research, or experimental development in Canada, creating new products or processes or making incremental improvements.

4. Eligible Expenditures: Eligible costs include labour, contractors, materials, and overhead costs directly correlating to the activity required to address technological uncertainties, obstacles, or challenges.

5. Program Deadlines: Applications must be submitted within 18 months from the end of the tax year in which the qualifying expenses were incurred.

6. Amount of Tax Credit: The program offers different funding levels depending on the eligible expense: up to 69% for labour, 36% for contractors, and 45% for materials. Most provinces and territories also offer additional support, between 3.5% and 30% of eligible qualifying expenditures.

7. Canadian-Controlled Private Corporations (CCPC): Canadian-owned businesses may earn a refundable Investment Tax Credit (ITC) at the enhanced rate of 35% on qualified SR&ED expenditures of up to $3 million. Expenses beyond this threshold attract a non-refundable ITC at 15%.

8. Other Corporations, Individuals, and Trusts: These entities can earn a non-refundable Investment Tax Credit (ITC) at 15% on qualified SR&ED expenditures.

9. Members of a Partnership: The Investment Tax Credit (ITC) is calculated at the partnership level and then allocated to eligible members.

10. Project Eligibility: Projects must conduct experimental development or research activities with some uncertainty and risk. Labour expenses will cover the portion of an individual's role that revolves around such experimentation. Materials and supplies must relate to qualifying projects.

11. Claimable Expenses: Labour is based on time spent on eligible activities in Canada. Contractor claims must be related to SR&ED performed in Canada. Materials must be consumed or transformed for the project. Overhead can be claimed either using a proxy method (55% of adjusted labour costs) or the traditional method (directly related and incremental to the prosecution of SR&ED).

12. Program Deadlines & Review: SR&ED claims must be filed within 18 months of the fiscal year-end. CRA can review the claim to determine if the projects meet the SR&ED definition under the Income Tax Act. Approved tax credits may be refundable, used to offset taxes payable, or carried forward for up to 20 years. These carry-forward credits may survive mergers, acquisitions, amalgamations, and wind-ups under certain conditions.

 

 

 CONCLUSION 

 

 

With Canada persistently prioritizing innovation and technological advancement, the significance of SR&ED financing as a key resource for businesses cannot be overstated. The program is projected to refine and expand, catering to various industries continually.

 

SR&ED financing is a robust impetus for Canadian enterprises, fuelling growth, fostering innovation, and cultivating success. Gaining insight into its mechanisms and advantages can establish a solid foundation for financial robustness and consistent development in your R&D initiatives.

SR&ED financing is more than just a fiscal instrument—it's a gateway to construct, innovate, and escalate. So, are you prepared to unleash the utmost potential of your business with SR&ED financing?

 

Don’t fail to consider SR&ED financing as a way to stay one step ahead of the competition and simultaneously satisfy your cash flow and working capital needs. Call 7 Park Avenue Financial, a trusted, credible and experienced SRED Canadian business financing advisor, to assist you with factoring your claim.

 

  

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

 

   What is SR&ED financing? 

 Scientific Research & Experimental Development (SR&ED) financing is a tax incentive program the Canada Revenue Agency (CRA) offers. It's designed to encourage businesses of all sizes and across various industries to conduct research and development activities within Canada. Businesses can recover some of the costs associated with their R&D activities by claiming tax credits through this program. Visit 7parkavenuefinancial.com

 

 How does SR&ED financing support businesses?

 

 SR&ED financing supports businesses by enhancing their cash flow and reducing the risks associated with R&D activities. Funds from SR&ED tax credits can be used to invest in new equipment, hire skilled professionals, or fund future R&D projects. By offsetting some of the R&D costs, SR&ED financing encourages businesses to continue innovating without the fear of financial constraints. Visit 7parkavenuefinancial.com

 

 What types of businesses or projects qualify for SR&ED financing?

