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

Tweet

YOU ARE LOOKING FOR SRED TAX CREDIT FINANCING

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

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

        Financing & Cash flow are the biggest issues facing businesses today

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

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

Or Email us with any questions on Canadian Business Financing

                                      EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

 

HOW DO SR&ED TAX CREDITS WORK? 

 

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

 

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


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

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

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

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

 

 

 

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

 

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

 

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

 

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

 

 

 

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

 

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

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

 

 

  

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

 

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

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

 

     

COMMON CHALLENGES FOR SR&ED .. AND THE SOLUTION

 

   

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

  

 

  

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

  

  

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

 

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

 

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

 

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

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

 

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

 

  

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

 

What is SR&ED financing?

 

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

 

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

 

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

 

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

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

 

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

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

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

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

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

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

 

What are the requirements for R&D credit?

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

 

 

How much does an SR&ED consultant charge?

 

Sred consultants charge either an hourly rate or in some cases a contingency fee based on a percentage of successful claims of a sr ed refund.Consultants focus on maximizing refunds based upon their expertise in different industries. Claims on contingency avoid the cost and time in preparing claims andhelp to avoid rejection of claims by Canada Revenue Agency. Consultants focus on keeping proper records and providing CRA with the information it needs for the r&d credits.

 

 

Sr ed Tax Credit Financing Sred Loan Solutions

 

 

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

Revolutionary Tax Credit Financing Options You Need To Know About / Unlocking The Potential Of SR ED Loan Financing

 

YOU ARE  LOOKING FOR CANADIAN  SR&ED TAX CREDIT FINANCING! 

SR&ED TAX CREDIT FINANCING - YOUR ULTIMATE GUIDE

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

        Financing & Cash flow are the  biggest issues facing businesses today

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

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

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

THE SECRET  TO MAXIMIZING SR&ED TAX CREDITS?   FINANCING !!

 

"Development is taking the research and turning it into something useful." - H. Dean Kamen

 

  

WHAT IS SR&ED TAX CREDIT FINANCING  

 

SR&ED (SRED) tax credit financing is a solid strategy used by more and more Canadian business owners and financial managers who wish to accelerate the benefits of Canada’s SR ED program.  Let's dig in on sr&ed tax credit financing options -

 

 Cash flowing, monetizing, or factoring via sred tax credit funding (they all mean the same thing!) your Canadian SR ED claim can accelerate cash flow and working capital for your privately controlled Canadian business that is utilizing SR ED credits under the government's program.

 

"Without financial resources, innovation remains a hobby." - John Doerr

 

In many ways the financing of your SR ED credit actually allows you to maintain your competitive edge, as the combination of your non-repayable tax credit and the immediate financing of it are a ‘double whammy‘ in the face of your competitors who might not use this strategy.

 

 

 

  

  

TURN YOUR SR&ED TAX CREDIT INTO A SOLID SOURCE OF FUNDING FOR YOUR BUSINESS  

  

  

 

A banker we deal with recently told us that current industry statistics show that many companies who are in fact eligible for the SR ED credit aren’t even applying for it, let alone financing it. Therefore when your firm maximizes the total value of your claim and then generates instant cash flow on that claim you are clearly leading the pack in this regard. That's the benefit of sred tax incentive loans.

 

  

HOW CAN I USE SR&ED TAX CREDIT ADVANCES  TO GROW MY BUSINESS  

 

Many clients tell us that they utilize the SR ED funds that they finance to assist in acquiring new equipment that allows them to maintain a competitive edge in their markets. The reality is of course that funds via  SR&ED financing solutions can be used for any general corporate purpose, which might be things such as equipment acquisition, advertising and marketing, reduction in payables or debt, or of course continued investing of even additional research and development efforts.

 

  

HOW DOES SR&ED TAX CREDIT FINANCING WORK?  WHAT DOCUMENTATION IS REQUIRED FOR  THE SR&ED TAX CLAIM  

 

So what is the cash flow and working capital potential in your SR ED, and how do you unlock that potential under the tax credit financing process?

 

If you are already filing for SR ED credits you are no doubt working with the assistance of your client, or, alternatively, someone that is known as a SRED consultant. Having a solid resource in one or both of these parties allows you to maximize on your potential claim. 

 

What is the role of SR&ED Consultants ?  Firms hiring a sr&ed consultant to rely on these experts to hand paperwork and documentation around their project to both identify the project clearly to CRA, as well as document the maximum allowable amount under SR ED - Quality claims will also avoid sr&ed audits by CRA.

Companies complete CRA form T6661 which is the actual narrative around the project and the challenges faced by the business in the sr&ed project.

Once you have filed your claim we recommend that you consider immediately financing the claim. Naturally, you don’t have to do this, and can simply wait the 3-12 months that it might take Ottawa and your particular province to review the claim, adjudicate it, and process it for payment. But, as we state, why not consider financing the claim?

 

  

HOW DOES A  SRED TAX CREDIT LOAN WORK?  WHAT ARE MY SR&ED TAX CREDIT FINANCING OPTIONS?  

 

Clients ask us how the actual process works. It is quite simple really. Your claim is generally financed at 70% of the total value of the amount you and your accountant and consultant have claimed. You can receive cash immediately after it is filed.

