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Information and Guide To Sr&ed Financing Loans
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SR&ED DEBT FINANCE 101
The SR&ED bridge loan in Canada. Did it almost become a hushed secret at a time when the very existence of the SRED tax credit seemed in doubt? Fear not as SR&ED advance funding loans are here to stay for those refundable tax credits under the program.
The real secret of SRED loans in Canada is that they were available for your tax credit prior to the current budget, and, guess what?... They remain in place today for your tax credit financing strategy!
Most Canadian business owners who utilize the SR&ED program in Canada were keenly aware that the very existence of the tax credit and the sr ed claim seemed in doubt in 2012 - That concern is long since gone!!!
Well, the dust has settled a long time ago, and if we had to say there was a general consensus we would have to say that in general there's a status quo around the program. Many firms that felt they would do 'better' or 'worse' under the new changes are finding that it’s a case of 'it depends' - so it could have been a lot worse.
Thousands of Canadian businesses received billions of dollars every year under the program funding, the formal name, of course, being Scientific Research & Experimental Development. Hence SR&ED. Your firm’s ability to demonstrate you have improved a process or processes, or come up with new technology or software qualified you for SRED.
PROGRAM CHANGES IN SR&ED
We’re not (fortunately?) accountants, we're financiers, so we'll let you talk to your SRED consultant or advisor on the various rates changes that took place, some up, some down, under the program. We would note that the biggest change seems to be the fact that capital expenditures don't qualify under the program, but salaries and materials and portions of your overhead still qualify. In SRED it's all about a qualified expenditure as approved by Canada Revenue Agency.
We'd love to take a poll one day on how many Canadian firms know that SRED Tax Credit Financing exists in Canada. We'd venture to say is clearly the majority, not the minority. So if we had to reveal that 'hushed secret' on this major Canadian tax credit incentive it's simply "Hey, you've got options on your SR&ED tax credit... You can wait for months, or much longer for you refund cheque" OR... "you can finance your claim".
HOW DOES THE SR&ED BRIDGE LOAN WORK?
If you do have a claim that's prepared by an experienced and credible SRED consultant that claim can easily be financed. The basic rules around that are as follows - The SR ED bridge loan gives you approximately 70% of the face value of your claim. No payments are made during the loan period - at final approval and payment of your claim by Ottawa and the province you receive your remaining 30%, less financing costs, a simple application and your ability to provide the SRED tax credit as collateral is all that’s required.
So is SRED dead? It looks like it isn’t. We can hear the sigh of relief among all those SR&ED consultants who provide the majority of the writes ups on claims in Canada.
And, don’t forget. SRED tax credit financing loans are here today, they were here yesterday, and they will be here tomorrow.
The SR&ED Financing program could not be more simple and easy - after your firm and your SR&ED Consultant has completed your filing a simple business application is completed, along with the appropriate info on your claim, amount, etc. After basic due diligence that would be required on any business loan your company receives your funds - No payments are made for the duration of the loan and the key collateral on the loan is of course your SR&ED claim and the government funds owing to you under the refundable tax credit program in Canada.
Speak to a trusted, credible and experienced Canadian business financing advisor on help for SR&ED BRIDGE LOANS for working capital and cash flow for your Canadian firm.
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