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Sr ed Tax Credit Financing – Your SR&ED Loan is Approved

Guest post by: Stan Prokop

Article Overview: Information for Canadian business owners who claim sr&ed research and how sr ed tax credit financing can generate positive cash flow via a sr&ed loan that is collateralized against your claim .

Sr ed Tax Credit Financing – Your SR&ED Loan is Approved

Is it possible to combine the benefits of sr ed grants with the benefits of sr ed tax credit financing for a sr&ed loan that makes sense? It sure is and let’s helps you understand some of those basics.

If you are either filing a sr&ed claim for the first time, or if you're a repeat "offender" - translated = you have experienced sred claim success for years... then why not combine financing power with your claim and recoup your funds faster . In today’s worlds it seems always about speed it seems, so if the Canadian government is paying you to do research , and you can recoup and deploy those funds even faster by financing your claim, well ,, why wouldn’t you .

Our focus here in our shared information is financing your claim... so we assume you are fully aware that if your firm is developing new products and services, manufacturing prototypes, improving processses, developing software, advancing mfg ... well .. We think you get the point! Which is simply your firm is a poster boy for sred financing and a sred loan and you should be filing to recover in the range of 35-40% of all your expenses.

Your credit is a non repayable credit, so your ability to monetize your claim and get that cash flow working into your firms operating cycle is key.

So how can those sred tax incentives are monetized? Simply speaking it’s the ability you have to use your sred receivable, because it is a receivable, and finance it in a manner that you would just as if it were any customer - except that in this case the customer is a pretty good paying client... ie the federal and provincial government.

Sound complicated? Nothing could be simpler. Let’s cover off the basic process and focus back in on those benefits.

To finance a claim you have to have a claim. Makes sense so far, right. Claims can be prepared by either yourself or someone that is commonly called a sred consultant. We wouldn’t be perfectly honest by telling you that claims prepared by outside respected consultants carry far more weight than claims prepared internally by yourself of your accounting firm. It’s simply a case of relying on expertise.

After your claim is filed you complete a simple financing application consisting of info about our firm, your current financial situation, as well as providing the actual technical claim and tax filing copy. SR ED tax credit financing relies on your claim being filed- in certain special situations you can actually finance the claim pre-filing - but we'll leave that one for another day.

The ability of many firms, particularly start ups, and tech firms that burn through a lot of cash , to recoup sred funds is a key driver in the whole sr ed loan process . That cash flow in many cases is seen by our clients as the life blood and in some cases the largest amount of cash they will receive in the current year.

Many business owners don’t know that you can file for two years, which of course simply means you’re doubling the amount of cash you can claim.

Many smaller filings these days for sr&Ed claims seem to be coming thru faster in the form of cash refunds... if you have a larger or first time claim it can take many months, potentially calling for a technical review of your project.

That’s where a sr Ed loan and sr Ed tax credit financing come in, because 70% of the sr&Ed claim is generally advanced in the form of a bridge loan. You make no payments on the loan and the loan is in effect settled when your final refund comes in from Ottawa .That allows you to utilized those funds for working capital, equipment, on going sr ed work , and just any general corporate purpose .

Speak to a trusted, credible, experience Canadian business financing advisor in the sr Ed tax credit financing area. This will increase your chances of a successful and timely approval, with most financings for a sr Ed loan happening within a 30 day period. That’s a sr&Ed cash flow optimization strategy that makes sense, right?

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Article Tags: sr ed loan, sr ed tax credit financing



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