The SR&ED bridge loan in Canada. Did it almost become a hushed secret at a timer when the very existence of the SRED tax credit seemed in doubt?
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 seemed in doubt in 2012.
Well, the dust has settled 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 who felt they would do ‘ better’ or ‘ worse ‘ under the new changes are finding that its 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, the formal name of course being Scientific Research & Experimental Development. Hence SR&ED. Your firms ability to demonstrate you have improved a process or processes, or come up with new technology or software qualified you for Sred.
Were e 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.
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 an options on your SR&ED tax credit .. You can wait for months, or much longer for you refund cheq. . OR … you can finance your claim.
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 you ability to provide the SRED tax credit as collateral is all thats required.
So is SRED dead? It looks like it isnt. 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, dont forget. SRED tax credit financing loans are here today, they were here yesterday, and they will be here tomorrow.
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.