A wide range of industries can qualify for SR&ED financing, not just those in the tech or science fields. The primary criteria revolve around technological advancements and uncertainties. If your business is engaged in creating new or improving existing materials, devices, products, or processes through R&D, there's a high chance you may qualify. Visit 7parkavenuefinancial.com

 

Can SR&ED claims be financed before they are filed?

Yes, in many cases, businesses can seek third-party financing while waiting for their SR&ED claims to be processed by the CRA. This can provide immediate funds to continue your R&D activities without any interruption. As a finance firm, we provide such pre-claim financing options to eligible businesses. Visit 7parkavenuefinancial.com

 

 How can I apply for SR&ED financing for my sr ed tax incentives?

To apply for SR&ED financing, businesses must fill out specific forms in their corporate tax return detailing the R&D activities conducted for eligible expenses, their purposes, outcomes, and associated expenses. Consulting a tax professional or a specialized SR&ED consultant can be beneficial to ensure the claim is appropriately prepared and maximized for your refundable tax credits. Visit 7parkavenuefinancial.com

 

 How does SR&ED financing affect my business's cash flow?

SR&ED financing directly improves your business's cash flow by providing a tax credit for eligible R&D expenses under the tax credit program. You can reinvest more money into your business from those sr ed credits for hiring, equipment procurement, or future R&D projects for a sr ed tax credit claim. This is especially important if you're a start-up or a small-to-medium-sized business where cash flow is critical when waiting for the sr ed refund. Visit 7parkavenuefinancial.com

 

What happens if my SR&ED claim is denied or reduced by the CRA?

If your SR&ED claim is rejected/denied by the CRA because of sr ed tax credit eligibility, you have the right to object and provide additional supporting information. However, preparing and presenting your claim to minimize such risks accurately is crucial. As a finance firm offering SR&ED claim funding, we work closely with you to ensure your claim meets all the necessary criteria. Visit 7parkavenuefinancial.com

 

 

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

Your Most Complete Guide to SR&ED Financing & SR&ED Loan Success In Canada

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SR&ED refundable tax credits and financing r&d   are in the news a lot these days. Things seem to be always changing, sometimes in a big way, sometimes less. The one constant? SR&ED Financing! It's always there - always available. Let's dig in.

 What is The SRED CREDIT?

 

Sometimes called ' Shred  Credits ' they are one of Canada's most accessible, popular, and widely used incentive programs under the auspices of Canada Revenue Agency, allowing you to claim for either a cash grant or in some cases a deduction against income taxes owing. R&D capital investments use up cash flow resources, so collateralizing your sr&ed claim makes a lot of sense when other traditional  sources of financing are not available.

Corporations that are in need of liquidity cannot afford to wait until the end of the fiscal year to receive payment of refundable tax credits. For this reason, lenders offer sred funding, an advance (or loan) to eligible corporations, while using the future receipt of the SR&ED refundable tax credits as collateral.

 

In the majority of cases, you are eligible for amounts in the 35-40% range of your total expenditures. The amount of that refund can go over 5O% when your Sred Consultant and accountant, typically working in combination, take advantage of both the federal and provincial parts of the program. 

 

At 7 Park Avenue Financial we can't overemphasize the role of ensuring your have an experienced and reputable sr&ed consultant preparing your claim . Their track records and reputations are invaluable both in the financing process as well as the CRA audit process for sred.

The formal name of the program is ' Scientific Research and Experimental Development ' , hence ' SR&ED ' ! It is one of the most popular government programs vie encouraging firms to conduct r&d in Canada, as well as providing refundable tax credits for those investments made by your firm.

 

Why a Sred  Loan ? SR&ED Debt Finance

 

 

Simply because its a method of allowing you to use your refund owing, which is essentially an account receivable, as a source of operating cash in the same manner in which any company would finance their receivables via either a bank or a commercial a/r financing firm. It's a good example of  ' specialty financing '. Note that this does not involve government grants, or grant financing - that's a whole different category of accessing funding from the government.

