The Short (And Long ) Answer is ‘ Yes ‘ : SR&ED R&D Tax Credits Can Be Financed
OVERVIEW – Information on financing research and development tax credits in Canada. SRED Finance loans monetize your claim and provide .. cash flow today!
Financing research and development (R&D) tax credits in Canada is really the end to a successful outcome of your SR&ED claim. There’s been a healthy dose of ‘ no you can’t ‘ when it comes to a lot of the changes in the program over the last several years. SRED Finance loans are the positive monetization of your claim – in effect the easy part! Let’s dig in.
Most Canadian business owners and financial managers who participate in the benefits of the program probably though do realize that for a program that has been around close to 30 years there was probably some ‘ Times They Are A Changing’ ) that were due . (Apologies to Bob Dylan who it turns out wasn’t writing about refundable tax credits)
While top experts and pundits maintained the program was ‘ broken ‘ it nevertheless continued to fund Billions of dollars every year for thousands of firms enhancing their business prospects through research. Anything that involves both provincial and federal governments is of course going to evolve.
Participants in the program of course know the basics – it’s all about proving some sort of technological advancement. Here it’s about documenting your spend on fixing ‘ uncertainty ‘ and trying to progress to ‘ technological advancement’
After your claim has been filed you’re in a strong position to… you guessed it… wait! That waiting can be totally eliminated by utilizing a SR ED bridge loan to monetize your filing, accessing your cash now… instead of weeks, months, or longer? based upon whatever status your claim is in with Canada Revenue. In some cases that of course might be financial or technical audit, in other cases just the bureaucracy that comes with those nice folks in the government.
How then does a SR&ED loan work? It could not be simpler and in fact we maintain that if there’s been changes to the financing of the program they have all n fact been quite positive! SRED loans are financed as bridge loans. You receive 70% of the total value of the claim on approval of the loan. The key collateral of the loan is, as you might surmise, your SR ED.
No payments are made for the duration of the loan, and when claims are finally approved you receive the balance immediately less financing costs which are mezzanine in nature due to the risk profile of this type of financing.
Financing research and development tax credits is a pretty easy decision – it boils down to:
Do you need the cash today and what use can be made of the funds? It’s really the ‘ opportunity cost ‘ that you are looking at. Funds of course can be used for what the accountants call ‘ any general corporate purpose ‘. That of course includes operating financing, purchasing new assets, or doing more R&D!
Oh by the way, even next years claim can be financed today if you have a track record or can demonstrate a quality claim with your SR&ED consultant.
Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your financing needs in research tax credits. It’s the ‘ easy ‘ part of research.
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 CLAIM FINANCING EXPERTISE
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