 

In certain cases you can actually receive funds for the claim prior to financing – that whole process is called SRED accrual financing. Some of the basic criteria are simply that you must have filed a claim before, have a solid reputable party preparing it, and be prepared to demonstrate good records and accounting around those expenses you are intending to claim.

 

 WHAT ARE THE BENEFITS OF SR&ED TAX CREDIT FINANCING 

 

So how can we summarize in a ‘bottom line' manner? It's simply as follows – you should be filing SR ED claims if you are eligible. On filing you have the option of financing that claim, so you are bringing immediate cash flow and working capital to your firm on funds that are not repayable to the government.

 

Funds can be used for any company purpose, and proper utilization allows you to maintain a competitive advantage over your competitors. That’s using research as a cash flow generator – a solid financing strategy!

 

Financing sr&ed tax credits for startups is always possible, even if you are a first-time filer or pre-revenue/early stage.

 

 WHAT ARE THE INTEREST RATES AND REPAYMENT TERMS FOR  THE SR&ED TAX CREDIT LOAN 

 

Financing rates for Sred Loans are very competitive for this form of non-dilutive financing. No repayment is made during the term of the loan, and loan facilities are closed out when Canada Revenue Agency pays the refund - Loan advances can be made after the business files its claim, or, if the company chooses financing can be approved prior to filing, ensuring a continuous road to cash flow on the claim.

 

Financing your refundable tax credits allows a business performing r&d to generate cash flows which can help the company run on a day-to-day basis as well as grow - all while not having to access additional owner equity and dilute ownership at a critical growth stage in the company.

Businesses can finance claims when they are completed and filed, or a company can choose to fund as they accrue their work in their project .  Most financings are approved within a 2-week period from start to finish via a basic application and information on the company.

 

 

 

CONCLUSION - HELP AND EXPERTISE FOR YOUR REFUNDABLE  TAX CREDIT LOAN

 

Get the cash you need to grow your business with SR&ED tax credit loan solutions. Find out how a SRED loan can help your business thrive in the new economy! Talk to the 7 Park Avenue Financial ( tax credit financing experts )  team about SRED tax credit financing services to grow your cash flow needs via maximizing the benefits of sred funding/tax credit financing as well as other financing options for business to assist in cash flow and cash management in your business.

 

 

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

 

WHAT IS SR&ED

Canada's  Scientific Research and Experimental Development (SR&ED) Program provides investment tax credits via a refundable tax credit to Canadian businesses that focus on r&d.  Companies of all sizes from start-ups to large corporations, and even public companies access the program - Most firms focusing on SR&ED receive a tax refund, and thousands of Canadian businesses access over 3 Billion dollars annually.

 

 WHO IS ELIGIBLE FOR SR&ED TAX CREDIT FINANCING 

 

SR&ED Tax credit financing for SMEs is available for any Canadian-controlled private corporation to claims research and development under Canada's  Scientific Research and Experimental Development (SR&ED) investment tax credit - R&D performed by the business must be done with a focus on the advancement of scientific knowledge and for the purpose of achieving technological advancement in science and industry. Companies that are not private receive a non refundable tax credit to reduce income tax payable in the tax year- i.e. public companies who conduct research around scientific or technological uncertainty.

 

WHAT ARE SR&ED ELIGIBILITY CRITERIA

 

Businesses qualifying for a SR ED refund/tax incentives must be able to prove criteria around technological advancement, and technological uncertainty and be able to provide information around technical content and the processes the business undertook in the research and development.

Project documentation must demonstrate the employees involved in the research and the amount of time spent on the project. The largest portion of any sr&ed claim typically involves wages and payments to subcontractors.

 

Financing via cash advances for the sr&ed claim can be funded via third-party commercial finance companies who fund the tax credit claim either prior to the refund being claimed or after the business has filed its year-end financial statements and documented their evidence-based documentation for innovation the business has focused on in their research and development.

 

 WHAT AMOUNT OF EXPENDITURE CAN BE CLAIMED? 

The amount of eligible expenditures that can be claimed in SR&ED falls under the categories of eligible salaries and wages, payments to subcontractors on the sr&ed project and materials cost pertaining to the sr&ed work under the category expenditure limit. Canadian controlled private corporations, aka "  CCPC's) " claim for specific percentages of these expenditures under the sr&ed expenditures for credit calculation.

Supporting documentation around the qualified expenditures must be kept by the business around actual work completed, people involved in the work and the calculations done by the firm under CANADA REVENUE AGENCY /CRA guidelines.

 

Stan Prokop

How Factoring Finance Works As Your Business Cash Flow Solution / Financial Engineering Via A Canadian Business Funding A/R Strategy

Tweet

YOUR COMPANY IS LOOKING FOR FINANCE FACTORING!

  

INVOICE FACTORING &  ONTARIO FACTORING COMPANIES  & FACTORING SERVICES IN CANADA  

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

Financing & Cash flow are the  biggest issues facing businesses today

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

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

EMAIL - sprokop@7parkavenuefinancial.com

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

 

 

 

ACCOUNTS RECEIVABLE FACTORING IN CANADA - YOUR GUIDE TO FACTORING RECEIVABLE FINANCING AND WHAT YOU NEED TO KNOW

 

 

  "Cash is king, but accounts receivable is royalty." - Unknown

 

 

Receivable financing in Canada. Canadian business owners seem to have a major point of confusion around  finance factoring and why this form of ' financial engineering ' differs from bank financing. Let's find out why. Let's dig in!

