YOUR COMPANY IS LOOKING FOR R&D TAX CREDIT FINANCING!
FUNDING SR&ED - CANADA'S SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT PROGRAM - AKA ' SRED '!
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
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Oakville, Ontario
L6J 7J8
SRED (SR&ED) tax credit loan finance brings 'closure' (and a positive one at that) to the Canadian government's SR ED refundable tax credit program. When it comes to financing your claim, the good news is that a not-so-deep 'dive' is required into what some mistakenly think is government bureaucracy. Let's dig in.
DO ANY CHANGES TO THE SR&ED PROGRAM AFFECT THE FINANCING OF YOUR CLAIM?
The numerous changes in Canada's Canadian SR&ED R&D Sred claims program might leave some owners wondering: ' Can I still finance our claim? ‘The answer is an astounding ' Yes you can' as not only have R&D tax credit financing stayed the same outside the program changes ... it has, in fact, some enhanced financing mechanisms.
THE SR&ED CONSULTANT ROLE
Business owners and financial managers that take advantage of the program (thousands of firms file and receive Billions in cheque refunds) still tend to take advantage of the fairly well-known model of 'contingency fees,' which eliminates pretty well all the risk and time in preparing their claim. While some use the term ' sred grants ' the program is in fact a refundable tax credit via a formula for the sr&ed tax credit calculation - i.e. your sr&ed eligibility.
While the government chose not to ' regulate ' fees charged by SR&ED consultants under shred programs, we can only assume the new disclosure rules made the cost of preparing claims more competitive, thus lower! Full disclosure seems always to keep business people more honest and open!
The whole issue of SR&ED consultants and who prepares your claim, as well as its financeability, is worth tabling here. While any SR ED credit can be financed over time, reputable consultants have provided a stronger comfort level for any claim financed. There is some discussion in the industry by the way that claims filed without a consultant preparation are, in fact, more subject to audits -therefore delays in approval and refund.
NEW FIRST TIME CLAIMS CAN BE FINANCED
But be clear that the smaller number of firms that complete their own claims can still finance the credit - and it helps more if they have a history of making their own claims. However, the bottom line is that ANY SRED tax credit is financeable before filing, filing, and filing. In some cases, any opinion letter might be required, but that is not the norm and rarer.
4 KEY SRED LOAN BASICS!
Back to the financing of your claim. Looking for some real ' bottom line ' on a SR&ED Loan for Canadian businesses? Here are the facts:
- Any firm, at any stage, pre-revenue or otherwise, can finance their SR&ED claim
- A potential ' audit ' of your rd tax claim does not really affect the financing of your sr ed refund
- While the federal/provincial governments have scaled back some of the refund percentages around refundable tax credits, it should be noted that has nothing to do with financing your claim or the amount you will receive under the tax credit loan
- Any claim to Canada Revenue Agency CRA in any amount can be financed - At a certain point, claims under the 50-60k range don't have the right economics for financing but claims well up to 1,000,000.00$ and over can be financed.
THE BENEFITS OF A SR&ED BRIDGE LOAN
Cash flow is a required ' tool ' for any business - financing your SR ED tax credit allows you to monetize your claim. Claims are financed at 70% loan to value and are set up as a bridge loan with no payments during the loan term. A claim can be financed before filing, and next year's claim work can also be preliminarily financed.
CONCLUSION
Sred financing is a solid way to help fund a majority of your research and development. If you're looking for 'closure' and wish to avoid any ' deep dive ' into an area you might not be comfortable in ( SR&ED Loans / SR ED PROGRAM ), consider seeking out and speaking to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with tax credits financing success.
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Stan Prokop
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