OVERVIEW – Information on the benefits of a SR&ED tax credit financing loan in Canada. SRED Finance loans are a way to monetize your SR ED credits , allowing you to cash flow refundable tax credits for working capital needs today
A SR&ED tax credit financing loan for your refundable SR&ED credits satsifies one basic need – recovering your r&d spending ! Let’s dig in .
There’s really only one reason to consider SRED Finance loans – accessing cash flow today, eliminating the wait around your SR ED filing. It’s really as simple as that.
There are a number of ways to look at why Canada has chosen an ‘ incentive ‘ type program to encourage Canadian business owners to participate in scientific research. Canada Revenue Agency administers the program, and pretty well all top experts agree that it’s a tremendous way to receive a cash refund for qualified spending.
The majority of the SR&ED claims in Canada are prepared by external consultants who have a lot of expertise in this area. When you finance your claim you should know that the overall reputation and quality of your claim has a lot to do with that consultant. And given that the main collateral for a tax credit loan is in fact the claim itself it goes without saying that its one key factor in approving your claim for financing. Naturally if you have filed before with the same consultant things move along even more quickly.
Although the program has been around for over 30+ years in recent times significant changes have been made to the program. At the end of the day these changes could probably be summarized as follows –
Easier filing via today’s technology changes
Reduction in some of the previously allowed expenses
Pre-claim consultation and simplified online filing
A focus and disclosure requirement on who prepares your claim and for how much
Why and how does your firm finance a SR ED credit? If you’re in the majority who believes ‘ cash is king ‘a SRED FINANCE LOAN is simply the immediate monetization of your claim. While some may view the challenge of preparing and filing a claim as work enough, just imagine the issue around waiting for your claim to be reviewed, audited, and approved.
That timeline could be weeks but quite often months. Don’t forget also that the cash you receive on a SR&ED loan can be used for any general company purpose. While many firms plough back the funds into more R&D funds are also used for working capital/operating expenses, growth, etc.
Tax credit loans are financing in a very creative manner. You receive 70% of the total claim as a bridge loan. No payments are made for the duration of the loan and when your claim is approved and funded by the govt you immediately receive the balance of the claim less financing costs.
The application process? It couldn’t be more simple and basic. A typical loan package would include your financials, a copy of your SR&ED filing, and details on who prepared your claim and if you have had previous claims that were approved, the latter being important, nice to have, but not necessary.
Preparing a claim but haven’t filed yet. Your claim can also be financed on a pre-filing basis.
Looking to ‘ get ahead ‘ in R&D spending. Consider SRED finance loans as a quick way to monetize the tax credit asset. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
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 TAX CREDIT FINANCING EXPERTISE
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