 

 

WHY CONSIDER  INVOICE FACTORING FINANCING  / INVOICE DISCOUNTING? 

 

Growing your product sales/service and profits is job # 1!  When businesses grow they need cash. Your small business cash inflows are tied up in a valuable asset -  accounts receivable waiting to receive a cash payment from clients,  and suppliers who want to ship your product.

 

UNLOCK THE SECRET TO CASH FLOW TODAY

 

Start accessing these funds through custom-tailored financing solutions from accounts receivable financing companies  for fast funding via 7 Park Avenue Financial so we can help make sure all of your funding needs are met without adversely affecting your company's operations or other business loans that are in place.

 

 

 

A/R FINANCING IS SHORT TERM FUNDING FOR YOUR OPERATING NEEDS 

 

An A/R finance strategy is not tied to long-term financing via debt. That, in general, is a good thing, and it delivers constant recurring cash flow and working capital needs for Canadian businesses as you generate sales and receive cash.

 

  

IT IS CRITICAL TO UNDERSTAND THE DIFFERENCE BETWEEN BANK FINANCING AND COMMERCIAL FACTORING SERVICES  

 

At the core of understanding the A/R financing process via factoring is the need to understand the difference between ' assigning ' and ' selling.' When you finance your A/R through traditional bank loans and financial institutions such as a credit union, you provide them with an assignment of your book debts, i.e. your receivable base.

 

UNDERSTANDING FACTORING RECEIVABLE FINANCING

 

In finance factoring from a third-party financial company, the paperwork around your transaction revolves around the general credit strength of your company's customers ( credit checks are sometimes performed ) and the actual sale of the receivable as you finance them via factoring companies. The total amount advanced against a/r when factors buy your financial rights in an invoice  is always more than a bank typical 75%

 

ADVANTAGES OF A/R FINANCING IN CANADA - WHO USES FACTORING RECEIVABLE FINANCE SOLUTIONS

 

What are some of the key advantages of invoice financing utilizing a commercial third-party finance firm vs. a bank? They might include:

 

Constant availability of a positive cash balance as you generate sales-  The company selling its receivables will occur typically within 24 hours of invoicing get paid! Factoring providers have an easy to obtain and very quick approval process around invoice payment

 

The ability to address seasonal bulges in financing needs via a factoring facility

 

A strong balance sheet relative to the amount of cash you have on hand

 

WHAT IS THE COST OF FINANCE FACTORING

 

When we talk to clients about those advantages, the one negative issue in their mind is the higher cost of this method of financing from a factoring company. Remember, though, this higher cost is what we could term a ' rising and falling ' issue.

 

 

5 KEY FACTORS AROUND RATE AND COSTS IN  A/R FINANCE - MAKING THE RIGHT CHOICE FOR YOUR BUSINESS

 

1. The actual costs of factor finance from many factoring companies depend on several key factors

2. How fast you collect your accounts

3. The discount rate at which your sales are purchased,

4. The advance rate on your cash, which is typically 90% of your  a/r balance. (Banks in Canada only advance or allow you to draw 75%) - that's more cash for your day-to-day needs. The remaining balance is in your reserve account, which is paid back to your firm when your client pays, less the ' factor fee' -i.e. the fee the factor takes - typically in the 1-2% range.

5. The invoice value of your accounts receivable is also a factor in your pricing relative to the average size and amount of your invoices and the given period they are outstanding. Good collections = more cash /lower funding fees!

 

All finance terms can vary depending on the variety of issues we have outlined above.

 

Finally, factoring charges are expressed as a factoring fee and not confused with an interest rate - a point often misunderstood.

 

SHORT TERM ' FACTORING LOANS ' VERSUS TERM LOANS

 

Remember also that we spoke of finance factoring as being a short-term day-to-day cash flow solution. Yes, the business owner/manager could, in fact, implement a ' permanent working capital solution, 'which might be a less expensive form of financing, but that typically brings debt to a balance sheet.

But when small businesses weigh the costs of borrowing a large sum for a term of typically 5 years at a fixed rate, you will see that the actual financing costs of a permanent bank term loan are, in fact, significant.

 

Using that example, the business owner or financial manager may well find that receivable financing is, in fact, a better strategy!

 

So it is very important to analyze the actual costs and benefits around either pledging (bank) or to factor (commercial finance firm) your accounts receivable base.

 

Your company also has the option of choosing recourse factoring or non-recourse factoring financing, allowing you, in the case of the latter, to transfer bad debt credit risk to the factoring company if there is a non-payment by your client. Invoice factoring for startups is always available as well.

 

CHECK OUT CONFIDENTIAL A/R FINANCING!  THE BEST FACTORING SOLUTION?

 

Most factoring companies offer only traditional ' notification ' type factor solutions. If you use a confidential account receivable finance solution, you can also avoid any notification to your clients traditionally required by old-school finance factors who require third parties to be notified. Collecting payments remains in your control.

 

At 7 Park Avenue Financial, that is our recommended solution for a/r financing for outstanding invoices you wish to finance for short-term cash needs, solid advance rates, and no long-term contract by the way. That’s a key benefit! Talk to our team about business factoring and financing solutions. Get quick access to cash to keep your business moving forward.