 Essentially you are unlocking the value of your tax credit, which is, in fact, a real asset on your balance sheet, although many companies we have worked with sometimes do not book that as a receivable. 

 

Companies using the Sred program tend to always be looking for business growth capital. Most but not all are early stage companies looking to commercialize their products and services. Just the ability to finance their r&d prior to their claim filing is appealing to firms who are always looking to generate cash. Many firms are in new or emerging sectors such as digital medial , environment, biotech, etc but firms in every industry utilize SR&ED. Accessing traditional financing is very challenging for many of the firms involved in SRED, and going the equity raise route is both time consuming and even moreso, costly!

 

 Claimants under the program may be surprised to know that if your firm has ongoing multi-year activity in research you can set up a Sred Line Of Credit, allowing you to accrue and then finance ongoing work. Here is where a track record in' Shred ', as well as a good consultant, is important.  Also, your claim can be financed before filing with the proper level of due diligence around claim content.

 

 

 We can make the case that SR&ED finance is really  SRED factoring, namely the factoring of your sred receivable. And as we have mentioned elsewhere, owners should consider sred accrual financing allowing you to accelerate cash flow.

The challenge around receivables of course is ' waiting for payment '! Historically the timing around SRED REFUNDS has been a major point of discussion and is one of the reasons why a  SR&ED FINANCING COMPANY is often utilized to monetize your tax credit. Depending on the size of your claim, the technical aspects around it a firm can easily wait for  many months to receive their refund.

 

 

 Another issue around the timing of claims is that your claim is filed by your accountant and Sr&ed consultant, typically working together, at the time of your year-end tax filing. You can see that it could add a further delay to payment by the government to your firm. 

 

 

KEY POINT: A  SRED CLAIM  can often be financed and funded in just a few weeks if you are working with expert help and someone who has a track record of financing success in the tax credit area.

 

Although many business people use the term ' loan ' when it comes to this type of debt facility,  SR&ED financing brings no debt to the balance sheet, you are just monetizing your claim as a manner of advanced funding.

 Utilizing SRED TAX CREDITS is simply an additional source of funding for many companies, many of which are new, emerging, and even startups. Although many firms are technology companies almost every industry is eligible for SRED CREDITS based on their commitment to r&d.  It's all about growing their business.

 

 New clients at 7 Park Avenue Financial always want to know if they are in fact eligible for SRED CREDITS.  If your business is what is known as  CCPC,  essentially meaning a private, not public company and you are doing qualified experimental research to develop your products you are eligible.

 

Industry statistics around SR&ED tell us that in the last 7 years payouts on SR&ED claims have reduced by over 5 Billion dollars - suffice to say billions are still being paid on thousands of current claims. The government seems to be asking anyone with interest to provide guidance on the future of the program.  Canada Revenue Agency provides great information on the CRA website on both the qualifications around your claim and overall eligibility. 

 

All of that  information essentially comes down to 3 issues - Is your firm investing in r&d capital to advance technologically, are their uncertainties in your research, and has the research become a process whereby technical challenges are overcome

Talk about uncertainty! Business owners hate uncertainty. Who doesn’t? The one constant in SRED? Cash Flowing Your Claim!


SR & ED (SR ED) factoring is a viable consideration for any Canadian company that files SR ED claims and is looking for additional working capital. Not all Canadian business owners and financial managers are aware that SR ED claims can be monetized (financed!).


For an overview of SR ED financing, it’s important for us to validate some of the basics -


-Have you filed an SR ED CLAIM?


-How much was the dollar amount of the claim?


-Who prepared the claim?


-What amount of cash or working capital do you need in conjunction with the claim filed?


If you are looking for cash flow with respect to your Canadian SR ED claim you either have working capital financing in place now with your bank or finance firm (a factoring company perhaps) or your firm is self-financing and you are looking for the SR ED to supplement additional cash flow. Risk capital /equity capital and Canadian venture capital is challenging to raise in Canada . Financing r&d makes a lot of sense.


