YOUR COMPANY IS LOOKING FOR SR&ED TAX CREDIT FINANCING!
FUNDING THE SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT REFUNDABLE TAX CREDIT FOR CASH FLOW NEEDS
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
A SRED (SR&ED) research and development tax credit loan finance strategy is essentially the 5th building block in your overall R&D strategy. The bottom line - it brings your cash recovery in plain sight! Let's dig in.
FINANCING YOUR SR&ED TAX CREDITS CLAIM FOR THE FIRST TIME? ALL CLAIMS CAN BE FINANCED
SR&ED claimants in Canada via Canada Revenue Agency CRA can be veteran participators in the program, or some cases, first-time filers. From our perspective, when we talk to clients in the area of SR&ED loans, it's really a 5 prong strategy, with financing being that last building block that brings the cash home.
THE 4 BUILDING BLOCKS OF SR&ED BRIDGE LOAN SUCCESS
What about those other 4 initial building blocks, and how does the Canadian business owner/ financial manager filing ensure they have all the bases covered. It all comes down to a common-sense approach to your R&D finance strategy
ARE YOU ELIGIBLE FOR SRED
First of all, you have to ensure you're eligible; otherwise, time and expense will be part of your agenda you don't want. First-time claimants often think their claim might be too small - smaller claims would typically be in the 50k range, and larger claims certainly can be all the way up to a Million dollars+.
ALL PRIVATE CANADIAN CONTROLLED COMPANIES AND PROPRIETORSHIPS CAN APPLY
While most firms claim that SR&ED are legal corporations, that isn’t a requirement, and sole proprietorships/partnerships can also claim and file their R&D spend. Percentages of recovery of your research and development vary by category, and qualified SRED consultants or individuals can properly assess maximum recovery, which can be from 15-35% of your total spend.
THE ROLE OF THE SRED CONSULTANT
Secondly, we've already mentioned the 'SR&ED Consultant ' - it's his or her role to ensure your claim qualifies. The quality of that filed claim will determine your total cash recovery, i.e. the refund. While the essence of a claim is the ' experimentation ' around the advancement of technology, documentation is key.
TIMING IS EVERYTHING!
The third building block is how your claim is filed and when. You or your consultant is required to document your efforts and costs. Those costs typically include salaries that are a part of the R&D, payments to contractors, and overhead and materials. In recent years equipment purchased for research qualified but no longer does.
FILING YOUR CLAIM
The 4th building block. It's simply filing your claim, which is typically done when you file your annual financials. The majority of consultants that Canadian business/owners managers use are paid on a contingency basis so filing a proper claim in the right timelines is as important to them as yourself. In recent years, these preparers of claims have to identify themselves and their firm's compensation arrangement.
LET 7 PARK AVENUE FINANCIAL SHOW YOU HOW TO FINANCE YOUR REFUNDABLE CREDIT CLAIM IN SR&ED
That brings us to building block # 5, and it’s the financing of your claim unless, of course, you choose to wait for a refund. Refundable tax credits are a key part of the cash flow for many firms, and for them, it makes sense to finance a claim and accelerate cash.
HOW DOES THE SRED LOAN WORK?
A SRED tax credit loan is a fundamental process, with your actual claim, i.e. the refund serving as the loan's key collateral. Claims are financed at 70% loan to value... so a 200k claim would typically net the business owner 140k in immediate cash for their sr ed tax credits.
NO PAYMENTS ?!
And those payments? The good news is there are none during the entire waiting process - and when your claim is adjudicated and approved, you immediately receive the balance of the claim less financing costs. If you are focused on financing next year's claim and have already started to spend on R&D, monies can also be advanced before the completion and filing of your claim. In effect, it's a SRED credit line for your research and investment tax credit work.
CONCLUSION
If you're filing SR&ED claims under the sred tax credit program and feel cash flow acceleration is key, investigate SRED FINANCE by speaking to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in financing your claim.
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Stan Prokop
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