 

DON'T GET CONFUSED BY THE TECHNICAL TERMS

 

At 7 Park Avenue Financial we find our competitors to do a good job of confusing clients with some of the technical terms in receivable finance - Here are some straightforward explanations of some of those terms

 

Lockbox - In certain forms  of receivable finance payments for the company's accounts receivable  are made into a secured account established via the financing company

Credit Insurance -  businesses have the option of taking credit insurance that protects them against losses to due non-payment and bad debt

Factoring Line - A factoring line is similar to a business line of credit and identifies the total amount the factoring company will advance on the business's accounts receivables

Concentration - Some factoring companies are concerned about the amount of financing made available to one single customer when in some instances a large percentage of the company's sales are to one or just a few clients

Factoring Agreement- this is a financing agreement that spells out the terms and conditions around the receivable finance facility - The agreement will identify advance rates, fees, etc,

 

"In a tight economy, factoring can provide a quick source of cash flow to help companies stay afloat." - Tony Robbins

 

CONCLUSION - MAXIMIZE YOUR BUSINESS POTENTIAL BY FACTORING RECEIVABLE FINANCING

 

Seek out and speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing engineering around cash flow and working capital and asset based loan solutions.

 

 

 

FAQ: FREQUENTLY ASKED QUESTIONS 

 

What is factoring finance? 

Factoring finance for small businesses is a  type of business financing often used by small and medium-sized businesses to meet immediate cash flow needs.  Using these financing methods a  company sells its invoices (e.g., unpaid customer bills) at a discount for an advance on future payments from those customers without waiting until they are paid in full or have been collected themselves directly -

 

The actual credit history of your firm is less important than the quality of your client base if your customer pays reasonably well to terms. Invoice financing for growth and expansion is available to any Canadian business selling on trade credit terms to other businesses. Trucking companies and staffing agencies are large users of receivable finance.

The transaction makes it easier for sellers to access funds now rather than wait months before collecting their receivables through regular channels.

 

 What is invoice factoring/debt factoring? 

 

Factoring is an alternative form of financing and is a financial transaction ideally suited to small and medium-sized businesses, especially enterprises that do not have a long and established banking record with a major lender.

Factoring is an innovative way for your business to access funds tied up in accounts receivable through cash flowing your sales immediately. You generate revenues without any obligation to do so if funds are not needed for a specific invoice

 

Why choose  7 Park Avenue Financial for your factoring needs?

 

7 Park Avenue Financial offers customized, flexible financing options and is an expert in working capital solutions. We will ensure you have a solid understanding of all available funding for your business and growth strategy priorities without hidden fees, etc. It's a true form of asset-based lending that strengthens your balance sheet, and your business incurs no debt.

Talk to the 7 Park Avenue Financial team about what your cash flow needs are directly related to day-to-day changes in cash needs and when cash reserves are low in your business cycle as specific industries have different funding needs. Find out how a factor provides the cash you need today

 

Who are the parties directly involved in a factoring transaction?

The three parties in a transaction involving invoice financing and factoring services via factor loans are the company selling its accounts receivables, the factor that purchases those receivables and finally, your customer. 

 

 What are the benefits of factoring receivable financing? 

 

The benefits of factoring receivables include the ability of a business to improve cash flow and access funding immediately upon sales made to clients - This financing process improves cash flow and makes cash management more predictable. Companies using traditional notification factoring can utilize the credit risk services of a factoring company.

When a business uses receivable finance solutions such as debt factoring no debt comes on the balance sheet - the business is simply monetizing assets. Businesses that are unable to access traditional financing from banks and other financial institutions still qualify for factoring solutions. Using a/r finance solutions generates cash available to reinvest in the business and take advantage of prompt payment discounts from suppliers

 

 

 What is the difference between recourse and non-recourse factoring? 

 

The difference in recourse and non-recourse factoring facilities revolves around the amount of risk a company wishes to take in accounts receivable as it relates to bad debt and non-payment. Companies using recourse fatoring assume full credit risk for products and services they sell t clients - Non-recoures finance facilities transfer bad debt and collection non-pyament risk to the factoring company - This additional risk is priced into the factoring fee and is more expensive given the higher risk assumed by the finance company. 

 

Businesses can also choose to offset credit risk by insuring accounts receivable via trade credit insurance.

  

 What are the qualifications for factoring in receivable financing?  

 

The qualification for a business to be successful in obtaining a factoring facility revolve around key actors such as the general overall creditworthiness of the client's accounts receivable. The age of invoices is also important, as invoices over 90 days old are not generally considered financeable . Factoring companies also look at overall facility size, invoice volumes and what industry the company is in.

Many firms such as freight companies and staffing and placement agencies are good client prospects for a factoring company, but any company selling on a b2b basis can access factoring solutions, While the client a/r quality for unpaid invoices is the main focus a company must also be generally financially stable and not in a downward financial spiral, Companies should be able to demonstrate they can provide proper financial statements and a generally reasonable debt to equity ration, and accounts receivable agings with accurate invoice documentation for goods and services delivered.

 

 What is the cost of factoring in receivable finance?  

