First And Goal By Financing Your Film or SR&ED Tax Credits
OVERVIEW – Information on achieving success in SR&ED and media ( movies / tv / digital ) government incentives . SRED Financing via a bridge loan for your film tax credit or SR ED claim provides valuable cash flow .. now
A bridge loan for a film tax credit or SR&ED R&D incentive credits allows you to finish the game a lot sooner, while winning at the same time. Our bottom of the 9th inning analogy seems a correct one – it’s been a long game from the time the SR&ED or film tax credit process was started.
Financing via a bridge loan for either of these two finishes the game, and cash flow is declared the new winner. Let’s dig in, separately for each type of credit, and then we’ll bring the financing aspect for both in – a remarkable similarity exists for the finance solution to tax incentive claims.
SR&ED: From the business owner/financial managers perspective there’s a long game plan in place for research and development credits. As much as owners wish to accelerate the process several key issues always slow things down – sometimes a little, sometimes a lot.
And by the way, that includes the necessity to address recent dramatic changes to the program in the last few years. Those changes revolve around the actual filing of the claims, who writes your claim, and how the claim is calculated. A most regular or new claimants find out, it’s the ‘ SR ED Consultant ‘ that typically prepares a claim.
Aligning yourself with a qualified consultant allows you to both maximize the financial benefit attached to your claim, as well as minimizing or totally eliminating cost and risk associated with a research claim. That’s because the majority of SR&ED consultants prefer to be paid on contingency – they take on. The risk and cost of preparing a good claim. Their compensation? They receive a negotiated portion of the refund as their fee for preparing a proper claim.
No type of financing is more of an ‘ art ‘ than the complexity around a full finance package relating to a media production. Getting capital together in areas of equity, debt, and mezzanine financing is, at its best moments – seriously challenging.
The film tax credit incentives that are provided by the combination of provincial and federal incentives (typically combined) assist independent producers and production owners in filling gout a large part of that financing need. A healthy tax credit component to any project clearly and obviously eliminates some of the other financial risk associated with any project.
While a small handful of Canadian chartered banks play some role in film finance it’s the tax credit that becomes usually the corner stone of any financing. The role of the SR ED consultant now changes to the ‘ Film Tax Credit Accountant ‘. He or she has the same goal – maximize the amount you can claim and receive for Canadian content – which by the way can be in the form of co productions with other accredited countries. Labor, service and hard assets become eligible for healthy re-imbursement. Even where you film or produce gets you extra points/extra funding.
And we’re not forgetting the ‘ digital ‘ aspect of tax credits – as many projects these days are ‘ Transmedia ‘in nature – i.e. Special FX, animation, etc. A separate (and again ‘ healthy ‘) tax credit exists for the digital world.
So, its ‘ first and goal ‘ for the owners of a SRED or film tax credit. The financing of either of these credits is similar; it’s done via bridge loan, and allows you to monetize your claim as fast as you are able to apply. Both credits are typically financed under the same structure – bridge loans with a 70% advance against the total amt of your claim. The monthly payments? There are none, as your loan is finalized when your claim is approved and funded by the government. At this point you receive the 30% balance of your claim, less financing costs.
New innovative SRED Financing / film tax credit allows you to cash flow your claim prior to filing it. This works best when you’ve got a track record but is not necessarily a strict requirement.
Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success when your goal is to finance research and film incentives. A great way to successfully eliminate the 9th inning challenge!
Author: Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN SR&ED AND FILM TAX CREDIT FINANCING EXPERTISE
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