SR ED Funding SR ED Financing SRED Loan | 7 Park Avenue Financial

Thousands of Canadian businesses use the government's SR&ED (aka SRED) program to recover billions of dollars spent by Canadian firms on experimental research and development on their products and services and technologies. Thousands of start-ups and emerging technology companies use the program - do you?

INNOVATION FUNDING TODAY!

Those billions of dollars allow the Canadian tech industry as well as others to develop new technologies, products and processes under the Scientific Research and Experimental Development (SR&ED) tax credit program.

Sr ed efforts are happening in every industry in Canada, with the most popular being software development,  the oil industry, and agriculture.  All sorts of companies are getting their share of these refundable tax credits, including private firms, public companies and even foreign-owned businesses where r&d efforts occur and are spent in Canada.

Industry sr&ed consultants are the professionals who prepare the technical and financial write-ups to confirm with r&d efforts and the sr ed claim process as laid out by Canada Revenue Agency - aka CRA ! ,  and in many cases can assist to increase claim size -  Some claims are investigated and audited, further reinforcing the need for solid claims prepared by pros.

The SR&ED program is complex and requires a technical and financial justification of your R&D efforts to the Canada Revenue Agency (CRA).

The entire SRED process can sometimes be significant, given the time it takes to perform research, prepare and submit a claim, and then wait for the SR&ED refund - That's where SRED Loan tax credit financing solutions come in!

SO WHAT IS SRED FINANCING? 

SOME IMPORTANT ISSUES AROUND THE SRED BUSINESS ENVIRONMENT

Businesses should ensure they understand the rules and processes around submitting a claim and the manner in which claims are written -  We will leave that to the SRED consultants and SR&ED  preparation firms who prepare your claims.

However some of the key points following the process the government has mandated for the submission of your claims. We can somewhat safely assume that any new government process change on a federal and provincial basis is a learning curve for everyone, including the government we surmise!

The Government has made great strides to simplify and better automate the entire process, which one assumes ultimately will have a major benefit for all, you the SRED claimant, as well as the parties within CRA who handle SR&ED.

Some might be somewhat surprised to hear that in actuality you have only 1400 words within which to identify your submission, and that doesn’t even allow you to include photos, diagrams, etc.

Some other key factors that you and your SRED consultant will have to take into account is your ability to slot your company and project within an industry code and a specific description around exactly what advance in technology or process you were attempting to change.

The bottom line quite simply is that in order to ensure your claim becomes eligible you will have to have a slick well-prepared document that ensures you ‘SRED gates’, if we may call them that. That might well be the changing of documentation you prepared in the past vis-a-vis backup attachments, photos, long narratives, etc.

Work with your SRED consultant to ensure that as systems and processes take effect you have maintained the quality of your claim.

HOW TO FUND YOUR R&D WITH SR&ED LOANS

The good news?  Despite any changes in Canada's SRED Program financing your SRED quite frankly hasn’t changed vis-a-vis the process, which we feel quite simply is the same as any other application for the business financing process.  And even better news - Major enhancements to Sred loans have proved even more beneficial around such key benefits such as funding your claim before it is even filed via an accurate/documented accrued claim process-

Financing your SRED still makes a lot of sense if your firm can in fact turn a non-repayable government grant into working capital and cash flow immediately!

SR&ED FINANCING REQUIREMENTS - IS IT THIS EASY? YES IT IS!

Work with a trusted and experienced SRED financing consultant to ensure you maximize the amount you can finance, which is typically 75% of the total value of your combined federal and provincial claim, or any accrued expenses prior to filing.

More importantly – know that your financing can usually happen within a couple of weeks if you have a solid SRED claim and Sred loan application. The typical backup includes of course the claim itself, information on owners and the business, as well as your ability to address any issues or questions surrounding your SRED or your company’s current financial position.

SR&ED financing can quickly reverse any working capital challenges you have, in a matter of weeks usually which is the time it takes to finalize an SRED loan and have funds advanced. The key collateral focus is of course the SRED itself, and no payments are made on the SRED financing – the funds advanced to you are netted against the final cheque from the government, less any financing costs. 

 KEY BENEFITS OF SR&ED FINANCING 

For companies choosing to fund claims before they are even filed with your year-end tax return, the immediate benefit is of course access to capital without waiting for approvals of your claim -.

The ability to predict income cash flows as you invest in r&d is key for many firms that are early stage,  pre-revenue, etc, Unlocking that government receivable, aka your sr&ed  refund allows businesses to potentially defer taking on more traditional debt or giving up valuable equity in early stages of a business when equity is most valuable and expensive to give up.

That allows a business to:

Grow and meet revenue goals in commercializing their products or services

Develop new staffing and sales personnel

Maintaining liquidity for day-to-day operations and effective cash management

CONCLUSION  - SR&ED FINANCING / R&D ADVANCE FUNDING LOANS

Using sr&ed financing eliminates the waiting process for filed or accrued tax credits.  Unlocking the waiting time for CRA response and approval is the key benefit of Sred loans.   Serious time lags can occur as firms file their year-end financial statement and tax return and prepare their SR&ED refundable tax credit claim - Use Sred financing as a bridge loan to success for your r&d capital investments, accessing your tax refund.

Consider an SRED financing strategy to give your firm what we could call a double kicker – first of all, you have received a non-repayable investment tax credit from the government, and then you have monetized that SRED claim to accelerate your cash flow and working capital in a short funding timeline!. Clearly a solid business financing strategy for Canadian businesses!

Call 7 Park Avenue Financial today, a trusted, credible and experienced Canadian business financing advisor who can assist you with SR&ED tax credit and grant financing under the SR ED loan process, quickly and efficiently!

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION  

' Canadian Business Financing With The Intelligent Use Of Experience '

 STAN PROKOP
7 Park Avenue Financial/Copyright/2024

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