The cost of factoring in receivable finance for financing fees is determined by the accounts receivable financing business/company and is based on a number of factors including the overall size of average invoices and the creditworthiness within the accounts receivables of the business as it relates to how fast customers pay. Companies choosing non-recourse solutions that transfer bad debt risk to the finance company will pay more for that service compared to a traditional business loan bank arrangement, - Miscellaneous fees also must be taken into consideration and include a setup fee, ppsa search fee, etc,  - A/R financing via factoring and accounts receivable firms is a more expensive solution than bank financing and typical rates from an accounts receivable financing company in Canada range from 8% per annum to .75% per month.
 

 

Selective receivables financing is also available for companies wishing to fund a specific or small amount of invoices - this is also known as ' spot factoring ' in the context of receivables financing.

 

 

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

SRED Credit Loan Solutions For Financing SR ED Tax Credits | 7 Park Avenue Financial

 

Tweet

YOUR COMPANY IS LOOKING FOR  SR&ED CREDITS FINANCING!

FINANCING YOUR SRED TAX CREDIT / R&D TAX  SR ED CLAIMS!

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

Financing & Cash flow are the biggest issues facing businesses today.

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

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

EMAIL - sprokop@7parkavenuefinancial.com

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

 

 

SR&ED TAX CREDIT LOANS FOR RESEARCH AND DEVELOPMENT TAX INCENTIVES IN CANADA

 

 

Financing SR ED (SR&ED) tax credits is the finality around filing your  SRED claim in Canada. So the question that remains to be asked is, ' Does it pay to finance your refundable credit under Canada's most popular research refund program? Let's dig in on the advantages of sr&ed financing for your business.

 

 

 

DOES IT SEEM THAT EVERYONE IS ALWAYS TALKING ABOUT SRED? WHAT ARE SR&ED CREDITS  

 

In recent years, the program has been a moving target by the government, whose goal was to maximize and simplify the program for Canadian businesses to achieve the benefits for which the program was originally derived.

 

HERE IS SOME HISTORY AROUND SRED

 

To understand the benefits of financing your SR&ED credit, it's necessary to step back and understand the origins and intent of the program.    In reality, the program has been around for almost 30 years now. While the program's name is somewhat daunting (‘SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT”), business owners and managers tend to call the program  " S R E D '!

By the way, sr&ed for non-ccpc ( non-canadian controlled private corporations ) is also available but for publicly listed firms the credits are not in the form of a cash refund.

 

 

 IS YOUR CLAIM ELIGIBLE 

 

The actual preparation of your claim is very much tied to success in financing your claim. We would maintain it's much easier to finance your refund than prepare it!  It is up to the owner/manager to ensure that the refund claim they prepare is ' eligible ' under Canada Revenue Agency (‘CRA’) guidelines. The premise of the program is that your company's r&d must be focused on solving scientific or technological uncertainty as a goal while having furthered technical knowledge. Areas such as  ' market research ' are not applicable to the program.

 

 THE ROLE OF INDUSTRY SR&ED FUNDING CONSULTANTS 

 

These days probably 99% of all claims are prepared by the folks known as 'SRED consultants ' - these people are typically steeped in either industry or actual program experience, many of whom have worked for CRA in the past and understand eligibility criteria. Their role is to validate that your processes and work result in  'scientific or technological advancement ' around sr&ed qualifications. A part of the ' turmoil ' in recent times, some of which has led to financing confusion of claims, relates to how these consultants who prepare claims are compensated. That compensation relates to the contingency fees that have consultants prepare those claims at their own cost, risk and expense.

 

SR&ED CONSULTANTS TEND TO WORK ON CONTINGENCY

 

That compensation was one of the main reasons the Government undertook a few years ago to revamp the program fairly. Some previously eligible expenses were cut back; businesses must now identify who is preparing their claim and how they are paid, etc. Additionally, some key aspects of the program - i.e. the ability to claim capital equipment purchases used in the research were eliminated.

 

It's pretty clear now that to be successful in financing SR ED tax credits and obtaining SRED Loans for research and development credit loans that the quality of your claim is key. Business owners and financial managers using qualified and credible/experienced consultants will continue to benefit from the program given the technical knowledge of the consultants.

 

 

HOW DO SR&ED LOANS WORK - A SRED LOAN EXAMPLE

 

That brings us to our key question - recognizing the benefits of the finance of an SR ED refund. That one benefit - Accelerated cash flow. SR&ED tax credits around your claim are typically financed at  75% '  loan to value '- meaning simply that, for example, a 400k refund would provide a loan in the 300k range

 

Loans must, of course, be repaid! But SR&ED financing is done via a bridge loan with no payments required for the loans' duration - another key benefit. When your claim is approved and funded by the govt, you receive the 30% remaining balance immediately, less financing costs.

 

  

IS DEBT FINANCING BETTER THAN EQUITY FINANCING? WHY USE SHORT-TERM BRIDGE LOAN  DEBT FINANCING STRATEGIES SUCH AS SR&ED LOANS?  

 

 

Every company's circumstances are different  - while debt financing requires that funding be repaid with interest equity financing demands that sellers give up some ownership in the business in exchange for business capital. Debt financing strategies such as sred loans provide tax benefits and do not require giving up any ownership - Sred loans are non-dilutive financing

 

 

  

SR&ED  BRIDGE LOANS CAN BE CREATIVELY TAILORED TO YOUR BUSINESS NEEDS  

 

While the government was busy re-doing the program a bit, the SR ED financier has also been working - to add even more creative features to the cash flowing of your claim - these include facilities such as a SRED credit line and even the financing of the next years claim around those r&d tax credits .. Today!  Talk to 7 Park Avenue Financial about financing r&d accruals before they have been filed - it's a  ' yes we can ' strategy.

