Guess What ? Sred Finance is Easy : SR&ED Credits 101 SRED Financing
OVERVIEW – Information on SR ED claims finance in Canada . SRED Financing maximizes cash flow around R&D expenses and provides an innovative way to maximize R&D Capital spend

 


SR&ED Financing
easy? Some clients we meet actually have a tough time buying into the fact that SR ED claims finance is not difficult. The bottom line? We think we can show you ‘innovation finance’, i.e. SRED FINANCING is not the challenge you might think it is. Let’s dig in.

Any business in Canada that files a SR & ED claim does so, for the most part, to take advantage of the incentive that the Canadian government provides for a refund of a significant part of your research expenses. And in Canada every year that covers thousands of businesses for Billions of dollars.

The actual financing of your claim is more dependant on your firm, what you do, and who you work with as opposed to the good folks that administer and approve claims at Canada Revenue Agency.

So while we can talk ( argue ? ) all day about the merits of the program, its recent changes in the last year or two , simply speaking the onus is on Canadian businesses who choose to participate in the program to maximize and recover their ‘ spend ‘ on salaries, applicable overheads , etc. In years gone by machinery and equipment were under that umbrella also but recently legislation changed the equipment component of SR ED credits.

At the hear of the program is the basic premise that claims prepared properly under new rules of claim submission can recover funds via applications submitted by Canadian private companies and even proprietorships. (Most companies that file and finance SR&ED claims though are clearly private incorporated entities.

Most people don’t realize that the program has been ongoing since way back into the mid ’80. Clients we meet who are now taking advantage of the program and heard about it late… well sorry about that.

While the SRED program has changed and been tweaked over the years we point out to clients that SR ED claims finance has in fact not changed. Yes of course a bit more scrutiny is in place around who prepares your claim (‘ SR&ED CONSULTANTS ‘ are the folks that prepare and attempt to maximize your claim ) SRED financing has in fact gotten more competitive and creative .

The actual tax credit itself is a refundable claim, not a ‘ grant ‘ .So as such your claim in effect becomes a legitimate ‘ account receivable ‘ of your business, with the client around that receivable being fairly credit worthy – i.e. the Canadian government .

How then are claims financed and what are some recent innovations in financing SR&ED. Typically your claims are financed at 70% loan to value and the actual financing is structured as a bridge loan with no payments .When you claim is ” finally ‘ approved by the government you receive the final 30% of those funds , less financing costs . The benefit is clear – you have ‘ cash flowed’ your R&D capital investment.

And oh yes, those recent changes in innovating finance around SR&ED? Many claims that have good track record in the past can now receive financing prior to filing your claim.

If you are looking to ‘ fast track ‘ and cash flow your investment in R&D 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 SR ED claims finance strategies and funding that make sense.

Author: Stan Prokop – founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of $90 Million of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:

CONTACT:

Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171
greg@7parkavenuefinancial.com

 

7 Park Avenue Financial
Canadian Business Financing