Canadian business owners and financial managers are aware that when they finance their receivables and inventory these 'current assets' are 'margined'. By margining we of course mean the amount of funds you can borrow against these assets.


In SR ED financing you are generally financed 70% of your claim, and that is the combined total of the Federal and Provincial claim.


So if you have filed an SR ED claim, of say, for example, $350,000.00 you are eligible for 70% of that amount, or $245,000.00


Funds can be advanced as soon as you have filed the claim, but not before. Naturally, it is somewhat important to ensure your claim was filed by a qualified party - usually an accounting firm or consultant. It's these consultants that are in the field daily on the program, wresting with all sorts of changes around Form 4088! ... Defining and backing up your project.


SR ED financing is outside your normal current financing arrangements. The SR ED is collateralized separately - it is, in essence, a short term working capital loan that is repaid when the government sends you your cheque. Most Canadian business owners do not want to wait, 3, 6, 12 months or more for a cheque for a substantial amount that is in effect a non-repayable grant from the government. The Canadian government continues to pour well in excess of a billion dollars into the program, and if your firm qualifies for an SR ED claim -


1. Why wouldn’t you use the program?

2. Why wouldn’t you accelerate the cash flow from the grant by financing your SR ED claim?


SR ED financing is a boutique small industry in Canada - business owners are cautioned to work with a qualified, credible, and experience party who will ensure they are maximizing financing capabilities under the program. Naturally, any firm can wait for its refund , but using the cash from financing your claim allows you to move on to new opportunities in your business, including even more investments in r&d. 

 

Typically companies investing in research are in highly competitive industries, and rather than considering external equity this type of financing is simply one way of increasing value and time to market without the dilution of additional ownership to your company. Utilizing internal cash resources in the early stage of growth allows you to increase the value of your firm at a later point.

Companies financing their r&d claims use funds for a variety of reasons - that might include further research, general working capital purposes, marketing, new employee hires, or geographical expansion.

 

How Does The SR&ED Financing Application Process Work

 

 Business owners and their financial mgr's should view the financing process as the most simple of loan applications. A minimum amount of the claim is typically $100,000.00. With a client's full cooperation we have had clients financing in plays in a week or two, sometimes sooner. Typical loan amounts are in the 70% range based on your total claim. Simple business application information applies, ie years in business, articles of incorporation, etc,

No payments are made for the duration of the financing! The loan interest accrues and is deducted from the final payment by the government of your claim . Your current lender security stays in place, and significantly less emphasis is paid to typical bank focus on personal guarantees, net worth of principals, etc. A track record in previous SR&ED claims is helpful, but not necessary, and firm time claimants may apply to fund their claims.

It should not come as a surprise that certain other refundable tax credit programs can also be financed, they include:

 

 

Digital Multimedia Tax Credits

E-Business Development

Multimedia Gaming

Film Tax Credits in Many Canadian Provinces

In summary, Canadian firms that are eligible to file an SR ED claim should do so. What firm would not want to receive a cash non-repayable cheque from Ottawa! If you can wait for the funding, and don’t need additional cash flow, great. That's why sred tax credit loans make sense.

 

If you wish to arrange interim financing for your claim enlist the services of a trusted and credible SR ED financier. In a matter of a couple of weeks, your working capital and cash flow will be augmented vis a vis your SR ED financing. SR ED Financing and factoring - a great Canadian alternative financing strategy

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 areas 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. He is an experienced

business financing consultant

.

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 financing 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
7 Park Avenue Financial/Copyright/2020

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.

Stan Prokop

The SR&ED Bridge Loan – The ‘ Hushed Truth ‘ On ( SR ED )SRED Tax Credit Financing Loans In Canada

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SR&ED ( SRED ) Finance is… Alive and Kicking!