 

 

CONCLUSION - A CASH FLOW  FINANCING STRATEGY VIA SRED LOANS

 

SR&ED Tax credit financing for small businesses is a valuable business financing tool for companies of all sizes - from startups to large corporations. Maximize your sr&ed tax credits with a financing solution that delivers on cash flow via financial options for your earned investment tax credits

 

Want to know more about  sr&ed  loan solutions and funding your research and development sr ed tax credit?

 

So, if you want to be like or business owner who has found it does pay to finance your SR&ED refundable tax credit seek out and speak to  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your  SRED credit loan needs with a viewpoint to maximizing  sr&ed credits for cash flow and r&d expense recovery.

 

 

  

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK  MORE INFORMATION  

 

What is SRED Financing? How Does SR&ED Financing Work?

 

SR&ED  tax incentives encourage Canadian businesses to invest in r&d. Investment tax credit rates for Canadian-controlled private companies can claim a large part of salaries and wages, as well as additional amounts for subcontractor payment and materials - Public companies receive considerably less but they are eligible for SR&ED when they conduct research under the program guidelines for eligible expenditures.  This tax incentive program sponsored by Canada Revenue Agency encourages r&d innovation in Canadian business. CRA reviews sr ed project claims for the quality of technical descriptions in the amounts claimed for expenses.

Many earlier-stage firms use sr&ed capital as a major source of funding for general company purposes as well as furthering r&d initiatives as it allows for a reduction in total development costs of the business as it performs research and development.  Claims can be financed via third-party commercial financing companies that specialize in the financing of refundable sr ed tax credits via  Sred financing Canada.

A  'sr&ed grant ' is not really a grant per se,  the sr ed program is a refundable tax credit around the sr ed claim.

 

 

WHAT IS SR&ED  AND WHAT DOES SR&ED STAND FOR?

 

The sr&ed tax credit is a tax incentive program in Canada that provides tax credits to businesses that focus on research and development activities around technical challenges they face in many areas, including those such as software development - A large portion of r&d expenses can be claimed as a tax credit. ' SR&ED" stands for ' Scientific Research and Experimental Development ". It's a Canadian tax incentive program that provides tax credits to companies that engage in research and development activities. The program encourages and supports innovation by allowing eligible companies to claim a portion of their R&D expenses as a tax credit, reducing their tax liability and increasing their cash flow.

 

WHEN IS THE SR&ED FILING DEADLINE

The sr&ed filing deadline for CRA is within 18 months of a business filing their fiscal year-end for the period in which research and development took place.  Claimants are urged to take advantage of timely filings to reduce the time it takes to get a refund or arrange to finance their claims.

 

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

Best Sr&ed Loan Tax Credit Financing Sred Finance Solutions !

Tweet

YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

Alarm Clock Ringing On Your SR&ED Claim?  It’s Time To Cash Flow It!

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

Financing & Cash flow are the  biggest issues facing businesses today

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

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

 

7 Park Avenue FinancIal
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

 

 

 

Maximize Your Return ON SR&ED Tax Credit Financing 

 

 

 ' SRED '  Financing in Canada is all about using tax credit financing for the right reasons. Maximizing Canada's  r&d program via a SR ED loan is all about reaping the program's final benefit -  ' Cash '  Let's dig in!

 

It's important to view financing your SR&ED credit in the sr ed claim process as an option that's your choice as a business owner/financial manager. It's simply one more way to assist in both the R&D portion of your business as well as your business's general financial health. Simply speaking, being eligible for the program makes you eligible for the financing.

 

 

  

WHAT IS SR&ED / ‘SRED ‘ FINANCING

   

 

SR&ED Financing is your firm's ability to take advantage of the  SR&ED (Scientific Research and Experimental Development) program to support research in Canada. This  Canadian federal tax incentive program provides refundable tax credits to Canadian companies, with the program being administered by  Canada Revenue Agency (  CRA) -

 

The program allows  Canadian businesses to innovate and focus on business growth with the help of financial support for businesses that focus on R&D .  The program requires that basic research done be in the areas of applied research and experimental development in any of Canada's industries - Common industries utilizing e program include technology, natural sciences, and engineering.

 

 

  

UNCOVER THE UNTAPPED POTENTIAL OF  SR&ED TAX CREDIT FINANCING FOR INNOVATION  

 

Sr&ed  financing for small businesses includes larger corporations as well, and even non-profit organizations can participate and utilize these tax credits and cash refunds for their sr ed project that allows them to fund their businesses and pursue additional r&d activity.   SR&ED financing solutions are a valuable alternative to companies having to consider raising more business capital because it is non-dilutive and allows owners to maintain current ownership. Many early-stage and pre-revenue companies use Sred financing to help increase current ownership valuation.

 

 

Sred is termed non-dilutive funding as the financing of your credits are short-term financing that does not dilute the ownership of your business. Financing is in the form of a bridge loan and does not require owners to give up additional ownership of the company at a critical stage when the full business potential has not been realized and the business owner wants to retain ownership of the company.

