Unlocking Growth: SRED Refundable Credit Financing & SRED Loan Funding | 7 Park Avenue Financial

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YOU WANT FINANCING FOR A SRED REFUNDABLE CREDIT – TALK TO US ABOUT A SRED LOAN AND HOW SR&ED FINANCING WORKS!

SR&ED Loans: Powering Innovation and Growth for Canadian Companies

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Read this article because it reveals how SRED loan financing can transform your company's financial outlook

Maximizing Returns: The Benefits of SRED Loan Financing

Introduction - Scientific Research and Experimental Development (SR&ED) tax credit funding for refundable tax credits in Canada.   

Of the many questions clients ask about the SR&ED (SRED) program in Canada a typical one, actually, two, is ' Can we finance our SRED claim when we conduct research... and how is financing SR&ED credits  done?'

Exploring SR&ED Loan Basics 

Let's work through a short SRED loan primer and cover the basics around financing under the tax credit program, allowing you to better understand the potential benefits of financing your SRED refundable credit, and, more importantly determining if it makes sense to finance that claim for work done on scientific or technological advancement in your industry.

Understanding SRED Claim Percentages  

SRED claim percentages actually vary by province, because they are a combo grant that is administered and funded by both your province and Ottawa. While percentages of the amounts you receive might vary a bit between provinces for the purposes of our discussion we'll speak in general terms, because we are pretty sure you aren’t going to move your company location to increase your non-repayable SRED credit!

 Eligibility and Financing Options - SR&ED tax credit financing for reimbursable tax credits in Canada 

SRED claims vary but in general, they do not go much more than over a million dollars. You have the ability to finance your claim if it’s eligible. We will also mention that if your company is perfectly willing to wait for your cheque that’s a good thing also, it just seems to us that if you can put non-repayable tax credits to work to generate additional revenue and profits, well... is a good consideration of financing our SRED refundable credit.

The Role of Claim Quality  

A key to financing your claim is the quality of your claim. Three types of preparers are out in the marketplace - your company itself can prepare the claim, your accountant can, or you can use an expert, otherwise known in the industry as an SRED consultant. Theoretically, all three parties could prepare a claim that is financeable via eligible expenditures, but the reality is that your SRED finance firm leans more preferably to the utilization of an SRED consultant. That's simply because expertise in an area such as an R&D overview submission seems to make the most sense.

Government Funding and Cash Flow  

The government pays out billions of dollars each year to firms such as yours - so filing a claim, and considering the financing of that claim can be a key part of your overall company cash flow management.

First-Time Claim Considerations  

If your claim is a first-time claim and is less than straightforward there is a strong possibility based on current SRED trends that you could wait close to a year for your refund. So the question then becomes, could your firm utilize effectively a SRED loan as a bridge type financing for additional cash flow and working capital?

 SR&ED Loan Process 

If you are answering in the affirmative then it’s simply a case of working with a trusted, credible and experienced Canadian business financing advisor to fast-track a SRED financing. Typical SR&ED loans take a couple of weeks or so to process; it’s a basic business application, with your SRED refundable credit collateralized. Advances on your claim are in the 70% range and are typically structured as no payments, with the final 30% due to your firm, less financing charges, at the time of final disbursement from Ottawa and your province.

SRED as a Talent Attraction Tool    

Use your company's participation in the SR&ED program as a talent attraction and retention strategy. Highlight your commitment to innovation and research in your recruitment efforts. Potential employees interested in cutting-edge projects may be drawn to your organization, which can enhance your R&D capabilities organically.

SRED for Environmental Innovation  

Explore the less-known aspect of SR&ED tax credit financing that focuses on environmentally friendly initiatives. Use the credits to fund research and development projects that have a positive environmental impact. This approach not only supports sustainability but also aligns with the growing demand for e

 Key Takeaways 

1. Understanding what the SR&ED (SRED) program is and how it functions is essential. This program supports research and development activities in Canada.

2. SRED Refundable Credits: These are the tax credits that eligible companies can receive as a refund for their qualified research and development expenditures.

3. SRED Loan: Knowing that companies have the option to finance their SRED claims through loans, which can provide them with immediate cash flow.

4. Claim Eligibility: Understanding the criteria that determine whether a company's SRED claim is eligible for financing. Eligibility is a crucial concept.

5. Claim Quality: The quality of your SRED claim plays a significant role in securing financing. Exploring how to prepare a financeable claim is vital.

6. Government Funding: Recognizing that the government allocates substantial funds annually to support SRED claims, which can impact a company's cash flow.

7. First-Time Claim Considerations: If you are making first-time SR ED claims, it's important to know that the process might be less straightforward and that financing can be particularly helpful.

8. SR&ED Loan Process: Understanding the basic steps involved in securing an SRED loan, including the application process and how advances are structured.

Conclusion - Funding options for SR&ED tax credit refunds in Canada   

A short summary of our shared info is very simple - if you qualify for a claim under the SR ED tax incentive program then clearly use the program!

If you don’t you are missing out. Want to wait a year for your money... great, keep us posted, the cheque is in the mail. Want additional working capital and cash flow today out of your non-repayable SRED credit, then consider the SRED loan financing program today. It’s as simple as that.

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your business financing needs.

FAQ

Who is eligible for SR&ED financing?

Companies engaged in eligible R&D activities and scientific and technological advancement in Canada can potentially qualify for SR&ED financing as the government strives to encourage Canadian businesses to focus on research in their industry. Areas such as sales promotion or quality control around products and market research do not qualify for SR ED.

Why should I consider financing my SRED claim?

SR ED Financing under this tax incentive program can provide much-needed working capital, accelerate growth, and keep your business agile by unlocking the value of your SRED credits.

How does the SR&ED loan process work?

It involves a straightforward application, with your SRED credits used as collateral. You receive advances, and the final payment is made upon disbursement from the government.


What are the benefits of using an SRED consultant for your refundable tax credit claim?

SRED consultants specialize in preparing high-quality claims, increasing your chances of securing financing and maximizing your SRED benefits around R&D around scientific or technological uncertainty



How can I find a reputable SRED consultant?

Research online, ask for referrals and check their credentials and track record to find a trusted consultant who can prepare the claim/tax refund and help companies qualify while properly identifying technical challenges - Software development firms are huge users and beneficiaries of the program as they strive to achieve technical advancement having furthered technical knowledge..


Can SRED financing affect my business's credit score?

SRED financing typically doesn't impact your credit score as it's secured by your SRED credits, not your credit history.


What are the alternatives to SRED financing for business growth?

Other options and Alternative funding sources tailored towards supporting the repayment of refundable taxes from the SR&ED program in Canada. include short-term working capital loans, merchant cash advances, and traditional bank loans. Choose the one that aligns best with your business goals.


 

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