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Your Complete Guide To SR&ED Financing Loans & Refundable Tax Credit Financing
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Information on: sred financing bridge loan tax credit claim Canada
SRED aka 'SR&ED'. The dust seems to have finally settled on the SRED Tax credit claim program in Canada. To put it mildly, it was a ‘winter of discontent ‘by all parties.
THE BEST REASON FOR FINANCING YOUR SR&ED CLAIM? CASH FLOW!
That means a couple of things, of course, one of which is that it's ( more or less ) back to business as usual for the thousands of Canadian firms who utilize the SR&ED refundable tax credit program; it also means that if you haven’t previously then you can also finance that claim. If only for one reason - immediate cash flow via r&d funding!
THE SRED PROGRAM IS BACK ON TRACK!
SR&ED financing, and yes, even the SRED program itself seemed to quietly slow down last year as the federal government took a hard look at the program. That same program was a critical part of the financing of thousands of firms in Canada that strive for innovation in their products and service and utilize the sr&ed claim process.
And that’s everything, by the way, from start to up major established corporations. In fact, only 20% of the users of the program were larger corporations, so we can only imagine the rumblings in ' SR&ED land ' for the 80% of firms who find themselves in either start-up or early revenue mode, or perhaps they have just been in business a few years and are starting to ' ramp up ' in revenues.
GOVERNMENT AND SR&ED CONSULTANTS WORKING TOGETHER - FINALLY!
While confusion seemed to reign supreme in 'SRED' the reality is that the program took a hard hit in popularity as everyone with a vested interest made a hard stand on where they stood on the program. That included the government, of course, the SR&ED consultants that actually prepare you claim (most firms don't prepare their own claims “and industry economists and pundits who questioned the payback on the governments billions of dollars spent on these non-repayable r&d tax credits under the auspices of Canada Revenue Agency.
And for the firms who in fact finance their claims for cash flow and working capital via a SR ED tax credit financing bridge loan for their sred claim in Canada that cash looked like it might be going away.
Nothing likes a happy ending, and there seems to be a general status quo on the r&d program, although some changes were made to areas such as the ' CAPEX ' portion of the program.
All's well that ends well, we guess, so it’s back to ensuring that if you wish to finance your claim and accelerate working capital benefits that choice is all yours.
HOW DOES THE SR&ED BRIDGE LOAN WORK - HOW MUCH FUNDING CAN YOU RECEIVE?
Claims are generally financed at 70% loan to value, and a properly structured SRED financing typically takes the form of a bridge loan collateralized by your claim. No payments are made for the duration of the loan, and your firm receives the balance of your claim, less financing costs once the good folks in Ottawa and your respective province approve and fund your claim per their guidelines.
CONCLUSION - SR&ED FUNDING
For a complete sred guide, seek out and speak to a trusted, credible and experienced Canadian business financing advisor on a bridge loan for your SR&ED r&d tax credit and research and development grants (Canada)
P.S. Claims can also be financed today for your next year's spend. Don't forget to look into that benefit also as another win in your sr&ed guide strategy as a part of funding and sr&ed eligibility.
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Stan Prokop 7 Park Avenue Financial/Copyright/2020