 

 

 

TAKING ADVANTAGE OF THE SR&ED TAX CREDIT HELPS REDUCE THE CASH BURN RATE  AND OPTIMIZE CASH FLOW

 

Your company cash burn rate is the amount of cash your firm uses as well as the speed in which that cash is consumed - A large number of firms utilizing the SR&ED tax credit program spend significant dollars over a long period of time before positive cash flow and strong revenue are achieved. That negative cash flow is a concern for all business owners and is even more of a challenge when cash is limited and they can't access traditional capital. The ability of a company to achieve a trend to more positive cash flow is a key benefit of companies that utilize SR&ED loan financing! Your business model continues sustainable!

 

 

HOW DO SR&ED TAX CREDITS WORK  - HOW SRED CREDITS CAN HELP FINANCE YOUR BUSINESS

The SR&ED program is formally called the Scientific Research and Experimental Development program and it provides tax incentives to Canadian firms doing r&d. Businesses claim credits for a portion of the qualified expenditures related to the r&d work they faced in technical challenges.



The tax credits are for items such as salaries/ wages and items such as materials of payments made to subcontractors under their research work as long as those contractors are at arm's length of the business. Provinces and the federal government combine these refundable tax credits which can vary based on the provincial portion of the claim.



Companies can claim Sred credits by filing at ear end under form T6661 from CRA -  That form is filed with the firm's annual financial statements. The company must demonstrate the r&d done is technological in nature and is focused on the advancement of knowledge and capabilities around products and processes.  Claims are accompanied by detailed reports about expenses and work done.


 

 
WHAT ARE SR&ED CONSULTANTS  &  WHAT ARE SRED CONSULTANTS? 

 

SR&ED Consultants help businesses to successfully navigate the government Sr&ed program to allow a business to successfully claim investment tax credits for r&d.  Do you need to use a sr&ed consultant?  These consultants have the technical knowledge and help identify projects that are eligible for the sred program as well as actually prepare and file sr&ed claims on behalf of the company.

 

In many cases, they assist clients with any potential audit of the claim as well as provide ideas and advise on how to maximize the incentive provided under the program for work in scientific and technological uncertainty and in demonstrating how the company furthered technical knowledge. They will help demonstrate your hypothesis using consistent scientific methods including if your effort did involve formulating testing and modifying that hypothesis and if the adopted procedure was consistent.

 

Was a hypothesis formulated specifically to reduce or eliminate uncertainty? Was the procedure used consistent with the scientific method, including formulating, testing, and modifying the hypothesis?

 

Refundable SR&ED credits are of course for privately owned companies in Canada. They, along with their counterpart, film credits are administered by CRA - Canada Revenue Agency.

 

Financing your SRED claim is all about cash flowing your refund - many businesses that utilize the program are at various stages of what we can call their ' life cycle '. In fact, many firms that choose to monetize their claim are in a start-up or very early stages of development.  It's at these times that cash flow and working capital are most important.

 

What then are the typical uses of cash when financing your R&D claim for Canadian controlled private corporations? Typically they include:

 

Funding additional research - many companies have an ongoing R&D program annually.

 

Utilizing the funding to move their R&D into new markets - aka Revenues!

 

General working capital needs - payroll, supplier commitments

 

Financing growth via new orders/contracts, etc

 

If you have those needs that is when you should use sred financing!

 

Some clients we meet often speak of the additional time commitment required to prepare the claim. Naturally, a lot of that time commitment can be eliminated by both having documentation in place, and even more importantly ' tying your horse ' to the right SR&ED consultant - it's these folks that prepare the claims for this industry.  A good consultant will maximize your claim.

 

Utilizing the right consultant adds legitimacy to your claim - and categorically speeds up the process both in writing your claim and ensuring it moves through the govt processes at  'warp speed.' Businesses will appreciate that not all govt programs move at warp speed!!

 

By the way, if you're looking for proof of the benefits of the program you need only understand that thousands of firms just like yours (including your competitors) reap almost 3 Billion dollars a year in refunds for their work in overcoming technical challenges in their industry.

 

A  SR ED loan is all about needing, and getting your money now. It's your chance to beat the ' waiting game ' as refunds can take anywhere from  3-12 months depending on the complexity, size and filing time of your refund claim. In fact, the entire finance process can take only a couple of weeks to receive funding when you're working with the right firm

 

 

EXAMPLE OF A SRED LOAN FINANCING  

 

SRED Finance typically monetizes 75% of your total claim. For example, a 400k claim will net you 300 k in loan proceeds. That's how much you can borrow against SR&ED claims when you qualify for sr&ed financing.

 

Really the simple way to look at it is to view the SR ED claim tax refund as an account receivable of your business - and you're simply borrowing against that asset. By the way, the financing costs of an SR&ED loan are built into one final balloon payment at the end of the loan - this is a bridge loan with no monthly payments.Your loan is paid back when your company received the refund.

 

KEY POINT -   Accrued sr ed claims can be financed before you file your year-end claim - Talk about accelerating cash flow financing!  Many firms we work with choose to take advantage of ongoing regular financing as they spend on r&d in advance of filing - an example might be every quarter.

