|
When SR&ED Credits Aren’t Enough: Your Hidden Financing Tool
Tired Of Waiting For Your SR&ED Refund? Financing Innovation & Monetizing Your SRED Tax Credits
UPDATED 05/16/25
YOUR COMPANY IS LOOKING FOR SR ED (SR&ED) FINANCING/ FACTORING!
ALTERNATIVE FINANCING OPTIONS FOR YOUR R&D
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT US
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
HOW SR&ED TAX CREDIT FINANCE SOLUTIONS CAN ACCELERATE YOUR BUSINESS GROWTH AND DEVELOPMENT
Canadian business owners and financial managers don’t find waiting productive. Tired of waiting months for your SR&ED refund? Tap into your money now.
Government has a role to play in helping us overcome market failures that otherwise prevent private financing from reaching its potential." - Barack Obama
FINANCING CANADIAN INNOVATION - YOUR SR&ED TAX CREDIT GUIDE
While not Canadian we think Mr. Obama had it right - Government has a great ability to provide support in areas where commercial financing may not be enough to achieve optimal success - That is what we think Canada's sr ed program does - where your firm focuses on the goal to advance scientific knowledge in your industry.
So why should you have to wait to finance (in effect, it’s a financing/factoring or discounting) your SR ED claim? You shouldn’t have t,o and we will show you how.
You’ve earned valuable SR&ED credits but can’t access the funds quickly enough to support growth or payroll.
The delay between filing and funding leaves you cash-strapped and frustrated. That’s where SRED factoring companies step in.
By unlocking immediate cash from your accrued credits, you get working capital when you need it—not months later. 7 Park Avenue Financial helps Canadian businesses bridge that gap efficiently and confidently.
3 UNCOMMON TAKES ON THE SUBJECT OF SRED FACTORING COMPANIES
-
Not Just for Tech Firms
Many assume SRED factoring is only for startups or tech-heavy ventures. In reality, manufacturers, agri-tech firms, and even logistics companies can qualify for significant refunds—and benefit from early access to those funds.
-
SRED Factoring as a Growth Strategy
Instead of using it to “patch holes,” progressive businesses use factoring to reinvest immediately into R&D or hiring, accelerating innovation cycles and even helping win investor confidence.
-
No Credit Score Required (Really)
Since approval is based on the legitimacy and status of your SR&ED claim, even companies with challenged credit can qualify, making it one of the few non-dilutive financing tools available to firms in pre-revenue / early stages of growth.
WHAT IS SR&ED?
If your business is involved in r&d you know that "sr&ed" stands for SR&ED stands for Scientific Research and Experimental Development -
It's the Canadian government program that helps businesses with their investment in research and development - And SR&ED tax credit financing solutions are an option available to a business to help fund their sr&ed activities via specialized financing of the claim, which is a refundable tax credit under the program.
BENEFITS OF USING SR&ED TAX CREDITS FOR R&D FINANCING
The ability of a company to take advantage of this federal tax incentive allows Canadian companies to finance r&d in their ongoing research efforts under a sr ed loan.
The innovative financing options under SR&ED credits allow businesses to help offset r&d costs and accelerate cash and manage cash flows in the business. Let 7 Park Avenue Financial assist you with this specialized form of funding under the program.
SRED tax credits loans use the collateral of your future sr&ed refund to create a short-term bridge loan -
This type of financing becomes a predictable source of cash/working capital that otherwise might be part of a long waiting game for the government sred refund to materialize based on claim filing criteria around year-end financial statements and the risk of further delay via a technical audit by Canada Revenue Agency/CRA.
The ability to eliminate waiting for the refund and accessing cash before year-end filings, preparation of the technical aspects of the claim and then waiting for the CRA refund is clearly the key benefit of a sr&ed bridge loan.
Companies that choose to use the advance funding capability of sr&ed financing solutions can access capital as they need it - We can in effect, describe the process as ' factoring' of the government receivable - aka your SR&ED claim!
UNLOCKING CAPITAL - HOW TO MONETIZE YOUR SR&ED TAX CREDITS
To be able to finance an SR ED claim you of course have to have an SR&ED claim. That makes common sense.
Canadian business owners know when they have a significant investment in their research and development and commercialization projects. That is more than intuitive because they are spending real dollars, often considerable sums, to maintain their competitive edge in products, services, and processes.
That’s of course why your firm should be finalizing a claim and filing it as soon as you can in conjunction with your fiscal year-end. Naturally, once you have filed the claim, you can wait anywhere from 3- 12 months for the refund cheque to arrive from Toronto or your provincial component from your province's capital city.
Do you have to wait to recover those funds?
Of course, you can if you choose, but your claim is financeable if you seek out and talk to a trusted, credible expert in this area. Why not finance your claim, recover those funds now, and continue your investment in leading-edge research den processes to maintain your competitive stance within your industry and product or service sector?
