YOUR COMPANY IS LOOKING FOR SR&ED FINANCING!
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:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
ELIMINATING THE OBSTACLE TO INNOVATION - CASH FLOW SRED FINANCING
INTRODUCTION
R&D Financing needs? Not every Canadian business owner or financial manager takes advantage of the Canadian Government SR & ED (Scientific Research & Experimental Development) tax credit program.
SR&ED loans and R&D financing are revolutionizing the Canadian innovation landscape, empowering businesses to push the boundaries of technology and scientific research.
It’s clearly in our opinion the best and truly legitimate and valuable programs that a government provides for its business entrepreneurs in Canada. So don’t let lack of funds be your ‘obstacle to innovation‘. Let’s dig in on sr&ed financing and those tax credits you can finance for cash flow.
WHAT IS SR&ED
The formal name for this program used by thousands of Canadian firms, and your competitors, is Scientific Research and Experimental Development program - it provides tax credits or cash refunds to companies who conduct eligible research in Canada. SR&ED tax credits are financeable!
The SR&ED (Scientific Research & Experimental Development) loan and R&D (Research & Development) financing program is a pivotal Canadian government initiative that offers financial support to businesses engaged in innovative research and development activities.
This program aims to stimulate technological advancement and economic growth by providing loans or tax incentives to companies undertaking experimental or scientific research that could lead to new or improved products or processes.
THE PROGRAM BEHIND SR&ED FINANCING
Many, when they hear of the program for the first, are amazed that they can receive significant funds, that are non–repayable (yes, that’s non–repayable!) for their ongoing investment in research, product development, business processes, etc.
And, those that do take advantage of the program dutifully wait many months, in some cases a year or so or more for their cheques from the provincial and federal government.
Why not borrow against these funds and utilize those funds for much-needed working capital and cash flow to further fuel the growth of your firm?
SR & ED financing is still relatively unknown in Canada – Sred funding clearly a very specialized type of financing, somewhat ‘boutique’ let us say, in nature, relating to the tax credits under the program.
WHY DOES THE GOVERNMENT SUPPORT THE SRED PROGRAM
The government, via the program, wants to provide funds and encourage Canadian businesses so they can continue to further their research and development and achieve technological advancement, providing Canadian firms with a lead in technology and business via the tax refund for their SR ED projects
HOW DOES THE SR&ED LOAN PROCESS WORK
So let's get back to the concept of SR&ED funding loan, aka ‘SHRED‘, aka 'SR &ED'. SR ED Loans are typically for approximately 70% of your combined federal and provincial claims.
The claim can be financed as soon as you have formally filed the claim with the government, which is at the same time you do your year-end tax filing. That allows you to start the sred refund process with the Canada Revenue Agency.
SR ED applications can be filed for the last two years, so on occasion, your firm might in fact have a significant receivable generated by that filing you have done. Our observation is that some companies book that receivable in their financial statements for the full amount of the claim. Some companies take the conservative approach and only record the cash coming in when it is received from the government.
WILL BANKS FINANCE SRED?
So, you as a business owner or financial manager of a Canadian company are asking yourself the obvious – if I book the SR ED as an account receivable, will my bank provide financing for it. Our experience is generally ‘no ‘they will not.
Canadian chartered banks, being somewhat more conservative in nature, recognize the SR ED claim may or may not be approved. So if there is any risk in your financial structure as viewed by the bank they will generally not advance funds on refundable tax credits.
The private sector of Canadian finance is in fact doing the SR ED financing. Claims are financed on the basis of your firm's overall financial status, although we add that even pre-revenue companies or companies that are losing money can still obtain SR ED financing via a bridge loan on their refundable tax credits.
KEY TAKEAWAYS
-
Eligibility Criteria: Understanding who qualifies for SR&ED loans and R&D financing is critical. Eligibility often hinges on conducting eligible research activities that contribute to new or improved products or processes. Comprehending these criteria can guide companies in shaping their R&D activities to align with funding requirements.
-
Tax Incentives and Refunds: A substantial part of the program revolves around tax credits and refunds. Grasping how these incentives work, including what percentage of R&D spending is reimbursable, can significantly impact a company's financial planning and investment in R&D.
-
Documentation and Compliance: Proper documentation of R&D activities is crucial for successful financing applications. This includes detailed records of experiments, failures, successes, and expenditures. Understanding the importance of compliance and meticulous record-keeping is essential for maximizing benefits from these programs.
-
Application Process: Familiarity with the application process, including deadlines and necessary documentation, is vital. Knowing how to navigate the application steps efficiently can greatly increase the chances of securing funding.
CONCLUSION
'SR&ED CANADA' is a great program, fact one of the most used Government business programs in Canada - It is not a 'grant' - it is a refundable tax credit for private corporations.
Every Canadian firm that files a SR ED claim should consider financing the claim if they feel the additional cash flow and working capital will assist their company in continued growth and success.
Seek out and speak to a trusted, credible, and experienced Canadian Business Financing advisor who can show you how to Talk to an expert and use this alternative financing as a great way to boost cash flow.
FAQ
What exactly are SR&ED loans and R&D financing?
SR&ED loans and R&D financing are government incentives that provide financial support to businesses engaging in research and development activities, aimed at encouraging innovation.
How can my business benefit from SR&ED loans?
Your business can benefit from tax credits or refunds on eligible R&D expenditures, reducing overall project costs and enhancing your capacity for innovation.
What types of projects qualify for the SR ED program?
Projects involving scientific or technological advancements, addressing specific challenges or creating new products or processes, are typically eligible.
Are there specific industries that benefit most from this financing?
While beneficial as a sr ed refund to Canadian companies in many sectors, technology, manufacturing, Software development, biotech and pharmaceutical industries often see significant advantages due to their heavy R&D focus and eligible expenditures via the government tax incentive program
Is the application process complex for SR&ED loans and R&D financing?
The process can be intricate, requiring detailed documentation of R&D activities and expenditures documenting the sr ed refund , but understanding the requirements simplifies the application.
What is the difference between SR&ED loans and traditional loans?
SR&ED loans are specific to R&D activities and often offer more favorable terms and tax incentives compared to traditional business loans and venture capital equity give-up scenarios
Can startups access SR&ED loans and R&D financing?
Yes, startups engaged in qualifying R&D activities can apply, making these programs particularly attractive for new, innovative companies.
Does failing in R&D affect my financing eligibility?
No, failures in R&D can still count towards SR&ED investment tax credit eligibility, as they contribute to the overall experimental development process under the sr ed investment tax incentive program
What documentation is needed for SR&ED loan applications?
Detailed records of R&D activities, expenditures, and project reports are typically required for a successful application for SR ED credits
What role do consultants play in the SR&ED loan process?
Consultants can provide expertise in navigating the application process, ensuring compliance and maximizing the financial benefits for Canadian controlled private corporations that conduct research under the program
Can SR&ED loans and R&D financing be combined with other grants?
Yes, these can often be combined with other government grants or incentives, but specific rules regarding the stacking of funds apply.