 

 

How long does it take to process a sr&ed financing claim - Spoiler alert -  a couple of weeks!

 

KEY TAKEAWAY - CLAIMING AND FINANCING YOUR SR&ED TAX CREDIT

 

Businesses in Canada can file and claim for the  Investment Tax Credit (ITC)  for r&d they are performing under Canada's Scientific Research and Experimental Development (SR&ED) program.

 

Companies  claiming the Sred credit must identify eligible activities and expenditures and be able to provide a detailed record of work and expenses via the approval process

 

Claims are filed on Revenue Canada's T6661 form which claims the refundable credit - Claims must include documentation that supports the claim such as receipts  for material costs  and records of payroll to employees or outside third-party contractors

 

Companies claiming SR&ED should understand claims may be audited and verified to determine claim eligibility around work and records

 

 

 

CONCLUSION  - GET THE MONEY YOU DESERVE BY TAKING ADVANTAGE OF SR&ED 

 

SR&ED Tax Credit Financing for small businesses is a great tool for financing research and development. Let 7 Park Avenue Financial help you in navigating the sr&ed tax credit finance process. Sred funding is a great tool to help fund startups. Government tax credit financing solutions for businesses allow you to monetize your refundable tax credit and maintain good cash management. No minimum filing history is required - first-time applicants are welcome!

 

If you're looking to ' think differently ' on your SR&ED refund and want to consider the benefits of financing that claim today speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow needs. We'll show you how Sred finance solutions are achieved in a fast, flexible, and low cost manner!

 

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

 

How much Can You Get From Sred?

The actual amount a company can claim under the SR&ED program will vary depending on each

business's project and the refundable tax credit is a combination of federal and provincial tax
incentives around the eligible expenses under the program. Depending on the province where the r&d is done different credits are applied - any investment tax credit under the program can be claimed by a private Canadian-controlled corporation, known as a  CCPC.

 
Is Sred a government grant?

 
The Scientific Research and Experimental Development (SR&ED) program is not grant per se, it is a tax incentive via an investment tax credit - The program allows Canadian businesses to invest in R&D in every aspect of the Canadian economy - small businesses and even large corporations can access the program to get financial assistance to conduct research and development in Canada. The key benefit of the program is it allows businesses to claim a refund for a portion of r&d that has been spent under eligible guidelines.

  

IS  SRED AN INVESTMENT TAX CREDIT 

The SR&ED) program is an investment tax credit and allows companies in every part of the Canadian economy to conduct r&d and claim tax credits for a large portion of expenses related to the research and development they conduct.

 

This incentive allows a company to reduce taxes and recoup a large portion of items such as wages and salaries and materials and other expenses related to the research. The percentage claim varies but can typically be in the 35% range. Software development is a large part of Sr ed claims.

 

Qualifying expenditures also include payments to third-party contractors and overhead costs related to the research in scientific or technological advancement. Companies are required to maintain complete details around the r&d, utilizing manuals as an example. Typically sr&ed consultants that the company engages to prepare a claim will ensure expenses incurred that are not eligible will not be submitted with the claim.

 

 What is the digital media tax credit?

Canadian game developers are eligible for the digital media tax credit in Canada. The program provides tax incentives to businesses developing and producing digital media - examples include video games, mobile applications and animation. The government's goal is to encourage the development of innovation in entertainment while allowing businesses to offset costs in the development of these products - Similar to SR&ED the Canada Revenue Agency administers these tax credits.

 

What is equity financing? 

 

Equity financing allows a company to raise business capital via the issuance of shares of ownership in the business. Shareholders receiving ownership participate in the success of the company which is proportional to their share of ownership.

 

Financing equity can be achieved through a variety of sources including initial public offerings, known as IPO's. New equity financing dilutes the ownership of existing shareholders of the business and allows new shareholders to have a say in the business decisions and direction of the company. SR ED funding is an example of non-dilutive financing and monetizing federal credit.

What are Government Funded Programs

 

Government-funded programs in Canada include the Canada Small  Business Financing Program which helps businesses access term loans and working capital and asset financing.  This program, along with the SR&ED program are the two most popular government-funded programs for business.

What technology grants are available?       

 

Numerous technology grants are available to Canadian businesses, including the Scientific Research and Experimental Development (SR&ED) Tax Credit -

The IRAP program, formally known as the Industrial Research Assistance Program is another popular program used by businesses to develop and commercialize the technology in areas such as clean tech. The IRAP program is a good example of non-dilutive financing as grants are non-repayable in a firm's efforts to develop and commercialize the technology.

 

The NSERC (Natural Sciences and Engineering Research Council)  program funds research in science and engineering

 

 

 What is alternative lending? 

 

Alternative lending is a form of financing that is an alternative to traditional banking. Different type of financing is available to Canadian businesses, including factoring, short-term working capital loans, asset-based lending solutions, and financing refundable tax credits.

Alternative financing solutions are a viable option for many businesses including smaller firms and startup businesses. Borrowers must consider the terms and requirements for different alternative finance solutions.

 

 How much money is in the ERC program 

 

The ERC program is the acronym for ' EXCELLENT RESEARCH CANADA ' - The program provides early funding to early career researchers from provincial governments in Canada. Applicants must submit research proposals to secure funding and in order to determine if eligibility criteria are met under the program.
 

 

 

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