Financing SR & ED Canada program claims in Canada comes with issues that can either slow down your claim or speed it up. Knowing what works and what doesn’t in SRED CRA finance goes a long way towards a successful acceleration of R&D cash flow. Let’s dig in.
As we’ve said numerous obstacles exist in the SR&ED program that can hamper your ability to recover funds quickly. Having said that doing certain things right can have the opposite effect – reversing the R and D cash flow drain.
Recent changes in the last couple years really leveled the playing field when it comes to the SR ED refundable tax credit.
Business owners certainly have the option of preparing their claim themselves – in fact who better understands what they are trying to achieve in research and development than the business owner/manager themselves.
Yet as in any ‘ government’ program that has some complexity attached to it sometimes some experience is helpful. Enter the SRED consultant – someone who prepares and helps file your claim. They are compensated on a strict ‘ fee ‘ basis, and in the majority of cases they work on a ‘ contingency basis ‘, taking a per cent age of the total amount recovered under the refundable tax credit program.
The quality of your consultant vis a vis credibility and expertise play a key role in the financing of your claim. While the industry seems to have eliminated the ‘ bad actors ‘ the key point here is that a reputable consultant maximizes your claim and adds credibility to the CRA validation process around your claim – which in fact may include an audit and meeting with the CRA rep.
Preparing your claim yourself of course saves you a ton of money – at the same time it also raises a flag to CRA that your claim has potential to be ‘ non compliant ‘ to the rules of the program .
We would add that even the large BIG 4 accounting firms in Canada all have active SR & ED practices.
The financing of your SRED CRA claim takes into account who prepared your claim, as well as any previous claim history you have. By the way, financing on first time claimants is 100% ok. Here it might help if you take advantage of the governments ‘ formal pre approval ‘ process.
What government program isn’t associated with paperwork?! While that might be a ‘ myth vs. reality ‘ statement the fact is that the govt has tried to streamline the program re online application, initial screening to ensure validity, etc
While we can go round and round on the merits of a good claim and who prepares it and how at the end of the day its simply ensuring your claim is ‘ eligible ‘ and that you have the ‘ documentation’ to back it up.
As far as we’re concerned financing a claim is easier than writing one up. Claims are financed in a unique manner – they are financed as ‘ bridge loans ‘ – providing you with funds for up to 70% of the combined value of your claim. No payments are made during the loan duration and you receive the balance of funds when your claim is approved, less financing costs that are mezzanine rates in nature.
Credible firms with good claims can also take advantage or financing such as a SR&ED line of credit being put in place – as well your next claim can start being financed now for qualified firms.
While playing the waiting game might pay off in some forms of business it doesn’t when it comes to waiting for govt cash , so seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can help you cash flow your claim .. today!
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 FINANCING EXPERTISE
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