Information on the SR&ED bridge loan in Canada. SRED Tax credit financing is a valuable way to enhance cash flow. SR&ED loans were and are available during recent program changes

The SR&ED bridge loan in Canada. Did it almost become a hushed secret at a timer when the very existence of the SRED tax credit seemed in doubt?


The real secret of SRED loans in Canada is that they were available for your tax credit prior to the current budget, and, guess what. ? .... They remain in place today for your tax credit financing strategy!


Most Canadian business owners who utilize the SR&ED program in Canada were keenly aware that the very existence of the tax credit seemed in doubt in 2012 - That concern is long since gone!!!


Well, the dust has settled and if we had to say there was a general consensus we would have to say that in general there's a status quo around the program. Many firms who felt they would do ' better' or ' worse ' under the new changes are finding that it’s a case of ' it depends ' - so it could have been a lot worse.


Thousands of Canadian businesses received Billions of dollars every year under the program, the formal name of course being Scientific Research & Experimental Development. Hence SR&ED. Your firm’s ability to demonstrate you have improved a process or processes, or come up with new technology or software qualified you for Sred.


We’re e not ( fortunately ?) accountants , we're financiers, so we'll let you talk to your SRED consultant or advisor on the various rates changes that took place, some up, some down , under the program . We would note that the biggest change seems to be the fact that capital expenditures don't qualify under the program, but salaries and materials and portions of your overhead still qualify.


We'd love to take a poll one day on how many Canadian firms know that SR&ED Tax Credit Financing exists in Canada. We'd venture to say is clearly the majority, not the minority. So if we had to reveal that ' hushed secret ' on this major Canadian tax credit incentive it's simply ' Hey, you've got an options on your SR&ED tax credit .. You can wait for months, or much longer for you refund cheq. . OR ... you can finance your claim.


If you do have a claim that's prepared by an experienced and credible SRED consultant that claim can easily be financed. The basic rules around that are as follows - The SR ED bridge loan gives you approximately 70% of the face value of your claim. No payments are made during the loan period - at final approval and payment of your claim by Ottawa and the province you receive your remaining 30%, less financing costs, a simple application and you ability to provide the SRED tax credit as collateral is all that’s required.


So is SRED dead? It looks like it isn’t. We can hear the sigh of relief among all those SR&ED consultants who provide the majority of the writes ups on claims in Canada.


And, don’t forget. SRED tax credit financing loans are here today, they were here yesterday, and they will be here tomorrow.


Speak to a trusted, credible and experienced Canadian business financing advisor on help for SR ED bridge loans for working capital and cash flow for your Canadian firm.






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

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 .

' 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

SRED Loans for Cash and Working Capital Now

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SR&ED Productivity Enhancement ? It's Called SR&ED Financing !!

Information on SR&ED Financing in Canada . The ability to monetize/cash flow your sred claim accelerates working capital and cash flow

SRED financing is simply the method by which you can, our firms own option, monetize or ‘cash flow ‘ you Sr&Ed tax credit and generate needed working capital and cash flow for ongoing operations or of course further investment in your r&d processes and development .

We have all seen the oil change commercial where the mechanic states ‘you can pay me now or pay me later ‘. Well financing your sred claim has a similar ring to it – of course you have the option of waiting for the government at the federal and provincial levels to mail your firm your cheque – that could take anywhere from 1-12 months – Or you can arrange to finance that claim now and utilize those funds for any business purpose .

Are we eligible to finance our sr&Ed claim? Clients often ask. We can only replay that if you have a claim, and have filed it, your are in fact eligible. In fact, under certain circumstance it can be arranged to receive funds even prior to filing.

Clearly the pure financial benefits of the sred grant program in Canada are numerous – you receive significant amounts back from expenditures made on research, including wages and salaries associated with that research, as well as major portions of material and equipment expenses.

All of those above noted expenses are ‘cash out ‘to your firm – the funds have been spent .So why not consider financing your claim and receiving those funds back in an extremely timely manner.

