Sred Financing: The Inevitable Rebirth Of The Tax Bridge Credit Loan In Canada
SRED (SR&ED) research credits in Canada allow participating firms to maintain their competitive edge while at the same time hopefully also staying one step ahead of the competition. But how does the Canadian firm finance the spend that comes with that R&D? Let's dig in.
It's pretty safe to say that any type of financing for firms in the SME sector is a challenge - so even safer to say that funding your research spend simply accentuates that challenge. There's no real form of ' debt finance' that allows a firm to finance its R&D.
In fact we suppose that of the thousands of firms out there that take advantage of SRED credits many of them are in the start up and pre revenue stage, making it even more difficult to access any form of financing, let alone Research spend.
Top experts in fact tell us that Canada, probably quite uniquely has about 98% of its businesses in the SME sector. That fact, coupled with the fact that R&D involves certain elements of ' risk ' make financing availability for SRED claims critical
Essentially two types of financing are available for SR&ED research credits. IF your firm has completed its annual claim and filed you have the potential to immediately access financing for your claim, which is typically arranged through a non bank entity. In our experience very few claims SRED claims are financed by banks on the sole merit of the SR&ED claim. We believe that if your bank would consider financing the claim it is in the context of a much larger borrowing relationship, which the majority of SR&ED claimants probably don't have in place.
Recent trends in Sred Bridge Loans (most claims are structured as a bridge loan with no payments made during the duration of the loan) allow Canadian businesses to access financing during the actual research activity spend itself. It's simply an acceleration of the ' waiting game' that participating Canadian business finds itself in while the federal and provincial governments adjudicate respectively their portions of your claim. Bottom line, this type of ' accrual financing’ allows your firm to eliminate the potentially lengthy wait involved in processing and in some cases auditing your claim.
For a firm that's in start up mode the actual financing received from a SRED research tax credit financing can be the majority of the cash that firm will receive all year.
All sorts of industries take part in the SR&ED (Scientific Research and Experimental Development) work. That can be software firms, pharma companies; mfg entities... research runs the whole gamut of Canadian business. We'll point out here that given the broad nature of research your ability to prepare and file a sound legitimate claim often rests on the shoulders of Canada's SRED consultants.
When it comes to the financing of your claim we point out to our clients that one of several key factors in financing approval is often the reputation of the SR&ED consultant you employ to prepare and file your claim.
If your firm is looking to recover research expenses under Canadian government SR&ED seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in completing a SR&ED bridge loan to provide valuable working capital and cash flow to your ongoing financing needs.
Stan Prokop [http://www.7parkavenuefinancial.com/stan-prokop]
It's pretty safe to say that any type of financing for firms in the SME sector is a challenge - so even safer to say that funding your research spend simply accentuates that challenge. There's no real form of ' debt finance' that allows a firm to finance its R&D.
In fact we suppose that of the thousands of firms out there that take advantage of SRED credits many of them are in the start up and pre revenue stage, making it even more difficult to access any form of financing, let alone Research spend.
Top experts in fact tell us that Canada, probably quite uniquely has about 98% of its businesses in the SME sector. That fact, coupled with the fact that R&D involves certain elements of ' risk ' make financing availability for SRED claims critical
Essentially two types of financing are available for SR&ED research credits. IF your firm has completed its annual claim and filed you have the potential to immediately access financing for your claim, which is typically arranged through a non bank entity. In our experience very few claims SRED claims are financed by banks on the sole merit of the SR&ED claim. We believe that if your bank would consider financing the claim it is in the context of a much larger borrowing relationship, which the majority of SR&ED claimants probably don't have in place.
Recent trends in Sred Bridge Loans (most claims are structured as a bridge loan with no payments made during the duration of the loan) allow Canadian businesses to access financing during the actual research activity spend itself. It's simply an acceleration of the ' waiting game' that participating Canadian business finds itself in while the federal and provincial governments adjudicate respectively their portions of your claim. Bottom line, this type of ' accrual financing’ allows your firm to eliminate the potentially lengthy wait involved in processing and in some cases auditing your claim.
For a firm that's in start up mode the actual financing received from a SRED research tax credit financing can be the majority of the cash that firm will receive all year.
All sorts of industries take part in the SR&ED (Scientific Research and Experimental Development) work. That can be software firms, pharma companies; mfg entities... research runs the whole gamut of Canadian business. We'll point out here that given the broad nature of research your ability to prepare and file a sound legitimate claim often rests on the shoulders of Canada's SRED consultants.
When it comes to the financing of your claim we point out to our clients that one of several key factors in financing approval is often the reputation of the SR&ED consultant you employ to prepare and file your claim.
If your firm is looking to recover research expenses under Canadian government SR&ED seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in completing a SR&ED bridge loan to provide valuable working capital and cash flow to your ongoing financing needs.
Stan Prokop [http://www.7parkavenuefinancial.com/stan-prokop]
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