Maximize Your R&D : SR ED Financing , Sred Loans And Refundable Tax Credit Loan Solutions

YOUR COMPANY IS LOOKING FOR SR&ED FINANCING AND HOW TO MONETIZE YOUR RESEARCH TAX CREDIT FOR CASH FLOW NOW!

The Power of SR&ED: Unleash Your Company's Innovation with Smart Financing

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Innovation Unlocked: Mastering SR&ED Financing and SR&ED Loans for Business Growth

SR ED financing is the most efficient way to accelerate and monetize your investment in R&D capital via the federal tax incentive program.

An SR&ED tax credit loan allows you to take maximum advantage of this most famous and used government refundable tax credit. Why does a SR ED loan make sense for your SR ED Investment tax credit refund then? Let's dig in.

INTRODUCTION - Unlock Your Business R&D Potential: SR&ED Financing and Loans Explained

Canadian businesses that invest in r&d know all too well that cash flow management is an important part of their business - the amount of money required to invest in research and development is a critical aspect of the competitive nature of their business.

SR&ED Financing and Loans in Canada Scientific Research and Experimental Development (SR&ED) program is an investment tax credit incentive offered by the Canadian government that encourages Canadian businesses to engage in r&d.

If there is a drawback to the program it's simply that waiting for the Canada Revenue Agency / CRA refund can take time, in most cases many months. That can cause a cash flow crunch.

Financing your sr&e claim is a non-dilutive form of financing that is cost-competitive and allows your company to access your sr ed refund immediately - you can then focus on growing the business - Talk to 7 Park Avenue Financial about how you can achieve the best financing rates in SR&ED in Canada.

Of course, the actual 'formal' name for the program is the Scientific Research & Experimental Development refundable tax credit. By the way, we've never been one for name-calling, so whether you call it 'sred' 'shred' or anything else for that matter, only the importance of the program is key to us!

WHAT IS SR&ED FINANCING?

SR&ED financing is simply a business financing solution that lets our company access your sr&ed tax credits as soon as you file your claim,, OR.. earlier if you wish. Your business can finance a sr&ed claim when you file your claim with CRA along with your annual tax filing - or at your option you can fund claims as you accrue and document sr&ed r&d efforts.

Financing your claim allows you to receive funds to reinvest in your business, focusing on further growth and of course optimizing cash flow. SRED loans are short-term bridge loans, they do not bring long-term debt to the balance sheet and as we noted no dilution in owner equity occurs. At the end of the day the best example to explain it is that you are monetizing a government receivable, the refundable tax credit under the sred program.

Canadian business owners and financial managers in a variety of industries have the ability to of course file SRED claims, and at the same time, if they choose, they can finance their claim and generate immediate cash flow and working capital from this valuable government grant program. Again, to be clear, those funds are non-repayable - and no payments are made for the duration of the sred bridge loan.

HOW DOES A FIRM QUALIFY FOR SR&ED FINANCING?

SR&ED claims can typically be financed for any claim over 100k - small transactions can be considered if it makes sense for all parties. Many companies utilize sr&ed consultants to prepare claims, and this always greatly enhances the claim credibility, as well as the understanding that your company has maximized the total amount available under the program under the guidance of your experienced SR&ED consultant.

Although claims prepared by owners and management can be considered for financing, the reality is that if you are applying for SR&ED financing it makes a lot more sense to have your claim prepared by one of two parties, either your accountant or what is known as an 'SRED Consultant'.

Safe to say that the only thing that prevents you from financing a claim is if you do not file a claim, so understanding the basics around a claim, as well as the characteristics that a claim needs to be financed is valuable information for Canadian business owners and financial managers. The government refunds billions of dollars every year under this program, and many owners/managers choose to finance their claims.

WHEN SHOULD A BUSINESS USE SR&ED FINANCING / SRED TAX CREDIT LOAN SOLUTIONS?

SR&ED financing is utilized by firms that have a constant need for cash that allows them to continue to grow r&d efforts while maximizing the valuation of their firm via increased sales. Given the long lead time in product development in many industries, additional cash received from a sred loan becomes even more valuable.

Claims are filed and substantiated under the normal program guidelines. One of the misconceptions around the program is that your R&D has to be successful in nature, and that's actually NOT correct, you just have to be in a position to document what you did and how you did or tried it.

Claims have never been easier to file, as the government has very much streamlined the program - but total care is needed to adhere to current filing guidelines - that's where those SRED consultants come in. Software development companies/technology companies are big users of the SR&ED tax refund to access capital via sr ed refunds.

With the information we are sharing here, we want to be able to ensure you understand how the quality and size of your claim affect its overall financeability.

HOW ARE SR&ED LOANS REPAID?

The actual claim preparation has an effect on your claims financeability - as your goal, should you need the cash flow and working capital, is to monetize that claim into a short-term SRED loan - with the SRED itself being the collateral for the loan.

SR&ED loans are paid via the proceeds of your refundable tax credit refund itself. Repayment options are flexible and funds can be disbursed according to company cash flow needs -

HOW MUCH CAN MY FIRM GET UNDER A SRED LOAN?

When you choose to finance a claim the general advance is made at 75% - so let's do some rough arithmetic around a sample claim and its financing.

We're told that in business timing is everything - As a business owner you can wait anywhere from 1-12 months to get your cheque in from the government, which is reimbursed at the federal and provincial levels. Or, if you choose to utilize those funds now under an SRED loan, you can get an immediate loan of 75% of that claim.

What do clients do with their SRED Loan proceeds? Funds are typically used for working capital purposes, equipment purchases, or even more ongoing SRED activity! Looking for more good news? No payments are made on your SRED loan; financing costs are calculated at the back end of the claim when you receive your funds, including the previously mentioned 25% that was held back on the financing.

Furthermore, if you have successfully financed SRED claims in the past, you could very well be eligible for SRED accrual financing - which is a special program that reimburses you for your SRED expenses as you go along during the year.

DO BANKS FINANCE SR&ED TAX CREDITS ? ( SPOILER ALERT - NO!)

Traditional financing institutions such as banks and business credit unions are poorly equipped to understand and finance SRED tax credits. As a result, we recommend you work with a trusted and credible business financing advisor to ensure your claim can be financed quickly and with a modest amount of preparation.

HOW DOES A COMPANY APPLY FOR SR&ED FINANCING

The application process for SRED loans could not be easier. Companies supply basic company information about the business such as financial statements, as well as a copy of the sr&ed claim itself, or a copy of accrued work to date if financing is required before the annual filing of your claim. Claims are reviewed around the basics of CRA guidelines around proof of technical advancement, technical uncertainty, and technical content.

Your company can choose to receive a lump sum loan maximum amount, or, if desired you can schedule ongoing disbursements based on the timing of cash management needs - For example, a company might choose financial support via quarterly disbursements around eligible expenditures.

CONCLUSION - FINANCING REFUNDABLE TAX CREDITS

SRED financing is a solid cash flow financing option for any company investing in r&d and needed working capital to support day-to-day operations and ongoing research and development - It is a solid form os short-term debt financing that maintains owner equity in the business when the business is early stage or growing and is a cost-effective business finance solution compared to equity financing, venture capital, long term debt, and short term financings that come with high-interest rates.

The bottom line on SRED Loans? If you in fact utilize the SR&ED program consider cash-flowing your claim to accelerate the monetization of your claim.

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in financing your R&D capital refund.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

Leveraging SR ED Financing , SRED Loans And Refundable Tax Credit Loan Opportunities