SR ED Tax Credits Loan Financing 7 Park Avenue Financial

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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

SR ED Tax Credits loan financing in Canada is all about ' connecting the dots ' in the process to recoup your R&D capital investment. That ability to understand the SR&ED process is somewhat best achieved by understanding how those ' dots' are connected.

Recouping a solid majority of your costs in the investment your firm has made in innovation in products and processes is what Canada’s Scientific Research & Experimental Development (hence the term ' sred’)   is all about.

Whether your firm is a start up, emerging, or middle market private company in Canada the cash you spend in R&D probably plays a significant role in your business financing mgmt challenges.

So what then is the ' game plan ' in SR&ED finance loans?  Naturally it's all about ensuring you have a quality claim submitted in hopefully a timely manner. The ability to satisfy Canada Revenue Agency's requirements starts with your selection of a qualified SRED consultant to prepare the claim. We would add the reputation and quality of that persons work certainly aids in financing your claim as it simply adds credibility.

A large majority of Sred claims are eligible for a cash refund - hence the ability to finance your request. (Some incentives require that you reduce your taxes payable with your claim). That refund can of course be used for any general company purpose, including more R&D to keep your company competitive.

Why then does financing your refund make sense? The basic reason is pretty simple - Your SR&ED refund is just that, a refund that is not repayable to the government. Therefore, thousands of firms that take advantage of the program receive billions (billions with a ' b'!) every year. So financing your claim does one simple thing. It accelerates your cash flow refund.

How does the SR ED tax credits loan financing strategy work ? It's a quick and efficient process involving submitting a standard  application to finance as well as a copy of your actual SRED submission .  Part of our ' connecting the dots' analogy involves how the different parties in an R&D refund work. Along with our aforementioned SR ED consultant your accountant is actually responsible for including the claim in your annual tax return. That starts the clock ticking for your refund.

How then does the loan work? It's essentially a ' bridge loan ' - with typically 70% of your total claim being turned into a loan with no set payment terms. The 'no monthly payments' scenario is finalized when the govt processes and sends your refund. At that time you of course receive the balance of your refund, less financing costs which have accrued over the ' waiting period'.  That waiting period involves standard processing times by CRA and the potential that some claims are reviewed from a financial and technical perspective.

If you're focused on speeding up cash flow and recouping a large part of your R&D investment consider SR&ED finance loans as a winning strategy - seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.

Stan Prokop