SR&ED PROGRAM ELIGIBILITY CRITERIA FOR FINANCING TAX CREDIT CLAIMS
So, what are the basics of financing that claim? Let’s review them in detail and ensure you have the underpinnings of a successful SR ED financing strategy.
As we mentioned, you have to have filed your claim to begin financing it - but not in all cases! Businesses can also access funding for r&d prior to filing a claim - That's cash management 101! We can almost call this your ' SR&ed line of credit '
THE 7 PARK AVENUE FINANCIAL SR&ED LOAN PROCESS
Let our team walk you through the application process to a quick and easy application process. Basic information about your firm is required - information such as your financial statements and a copy of your SR&ED claim or accrued calculations to date. Typical financing timelines will be in the 14-day timeframe from a viewpoint of basic due diligence and a term sheet issued to the borrowing outlining payment terms.
No monthly payments are made for the duration of the loan and no personal guarantees are required - Your actual CRA SR&ED refund terminates loan as repayment.
In our experience the whole process, we tell our clients, takes two to three weeks if your full cooperation is provided.
Naturally, if the timing is important you could start the process a little in advance of filing your claim.
Any SR ED claim can be financed, but those that are prepared by competent parties are in effect ‘more financeable' as they have a credibility and experience factor attached to them.
Does your own firm’s financial status play a part in the financing of your SR ED?
We can say with assurance that 90% of the SR ED financing questions rely very specifically on using the SR ED as collateral for the financing. But naturally, your firm has to be able to demonstrate some sense of ongoing viability concerning sales prospects, etc.
However let's be honest, many firms are using SR ED tax credits because they are in growth or start-up mode, so that should not deter you from contemplating and discussing the financing of your SR ED. Utilizing a sr ed consultant will typically maximize the value of your claim as they are expert at experimenting technical challenges that require documentation under the federal sr ed program.
A normal SR ED financing application includes the usual business info data you would submit with any business financing – i.e. info on your firm, its financials, info on the owners, etc. Loans or advances against your claim are generally made at 75% loan-to-value -
In effect, you immediately receive 75% of the total amount of your SR ED tax credit claim. The balance is remitted to yourself, less financing fees when your claim is approved and funded in Ottawa.
A proper SR ED financing is structured so that you won’t make any payments while you wait, so it’s a pure cash flow and working capital strategy.
CASE STUDY
Client: Ontario-based Agri-Tech Startup
Challenge: 6-month CRA wait for $220,000 SR&ED refund
Solution: Partnered with 7 Park Avenue Financial for SRED factoring
Result:
-
Received $165,000 in 14 days
-
Deployed funds to ramp up staffing and equipment
-
Accelerated commercialization by 3 months
KEY TAKEAWAYS
Sr&ed finance is a specialized form of financing in Canada that provides advance funding for the sr&ed refundable tax credit - It is a specialized form of finance that helps Canadian businesses accelerate cash flow and manage the cash flows of a business that invests in r&d.
CONCLUSION- LEVERAGING GOVERNMENT GRANTS AND TAX INCENTIVES FOR R&D FINANCING
In summary, utilize your tax credits to recover significant portions of all your R&D expenses if you are a privately owned Canadian company.
Ensure you consider an SR ED financing strategy if you wish to accelerate SR ED spending or simply use the funds for any general worthwhile purpose.
Speak to 7 Park Avenue Financial, a trusted, credible and experienced SR ED financing advisor and a specialized funding company that will structure a claim that makes maximum financial sense for your firm via funding a filed claim or utilizing accrual financing.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What is the SR&ED program?
Canadian controlled private corporations in Canada ( CCPC) are sr ed eligible to receive refundable tax credits on eligible expenditures that qualify under Canada's sr&ed r&d program for scientific or technological advancement / scientific or technological uncertainty.The investment tax credit is a combination of federal and provincial credits and is refunded as cash to private companies to stimulate economic growth in Canada. ( Publicly listed companies receive tax credits but not in the form of cash refunds) - The focus of the program is to encourage Canadian firms to carry out eligible aspects of research and development.
What types of activities are eligible for SR&ED tax credits?
Activities that are eligible for the sr&ed tax credit are experimental development and applied research and scientific research - All the work must be paid for and carried out in Canada under eligibility criteria set out by Canada Revenue Agency/CRA - SRED consultants are third-party firms and individuals that help companies with the sr ed claim process.
How can companies monetize their SR&ED tax credits?
Companies can monetize their sred tax credits under specialized r&d financing from specialized funding companies such as 7 Park Avenue Financial. Solutions such as sr&ed short-term bridge loans using the sred credit as collateral allow a business to access needed capital to continue funding general working capital needs for r&d efforts.
Any privately owned company that is engaged in r&d in eligible areas of Canada's SR&ED program can claim refundable SR&ED tax credits. These credits via the sr ed claims can be claimed by businesses, partnerships, and individuals who utilize sr ed tax credit claims.