We can almost hear some of your questions now as you review our information, as they are typical of what many clients ask:

How exactly do I monetize the sred claim

What exactly is a sred loan – is there additional debt involved

How long does it take and what does it cost?


Let’s cover off some of those very basic questions so you can feel comfortable about the sred financing process. The sred financing, or the monetization or cash flowing of you sred claim is simply a business financing that uses the actual sred claim as collateral. You receive approximately 70% of the full federal and provincial total as a short term cash loan that is collateralized by the sred itself. Of course the additional 30% is still yours, it is simply held back as a buffer for any adjustments that are made to your claim.

No payments are made on your sred loan, and the final cheque to you firm (you have already received 70%) is the holdback amount less the financing costs. So you have pure cash flow and additional working capital, no long term debt associated with a loan per se, and no payments are made. That is truly creative business financing for which most Canadian business owners are not even aware.

The typical process to create a sr&Ed financing is approximately 2-3 weeks, you should quite frankly view it as any other business application – the usual business info and backup on your firm, plus of course the details of the sred financing.

In summary, have your claim prepared by a qualified sred consultant - recent submission rules and styles have changed.

If you have unlimited cash flow and working capital resources by all means wait for your cheque – if you want to cash flow or discount your claim speak to a credible , experienced and trusted business financing advisor in this area .

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

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 .

' 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

Sr&Ed Factoring – Cash & Working Now for your Canadian SRED Claim

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Information on SR&ED loans in Canada. Financing the refundable sr&ed tax credit delivers cash and working capital back to your business. Factoring sr&ed claims makes business sense - here's why!

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Sr&ed Factoring , or in effect the financing of your Canadian SRED claim is a unique and innovation method of financing your tax credit .

For many Canadian business owners and financial managers the amount that their company has invested in research and development of innovative products and services represents a significant amount of their budgets.
Naturally Canadian business appreciates the amount of funds that the Canadian government refunds as non-repayable cash grant for your firms investment into product and technology advancement.

When we meet with customers who wish to finance, (factor) their SR&ED claim it’s all about timing. They want to get the immediate benefit of that cash flow and working capital back into their firm. The financing of the claim is the way to do that – it’s a case of immediately receiving the cash refund for your claim as opposed to having to wait anywhere from several months to a year to get the refund . And if your firm is filing a SrEd claim for the allowable period of two years prior well that cash flow and working capital has now doubled and provides a significant amount of cash flow if you finance the claim today.

As we have stated the whole scenario of financing a Sr&Ed Tax credit is essentially the process of factoring, or ‘discounting the claim ‘. We would point out that the whole process is applicable to film tax credits also, which a growing and robust industry is given that the government has heightened its grants in many areas of film tax credit financing.

So whats involved in monetizing your SR&ED claim? And perhaps as important, what amount of funds can you get today for the claim. We have stated the claim is discounted or factored - business factor because they need immediate access to cash when current assets such as accounts receivable cannot provide cash flow in a manner that allows your firm to have the working capital it needs. In some cases the factoring of receivables or a SR&ED claim may be one options for cash flow generation, however in a great deal of the cases it in fact is the only option .

That is because Canadian banks are reluctant to finance SR&ED claims because of the partial uncertainty in the final approval of the claim, and the reality is that many Canadian small and medium companies currently are challenged in obtaining all the business financing they need.

How much can I get? Is the typical question asked by Canadian business when financing their SR&ED claim? The answer is typically 70% now, and generally financing is structured along the lines of no principal or interest payments on the SRED loan financing until the government approves and funds the claim. At that point your firm gets the additional 30% of the claim, less financing costs associated with the claim which vary based on size of claim, overall financial situation of your firm, etc.

We want to clearly point out that no company should be deterred from financing a claim because they are in a pre- revenue state, or if they have other financial problems or challenges, as the essential security of your SR&ED itself is the prime collateral for the financing.

Talk to an expert in SR&ED financing and determine if you’re a solid candidate for immediate cash flow and working capital via this great Canadian government program.



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
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 '

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