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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
SRED Research tax credits in Canada can be financed. Your business's ability to finance your SR ED claim seems to come as a surprise to many business owners who take advantage of this popular program. Let's dig in.
The concept of financing a Sr&Ed claim is really the final step in maximizing the benefits of Canada's most popular and generous refundable tax credit program for business. For those interested, the program's actual name is the Scientific Research and Experimental Development program.
Having gone through significant changes over the past years, the R&D program is still very robust. Just how robust - well, in fact, thousands of firms apply and qualify every year, and they claim cash credits well over 3 Billion dollars annually. Naturally, only firms with an R&D aspect to their business qualify, and they must adhere to the program's spirit. By the way, claimants can claim every year, and many firms file and qualify every year.
To maximize the program's benefit - i.e. receiving your refund involves preparing a quality claim under program guidelines. This typically is done by 3rd parties known as SR&ED consultants. The benefits of using these folks are pretty simple - they have specific expertise in the program. Over time, they have gravitated to a contingency fee for their work - meaning, of course, they absorb the risk of time and preparation of your claim at no cost to your company. They then pre-negotiate a fee with yourself, which typically is due on receipt of your claim. In recent years, these consultants were heavily scrutinized, and they now actually are identified on your claim and their compensation.
While your SR ED claim can be financed during preparation, at the time of filing, or post-filing, there is always the chance your claim could be scrutinized or audited. Typical scenarios include claim eligibility, documentation and backup; the government actually publicizes timelines for assessing your claim and issuing a refund.
To cash flow your SR ED credit immediately, a simple application process is in place. Typical info on your business includes a copy of your claim, info on who prepared it, and your financial statements. In the early-stage, firms can still 100% qualify for SRED financing as the key collateral behind the loan is the refund itself. Many early-stage firms apply and qualify for SR&ED loans.
Why benefit from a SR ED financing? It's all about cash flow, your company’s ability to turn your R&D expenses back into cash for any company purpose.
If you're interested in seeing how easy it is to finance your R&D credit, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in turning your refund into an early cash flow bonus for your business.
Stan Prokop
