YOUR COMPANY IS LOOKING FOR SR&ED CREDITS FINANCING!
FINANCING YOUR SRED TAX CREDIT / R&D TAX SR ED CLAIMS!
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Financing & Cash flow are the biggest issues facing businesses today.
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SR&ED TAX CREDIT LOANS FOR RESEARCH AND DEVELOPMENT TAX INCENTIVES IN CANADA
Financing SR ED (SR&ED) tax credits is the finality around filing your SRED claim in Canada. So the question that remains to be asked is, ' Does it pay to finance your refundable credit under Canada's most popular research refund program? Let's dig in on the advantages of sr&ed financing for your business.
DOES IT SEEM THAT EVERYONE IS ALWAYS TALKING ABOUT SRED? WHAT ARE SR&ED CREDITS
In recent years, the program has been a moving target by the government, whose goal was to maximize and simplify the program for Canadian businesses to achieve the benefits for which the program was originally derived.
HERE IS SOME HISTORY AROUND SRED
To understand the benefits of financing your SR&ED credit, it's necessary to step back and understand the origins and intent of the program. In reality, the program has been around for almost 30 years now. While the program's name is somewhat daunting (‘SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT”), business owners and managers tend to call the program " S R E D '!
By the way, sr&ed for non-ccpc ( non-canadian controlled private corporations ) is also available but for publicly listed firms the credits are not in the form of a cash refund.
IS YOUR CLAIM ELIGIBLE
The actual preparation of your claim is very much tied to success in financing your claim. We would maintain it's much easier to finance your refund than prepare it! It is up to the owner/manager to ensure that the refund claim they prepare is ' eligible ' under Canada Revenue Agency (‘CRA’) guidelines. The premise of the program is that your company's r&d must be focused on solving scientific or technological uncertainty as a goal while having furthered technical knowledge. Areas such as ' market research ' are not applicable to the program.
THE ROLE OF INDUSTRY SR&ED FUNDING CONSULTANTS
These days probably 99% of all claims are prepared by the folks known as 'SRED consultants ' - these people are typically steeped in either industry or actual program experience, many of whom have worked for CRA in the past and understand eligibility criteria. Their role is to validate that your processes and work result in 'scientific or technological advancement ' around sr&ed qualifications. A part of the ' turmoil ' in recent times, some of which has led to financing confusion of claims, relates to how these consultants who prepare claims are compensated. That compensation relates to the contingency fees that have consultants prepare those claims at their own cost, risk and expense.
SR&ED CONSULTANTS TEND TO WORK ON CONTINGENCY
That compensation was one of the main reasons the Government undertook a few years ago to revamp the program fairly. Some previously eligible expenses were cut back; businesses must now identify who is preparing their claim and how they are paid, etc. Additionally, some key aspects of the program - i.e. the ability to claim capital equipment purchases used in the research were eliminated.
It's pretty clear now that to be successful in financing SR ED tax credits and obtaining SRED Loans for research and development credit loans that the quality of your claim is key. Business owners and financial managers using qualified and credible/experienced consultants will continue to benefit from the program given the technical knowledge of the consultants.
HOW DO SR&ED LOANS WORK - A SRED LOAN EXAMPLE
That brings us to our key question - recognizing the benefits of the finance of an SR ED refund. That one benefit - Accelerated cash flow. SR&ED tax credits around your claim are typically financed at 75% ' loan to value '- meaning simply that, for example, a 400k refund would provide a loan in the 300k range
Loans must, of course, be repaid! But SR&ED financing is done via a bridge loan with no payments required for the loans' duration - another key benefit. When your claim is approved and funded by the govt, you receive the 30% remaining balance immediately, less financing costs.
IS DEBT FINANCING BETTER THAN EQUITY FINANCING? WHY USE SHORT-TERM BRIDGE LOAN DEBT FINANCING STRATEGIES SUCH AS SR&ED LOANS?
Every company's circumstances are different - while debt financing requires that funding be repaid with interest equity financing demands that sellers give up some ownership in the business in exchange for business capital. Debt financing strategies such as sred loans provide tax benefits and do not require giving up any ownership - Sred loans are non-dilutive financing
SR&ED BRIDGE LOANS CAN BE CREATIVELY TAILORED TO YOUR BUSINESS NEEDS
While the government was busy re-doing the program a bit, the SR ED financier has also been working - to add even more creative features to the cash flowing of your claim - these include facilities such as a SRED credit line and even the financing of the next years claim around those r&d tax credits .. Today! Talk to 7 Park Avenue Financial about financing r&d accruals before they have been filed - it's a ' yes we can ' strategy.
CONCLUSION - A CASH FLOW FINANCING STRATEGY VIA SRED LOANS
SR&ED Tax credit financing for small businesses is a valuable business financing tool for companies of all sizes - from startups to large corporations. Maximize your sr&ed tax credits with a financing solution that delivers on cash flow via financial options for your earned investment tax credits
Want to know more about sr&ed loan solutions and funding your research and development sr ed tax credit?
So, if you want to be like or business owner who has found it does pay to finance your SR&ED refundable tax credit seek out and speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your SRED credit loan needs with a viewpoint to maximizing sr&ed credits for cash flow and r&d expense recovery.
FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
What is SRED Financing? How Does SR&ED Financing Work?
SR&ED tax incentives encourage Canadian businesses to invest in r&d. Investment tax credit rates for Canadian-controlled private companies can claim a large part of salaries and wages, as well as additional amounts for subcontractor payment and materials - Public companies receive considerably less but they are eligible for SR&ED when they conduct research under the program guidelines for eligible expenditures. This tax incentive program sponsored by Canada Revenue Agency encourages r&d innovation in Canadian business. CRA reviews sr ed project claims for the quality of technical descriptions in the amounts claimed for expenses.
Many earlier-stage firms use sr&ed capital as a major source of funding for general company purposes as well as furthering r&d initiatives as it allows for a reduction in total development costs of the business as it performs research and development. Claims can be financed via third-party commercial financing companies that specialize in the financing of refundable sr ed tax credits via Sred financing Canada.
A 'sr&ed grant ' is not really a grant per se, the sr ed program is a refundable tax credit around the sr ed claim.
WHAT IS SR&ED AND WHAT DOES SR&ED STAND FOR?
The sr&ed tax credit is a tax incentive program in Canada that provides tax credits to businesses that focus on research and development activities around technical challenges they face in many areas, including those such as software development - A large portion of r&d expenses can be claimed as a tax credit. ' SR&ED" stands for ' Scientific Research and Experimental Development ". It's a Canadian tax incentive program that provides tax credits to companies that engage in research and development activities. The program encourages and supports innovation by allowing eligible companies to claim a portion of their R&D expenses as a tax credit, reducing their tax liability and increasing their cash flow.
WHEN IS THE SR&ED FILING DEADLINE
The sr&ed filing deadline for CRA is within 18 months of a business filing their fiscal year-end for the period in which research and development took place. Claimants are urged to take advantage of timely filings to reduce the time it takes to get a refund or arrange to finance their claims.
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