What are the benefits of using SR&ED tax credits to finance R&D?
When a business uses the sr ed investment tax credit to fund r&d benefits include accelerated cash flow as well as a significant reduction in overall r&d expenditures. Successful efforts in r&d allow a business to remain competitive and grow its products domestically and internationally.
What is a tax credit broker?
Tax credit brokers facilitate innovation funding and the financing of tax credits and government grants for companies that have earned tax credits and grants under various federal and provincial incentive programs designed to stimulate capital investment in areas of research and development. Funding is primarily from specialized commercial finance firms versus traditional financial institutions such as banks. Monetization options are in the form of specialized short-term bridge loans and allow participating borrowers to capitalize on investment opportunities in their businesses via access to short-term capital financing.
How do sred factoring companies work for a manufacturing business with r&d expenses
What’s the timeline for getting funds from sred factoring companies
Can a startup with no revenue qualify for sred factoring
Why is sred factoring better than a traditional bank loan for r&d firms
-
Bank loans typically require collateral and credit history. SRED factoring focuses solely on your SR&ED tax credit value, making it faster, more accessible, and less risky for early-stage firms.
How do sred factoring companies handle rejected or delayed CRA claims
Who qualifies for sred factoring companies in canada
What industries benefit most from sred factoring companies
-
Technology, aerospace, food processing, software development, and manufacturing are frequent claimants with high R&D spending—making them ideal for SRED factoring.
When is the best time to apply with sred factoring companies
Where do sred factoring companies operate in canada
-
These services are available nationwide, with firms like 7 Park Avenue Financial serving clients across Ontario, Alberta, Quebec, and British Columbia.
Why do sred factoring companies ask for technical documentation
How do sred factoring companies calculate your advance
-
Advances are typically 70–80% of the net claim amount, based on risk, claim quality, and stage of CRA approval.
What’s the difference between sred financing and sred factoring
Who are the best sred factoring companies in canada
Why do some sred claims get rejected by factoring companies
-
Claims may be denied due to weak technical documentation, unfiled returns, or previous CRA audits on the process to conduct research. Strong SR&ED consultant support reduces rejection risk in financing SR ED Projects.
How long doe sred factoring terms last
How does sred factoring improve business cash flow
-
Provides quick access to non-dilutive cash
-
Helps meet payroll, vendor, or operational needs
-
Eliminates waiting period from CRA processing
Why is sred factoring considered low risk for borrowers
-
No repayment if the claim isn’t paid
-
No personal guarantees are typically required
-
Based on SR&ED claim, not the business credit score
How can sred factoring accelerate product development
-
Funds can be reinvested into R&D
-
Speeds up hiring, prototyping, and innovation
-
Avoids interruptions in project timelines
How does sred factoring support seasonal businesses
-
Cash flow timing aligns with seasonal cycles
-
Prevents slowdowns due to delayed refunds
-
Enables steady cash availability year-round
Why is sred factoring ideal for first-time claimants
-
Reduces uncertainty in CRA refund wait time
-
Encourages early filing and faster claim processing
-
Offers funding confidence during early growth
What is a sred claim and why is it important
-
It's a federal tax incentive for R&D expenses
-
Eligible Canadian businesses can recover 35% + of costs
-
Helps lower effective R&D costs significantly
How is sred factoring different from invoice factoring
-
SRED factoring is based on government tax credits
-
Invoice factoring is based on unpaid customer invoices
-
Both provide upfront cash but for different assets
Is sred factoring CRA-approved
-
While not a government program, it’s based on legitimate CRA refunds
-
Funders comply with CRA rules to ensure refund protection
-
It’s a widely accepted financing tool in the R&D ecosystem
How do I choose a reliable sred factoring company
-
Look for industry experience, transparency, and references
-
Ensure no hidden fees or unreasonable interest
-
7 Park Avenue Financial has proven experience in this space
What happens if my claim is delayed by CRA
-
Some factoring firms offer flexible terms
-
Delays may result in payment extensions
-
Communication with the factoring partner is key
How much can i expect to receive from sred factoring companies
-
Most companies receive 70–80% of the claim’s value upfront
-
Final payout comes after CRA processes the claim
-
Total funding depends on claim quality and lender
Are Sred factoring companies regulated
-
Not formally regulated like banks
-
Operate under commercial finance laws in Canada
-
Reputable firms follow strict due diligence processes
What are the costs of using sred factoring
-
Fees typically range from 1-1.25% monthly
-
Pricing depends on risk, claim size, and term
-
Often more affordable than equity or unsecured debt
' Canadian Business Financing With The Intelligent Use Of Experience '
STAN PROKOP
7 Park Avenue Financial/Copyright/2025
ABOUT THE AUTHOR: Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil
|
