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SRED Finance In Canada : Accessing SR&ED Loans
How To Win The War On The Wait For Your SRED Refund





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You have filed your SRED (SR&ED) tax credit. The benefits of this program can’t be overstated. Now all you have to do is wait for the cheque from the government, right? Let’s dig in.


There is another option. As a Canadian business owner and financial manager you may have chosen to ‘book' your SRED claim as an account receivable – money owing to you, that is non-payable, from the government. Some of our customers choose to book the claim as an asset/receivable, some choose not to, or in some cases they book a conservative estimate of their final cheque.


Assets can be financed – your SRED claim is an asset, and is in effect a receivable, somewhat longer in nature than you other receivables (hopefully).  Those Canadian firms that have bank lines in place have probably realized by now that most chartered banks in Canada do not include your SRED claim as a true receivable.


So, can that receivable be financed and monetized?? It absolutely can, via the process of SRED financing.  We hear more often than not the term ‘factoring' in business – which is, of course, the sale of a specific or group of receivables.


That’s what SRED financing is about.  A carefully constructed SRED financing allows you to ‘cash in' – the finance people say ‘monetize' the SRED claim. That’s valuable cash flow that might not have come into our working capital for many months, in some cases a year based upon the timing of your filing, the complexity of the claim, the technical audit, etc.


We strongly recommend to business owners that if they are looking to finance an SRED claim that they work with an experienced and trusted advisor in this area.


Whenever we meet with a client or business owner who wishes to inquire about our SRED financing work the company invariably wants to know several key things –


How does it work?

What does it Cost?

How much do I get on the claim?

What’s involved?

When do we get our funds?!


Let's discuss those issues in a general way.  We honestly think our comments will apply to almost 95% of SRED financing claimants. You want facts? We’ll give you the facts!


SRED 101 – Everything you wanted to know about SRED Financing, but were afraid to ask.  Your SRED claim is sold/assigned to the financier - Similar to the factoring practice of selling a receivable, you sell your claim for the purposes of getting the cash – it’s a sooner rather than later scenario!  SRED financing is a form of alternative financing, rates vary with the size and complexity of the claim, and rates are higher than bank financing.


In our experience firms financing their SREDs are totally focused on generating additional cash flow and working capital so they can continue to grow sales and profits.  Claims are financed at approximately 70% of their LTV. By LTV we mean 'loan to value', so a company filing a $300,000.00 SRED claim would receive $210,000.00. The balance owing to you (less financing costs) is funded when the claim is finalized and paid by CRA – Revenue Canada.


Oh, and what’s involved?  In our work with clients we maintain that SRED financing is not unlike any other financing: an application, some backup information, some due diligence around your company and your SRED, then documentation, and you’re funded. We typically have been able to originate and complete financings for our clients in 2-3 weeks.


Bottom Line? SR&ED Financing is a viable and valuable alternate form for working capital financing in Canada! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your tax credit financing needs. 


' Canadian Business Financing With The Intelligent Use Of Experience '