YOU’RE LOOKING FOR TAX CREDIT FINANCING IN CANADA!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
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 - sprokop@7parkavenuefinancial.com
THE TWO BEST TAX CREDIT PROGRAMS IN CANADA
Two. Count 'em. Two, that’s essentially the two types of tax credit that can be financed in Canada, We're talking about SRED, of course, and hopefully, we can be forgiven for lumping together film, television, and animation /transmedia credits into one category.
Let's do a quick recap of these two tax credits, with the focus on the ' benefits ‘and ' how-to ' relative to the finance of these two non-repayable credit government programs.
THE SR&ED REFUNDABLE TAX CREDIT PROGRAM
SRED first. We guess if Shakespeare were around today he might well analogize his play ' MUCH ADO ABOUT NOTHING ' as his succinct summary of all the brouhaha around the federal SR&ED program. For quite a while there had been rumours, discussion, and innuendo (it almost sounds like a plot or storyline!) around changes to the program.
The SR&ED, aka ' SRED' program, is, of course, the government's program to support research and development in Canada. For public companies that translate into some major tax deduction benefits; but for the private companies in Canada, we're talking about Billions ... That's billions with a B ... in non-repayable funds that are used by thousands of firms to grow and operate their businesses.
The heart of the matter seemed to be the actual consultants themselves, and when the dust settled it's these actual consultants and firms that prepare the claims that one could say were somewhat uncomfortably under the microscope.
That's an even more relative comment when it comes to financing you SRED claim, because typical SR&ED loans, when financed properly, focus a fair bit on the quality of the preparation of the claim, and the credentials of the consultant or firm that did the claim in conjunction with your year-end tax filing.
HOW DO SR&ED BRIDGE LOANS WORK?
SRED Bridge loans are a solid way for firms to immediately recapture valuable cash flow and working capital. Financing is typically structured as a bridge loan, with no payments being made until the claim is verified and or audited by the government folks. SRED finance is typically structured on a 70% loan to value basis, and you receive the other 30% of your claim when the claim is approved and monetized; less of course financing costs.
Whether your firm is an established SME firm, or even a start-up the cash flow and working capital you can generate from your claim is, shall we say valuable!
FILM TAX CREDIT FINANCING
On to something more exciting? We guess that puts us into movies, TV and transmedia / animation tax credit financing. Books are written, and stories are legendary, around how challenging it is to finance media projects.
A the end of the day the combination of owner equity, debt, and the film tax credit is a very recognizable way to finance projects, worldwide for that matter.
Similar to our comments on SRED, the discussion point in the government and press seems to be ' who benefits ' when the government in Canada provides these generous film, television and animation tax credit incentives? The answer - You won't catch us weighing in on that one! We'll leave it to the pundits to address that issue, whether is co-productions, or 100% Canadian projects.
Many projects, as we have alluded to have Hollywood or other ownership, but the federal government, through the ' FILM / VIDEO PRODUCTION TAX CREDIT ' provides generous non-repayable funds for salaries, wages, and other costs associated with making a project complete.
THE FILM TAX CREDIT FINANCING PROCESS
And, back to the heart of today’s matter, your film tax credit in Canada is financeable. If you have a legitimate project, as well as your debt and equity lined up you are in a position to cash flow your film tax credit. Similar to SRED it’s not uncommon for a completed tax credit to be financed in the 70% loan to value range - with the same financing mechanisms applying.
The tax credit is the key collateral, and no payments are made during the duration of the tax credit until the matter is finalized; i.e. the cheque received from the government. Billions are spent on these productions in Canada, primarily in Toronto, Montreal and Vancouver, but elsewhere also.
So as esoteric as it may seem the reality is that your project is at the end of the day a commodity and that commodity can be financed to assist in the completion of your current project or perhaps to start the next one. Over the years HOLLYWOOD AND VINE seems to look a lot like YONGE AND DUNDAS, and the film tax credit program, along with its financing, is key to that.
CONCLUSION
The bottom line, whether you have a SRED TAX CREDIT, of a FILM, TV, OR ANIMATION credit financing is available. Speak to a trusted, credible and experienced Canadian business financing advisor on financing your claim today.
Click here for the business finance track record of 7 Park Avenue Financial Stan Prokop
7 Park Avenue Financial/Copyright/2020
