OVERVIEW – Information on sred credit financing in Canada. A Sred Loan Accelerates Your R&D Capital Investment ! Here’s Why Tax Credit Loans Make Sense
SRED Credit financing in Canada continues to be a strategic way in which your firm can stay competitive and at the same time take advantage of the cash flow financing benefits that come with a SR&ED loan. We’re examining why tax credit loans work! Let’s dig in.
While pretty well everyone agrees the Canadian R&D capital refundable tax credit is one of Canada’s best programs for maximizing research and development incentives it’s unclear that the advantages of a SR&ED are fully understood.
Not only is the program applicable to almost every industry in Canada, but at the same time business owners and financial managers can compound the power of this program by financing your claim via a Sred loan. The key benefit of that loan? Cash for your SR ED claim now!
Let’s recap some of the key aspects of the program as they relate to your ability to monetize ‘your tax credit into real cash flow and working capital now. Also, let’s recap and focus on some current issues in your ability to access and maximize your SRED claim.
If you aren’t filing a Sred claim you certainly can’t finance one. The Canadian government, both federally and provincially reimburse billions of dollars annually to Canadian business in all industries. A few industries seem more tailors made than others for SRED claims, example: Software and information technology.
The SR&ED program certainly doesn’t discriminate on any one industry .Your firm can be a commercial bakery, a sign company, a biotech firm, a software development company, or an industrial manufacturer. Bottom line? Every industry is eligible in some manner.
Your claim of course needs to be prepared by a knowledgeable third party. In Canada this essentially is an accountant who is proficient in SRED or a third party commonly called a ‘SRED consultant’. Typically, but not always, the consultant you engage will be a specialist in your industry. That’s a plus of course but the reality is that even if your firm is preparing your own claim (rare but possible) it can still be financed, although the claim will be subject to some form of due diligence no doubt.
Recently changes in the entire SR&ED process can both help and hinder your firm in maximizing your total sred credit. Naturally the larger the claims the more amount of cash that you can finance under a tax credit financing.
Canada Revenue Agency has clearly focused on streamlining the program – forms are found online at the government website, and in some cases have dramatically been simplified. For example, the new online from limits the overall technical description of our claim to only 1400 words.
In general almost 75% of claims are not fully audited, and are therefore approved and somewhat fast tracked for refund.
How do some of the new forms and rules affect your ability to finance your claim? When it comes to financing your sred claim it is critical to work with an experienced, credible, and trusted third party. Claims are generally financed at 70% of their overall value. Therefore your ability to have your claim fully document, prepared by a credible third party, and fast tracked into the ‘non audit ‘75% of all claim range is a solid sred financing strategy .
We referenced that claims are financed at 70%. That simply means that the larger your claim you can receive immediately, on financing approval .70 cents on the dollar for your claim. You of course still receive the rest of the claim, less financing costs, when your claim is approved and funded by Ottawa.
The SR&ED Loan application process? It couldn’t be simpler. A basic application, which is of course supported by your actual technical claim. The sred loan is collateralized by your claim. Our own goal in a completed financing is typically a few weeks start to finish.
If you are filing sred claims in Canada you are among the 15% of businesses that are eligible for this refundable tax credit. Consider compounding the power of the program by financing your claim and accelerating cash flow. Why not compound the power of that government benefit. Cash via tax credit loans can be used for any corporate purpose – including accelerating next year’s research spend!
In summary, that ‘ slim chance ‘ of a prompt cash refund can be significantly enhanced via SR&ED financing done efficiently and promptly. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your refundable tax credit funding needs.
Stan Prokop – founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 12 years – Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
‘ 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.
7 Park Avenue Financial
Canadian Business Financing