A SR&ED Tax Credit Loan is one of the best ways for small to medium sized businesses in Canada to address some critical working capital and growth and survival issues. If the Canadian business owner or financial manager is committed to R &D then financing tax credits allows you to turn the tables in a very positive manner. Let’s dig in.
It’s pretty basic stuff that firms such as yours who are committed to research in product innovation and processes are doing that to stay one step ahead of the game when it comes to competition. Unfortunately there’s a financial cost attached to that investment commitment, and that’s whether you’re a start up pre revenue /early stage revenue business, or established for years.
It’s a pretty safe bet that companies that innovate have a better chance of surviving. We read about one company named APPLE that … well apparently you’ve heard the story also.
The good news is that the Canadian government recognizes that investment you make also via the SR&ED program in Canada. And you can take that program one step further, as we have noted, by financing your tax credit instead of waiting for your cheque to arrive from Ottawa and your provincial capital. (SRED credits are a two pronged credit – federal and provincial).
It’s a pretty safe assumption that firms who could in fact invest in R&D sometimes dont as a simple measure of the capital required to move their products and services forward in a competitive manner. Simply speaking, they feel its ‘ cost prohibitive’. By the way , many business owners we meet who are great candidates for SR&ED also say it’s ‘ too much paperwork’ ; and Thats an excuse we have a real problem in accepting when the government of Canada hands out Billions ( yes that’s Billions with a B ) to the SME sector to your competitors.
That same excuse of ‘ too much paperwork ‘ brings out a key point in the whole SRED financing process. Sred claims that are financed tend to be financed by SRED consultants – professionals prepares of your claim. Their experience and integrity adds a lot to the SR&ED tax credit loan process.
So how does the whole financing of tax credits work. It’s a more basic process than you think. Credits are financed at 70% of their value in general. They take the firm of a bridge loan with no payments – i.e. your firm receives the funds for your filed credit and your loan is paid and closed when funds are remitted from the government.
And as the man or lady on TV says ‘ BUT WAIT… THERES MORE! (We supposed this is our version of a SRED Finance infomercial!) . One of the newer trends in tax credit finance is accrual finance, or R &D credit lines, allowing you to monetize next years claim… today!
If you want to turn the tables on the waiting game for your tax credits seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the tax credit financing tool you need to maintain your competitive posture.