Shining A Spotlight on SR&ED Tax Credit Financing

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Canadian business owners know that the SR&ED program in Canada is a huge benefit, and an incentive to the funds that Canadian firms commit to research and development - we haven’t met one firm yet who doesn’t think it’s a great program.

But are you missing out on one aspect related to 'SRED', which is that you are able to implement SRED tax credit financing that in effect supercharges your non-repayable tax grant? Simply speaking your ability to monetize or cash flow your SR&ED claim remarkably enhances your overall business financing.

THE SR&ED program (Scientific Research & Experimental Development) reimburses you for your R&D expenses - you know that already. So at this point a compelling choice emerges - you have the option of waiting for your cheque from Ottawa and the Provinces (you are perhaps familiar with the saying 'the cheque is in the mail’!) or you can facilitate an SRED loan to obtain your cash today.

Many younger, emerging or start-up firms that we have worked with count on the cash from their SRED grant as one of the largest receivables or cash injections they will receive at one time during the year. That’s a lot of money to most firms. Actually the government statistics show that anywhere from 2-4 Billion dollars in any year go out to firms such as yours in the form of non-repayable SRED grants.

'So how does SRED tax credit financing work?' ask clients. Is it complicated, time-consuming, what else is involved? Those are all perfectly legitimate questions.

We'll provide a very basic overview of the SRED tax credit financing process. First thing's first - you need an SRED claim completed and filed. In certain circumstances financing can also be done prior to filing your claim, but for simplicity's sake we will focus on your claim having been filed.

If your claim has been prepared by an SRED consultant with experience and a reputation, that plays a great factor in your SRED loan approval. As you can imagine the actual SRED claim is the collateral for the loan, so we want to ensure your claim has a very significant chance of being approved. We hate to say it but it is rare that a business owner or your accountant can prepare a proper claim, simply because as in all fields of business, an expert is preferred.

For the actual financing of the claim it also doesn’t hurt to work with an SRED tax credit financing expert. He or she will enhance the speed of your funding, which involves simply a basic standard business financing application as well as a review of the claim as we have stated. Funding is not for 100% of the claim, a very typical amount is 70%, and the other 30% is more or less to be viewed as a buffer. You can expect the whole process to take a couple of weeks, which certainly isn’t bad, and if you focus on working with an SRED financing expert you should have minimal delays if any.

In summary, if the Canadian government is allocating billions to firms such as yours, clearly having cash is better than waiting for cash - consider monetizing your claim today and stay one step ahead of your competition that is still waiting for that cheque. Remember, as we said, it’s in the mail!

' Canadian Business Financing With The Intelligent Use Of Experience '

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

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