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SR&ED financing – A Solid Cash Flow Strategy !

Information on how Canadian firms utilizing the SR&ED program can finance their sred claim. Cash flowing your sr&ed refund is a solid source of working capital and cash flow for companies committing r&d capital

Your ability to finance your sred claim (aka ‘sr&ed claim) simply signifies the cash flowing of your non repayable government grant. We think that anytime you can hasten cash from the government and turn that into immediate cash flow and working capital, well… that is a good thing.

SRED grants, (sr&Ed grants) are of course the funds you received from Canada Revenue Agency based on the filing of your Scientific Research and Experimental Development (SR&ED) claim. These funds have never been more generous and many Canadian business owners and financial managers are not aware that the program even exists, let alone their ability to partake in the billions of dollars of non repayable grants issued by this department within CRA Canada. Essentially it is the largest support for research in Canada. Many clients are always asking us if there are ‘government grants and loans ‘. We are of the opinion that the two best programs in Canada to finance your firm are the federal BIL/CSBF loan and of course the SRED program.

Your firm ability to generate a claim immediately turns into a non repayable cash grant. Timing is everything, and you have the ability to finance that claim if you want to monetize those funds and get them working inside your firm. For many early stage and start up firms the ability to finance their sred claim is often the largest receivable the firm has that year. And the beauty of the program is of course that as along as your firm is a private corporation you can partake in these funds.

As companies, and even as consumers we generally use an ‘expert ‘to prepare our taxes and file them. It is certainly no different with SRED and we recommend that you use a sr&Ed consultant to ensure your claim is prepared properly. Naturally using their own expertise, or the governments self assessment tool you want to be sure you are eligible for the grant, given that it takes time to prepare and file the claim.

Naturally after filing a professionally prepared claim you are of course entitled to wait for you cheque – that timeframe can be anywhere from a couple of months to potentially close to a year depending on some key factors as your first time filing, and the due diligence that SRED employees do on the technical and financial aspects of your claim .

So you are eligible for Sr&Ed. You have filed a claim. You have been made aware you can finance the claim, but you are not sure how. In general the banks in Canada don’t finance these sorts of claims – that’s a general statement, but 99% of the time we are pretty sure we are correct in making that comment. Therefore it is strongly recommended you contact a business financing advisor who specializes in sred finance. At that point it’s a relatively simply process, and we encourage clients to view it as they would any business financing, from a lease to a loan arrangement. There is standard application information, and the whole process, up to an including funding, can be completed in a manner of weeks.

As a general rule it makes sense to finance claims that are over 250k in size, but quite frankly smaller claims can also be financed. There is no challenge to the amount of financing re the size of a sred filing – Claims well in excess of a million dollars can be easily financed.

The key advantage of financing a claim is that you are not undertaking any debt; you are just discounting a receivable that you have – that receivable being the sred claim itself. The sr&ed filing itself is the actual collateral for the financing – and if you want more good news then you should be aware you don’t makes payments on a sred claim finance. The funds advanced are netted out from your final chq from the government. Usually sred claims are financed at 70% of their filed value that leaves a buffer in case part of the claim is downsized when approved.

Cash flow is king, if you have a sred claim be aware that claim is financeable , and your ability to get those fund working again usually puts you in a more competitive stance within your industry , and allows those funds to be used for further research or any general working capital purpose . Speak to a trusted, credible and experienced advisor in this area to ensure you are aware of the benefits of sr&Ed finance – claim those funds!

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 905 302 4171

Office
= 905 829 2653
Email = greg@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

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 100 Million $ of financing for Canadian corporations .

‘ Canadian Business Financing With The Intelligent Use Of Experience ‘

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Stan Prokop

7 Park Avenue Financial
Canadian Business Financing