Many companies in Canada taking advantage of the sred program (formally called the Scientific Research and Experimental Development) are surprised to find that they can in effect ' cash flow ' or 'monetize' that claim into the liquid gold business calls cash flow.
So, does sred financing make sense for your firm - by the way, we think it does... and how can you ensure you qualify? Let's ensure we cover off some of the basics around those issues in order for you to determine if sred finance makes sense for you.
If we go back to square one it all comes down to knowing what the program is, ensuring you qualify, and then having a claim to submit. SRED claims are submitted when you file your year end tax return.
If you have never filed a sred claim 2 key points immediately are a focus of discussion when we meet with clients - first of all you have to have the technical expertise to prepare a claim. Secondly, in the last year or so the government has altered the program in order to make submission more expeditious. You of course need to be aware of the new format guidelines, which in effect simplify your preparation and filing process.
In our opinion, and most agree we are quite sure, you want a sred consultant to prepare your claim. These are folks in private industry who specialize in preparing claims, and more often than not they have done work in your industry. We are quite sure we have your agreement than an expert in any industry is better than a rookie.
Technically your accountant could prepare you claim, but we're often surprised to hear clients tell us that their accountant was not even aware of the program!
In order to receive funds for your sred credit - and by the way these funds are non - repayable (yes you heard us correctly) you simply need to file a qualified claim.
Waiting for your refund is what sr Ed tax credit finance is all about. Sred financing is based on the premise that your firm could use the cash flow today, instead of waiting for weeks, months, or even a year in some cases.
So how do you factor, or discount, or cash flow, or monetize that sred claim. (All those terms mean the same thing). It’s a simply process; locate a specialist in Canadian business financing who can assist you in preparing a simply application that includes your sred claim and basic financial application info. Claims are generally financed at 70% loan to value, meaning the 30% is held back as a buffer. No payments are made on the financing and the final cheque from the government is netted against your advance.
In the meantime you can make use of those funds for any general corporate purpose.
So - do you qualify for a sred tax credit financing - if you have a claim you do? Should you consider a factor or finance scenario around your claim - that’s for you to decide and for us to suggest. And by the way, if you don’t need cash or working capital, then don’t finance the claim - but who is in that position these days?
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Stan Prokop - founder of 7 Park Avenue Financial -
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/sr_ed_tax_credit_sred_financing_factor_sred.html
Showing posts with label SR ED Tax credit. Show all posts
Showing posts with label SR ED Tax credit. Show all posts
1/8/11
12/4/10
Your Competitors use SRED Financing to Cash Flow Their CRA SRED (SR&ed) tax credit claims for Working Capital
Your business success hasn’t been based on doing what your competition does, but if they are utilizing sred financing to grow their business doesn’t it make sense to investigate why cra sred claims, when financed, might put you a step ahead of the competition?
We think so , and if the Scientific Research and Experiment Development Program , aka " sr & ed ) pours billions of dollars into Canadian company coffers every year why wouldn’t you want to accelerate the access to cash for those claims and maintain your own competitive posture in your industry .
The financing of you sred claim, via what we could call a sred bridge loan is a recognized and solid manner in which to recover working capital faster. The very essence of having a sred claim filed of course means you will recover your funds, but doesn’t it make sense to recover them sooner, putting cash flow and working capital back to work for your company.
In business it’s all about timing, and in case you haven’t noticed things aren’t exactly moving slower in Canadian business today. So is it an advantage to get immediate cash for your sred calim instead of waiting several months, in some cases up to 9 or 12 months for your funds? You probably don’t need exactly cash flow these days - therefore we strongly recommend waiting for your cheque from the feds, it’s ' in the mail ' so to speak. However, if you're among the many clients that we meet that could actually use additional cash flow today, then you should be considering financing your claim.
What are the mechanics of having your claim financed, ask client such as yourselves? To say that SR &ED financing is a niche industry requiring knowledge and expertise is a bit of an understatement. That is why we strongly suggest you work with a trusted, credible and experience d business financing advisor who will walk you through a very basic process.
Sred financing will, 9 times out of ten, get you approximately 70% of your total sr&Ed filing as a cash flow bridge loan. Why 70%. It is simply because the remaining 30%, which of course still belongs to you, is held back as a buffer to cover both any adjustments the good folks in Ottawa might make to your claim, and it also helps to cover off the actual financing charges. However, it’s easy to see that if you have a claim, for example, of 300k that an immediate cash flow loan of 70% of that amount generates some real cash back into your firm. Which of course, per the program, is in effect a non repayable grant.
Could the benefits therefore be any clearer - The Canadian government is reimbursing you with your R&D funds and you are accelerating that re imbursement straight back into working capital. Use the funds for whatever general corporate purpose - pay payables, buy new equipment, re invest in more R&D, it’s your call!
The mechanics of sred finance are simple - have a claim prepared by a credible consultant or accounting firm. Complete a simple business financing application, go through standard due diligence as you would any type of financing, and execute a financing document which in effect collateralizes the sred for your sr&Ed loan. The entire process can be completed with a couple of weeks with the right amount of commitment on your part.
If your sred claim was prepared by a consultant who did it on contingency you can even pay them out of the financing - at that point everyone is happy!
Your competition probably finances their cra sred claim - why not increase your own cash flow and maximize your refund for the best uses your company can utilize. That’s a competitive financing strategy that works!
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/sred_financing_cra_sred_sr_ed_tax_credit.html
We think so , and if the Scientific Research and Experiment Development Program , aka " sr & ed ) pours billions of dollars into Canadian company coffers every year why wouldn’t you want to accelerate the access to cash for those claims and maintain your own competitive posture in your industry .
The financing of you sred claim, via what we could call a sred bridge loan is a recognized and solid manner in which to recover working capital faster. The very essence of having a sred claim filed of course means you will recover your funds, but doesn’t it make sense to recover them sooner, putting cash flow and working capital back to work for your company.
In business it’s all about timing, and in case you haven’t noticed things aren’t exactly moving slower in Canadian business today. So is it an advantage to get immediate cash for your sred calim instead of waiting several months, in some cases up to 9 or 12 months for your funds? You probably don’t need exactly cash flow these days - therefore we strongly recommend waiting for your cheque from the feds, it’s ' in the mail ' so to speak. However, if you're among the many clients that we meet that could actually use additional cash flow today, then you should be considering financing your claim.
What are the mechanics of having your claim financed, ask client such as yourselves? To say that SR &ED financing is a niche industry requiring knowledge and expertise is a bit of an understatement. That is why we strongly suggest you work with a trusted, credible and experience d business financing advisor who will walk you through a very basic process.
Sred financing will, 9 times out of ten, get you approximately 70% of your total sr&Ed filing as a cash flow bridge loan. Why 70%. It is simply because the remaining 30%, which of course still belongs to you, is held back as a buffer to cover both any adjustments the good folks in Ottawa might make to your claim, and it also helps to cover off the actual financing charges. However, it’s easy to see that if you have a claim, for example, of 300k that an immediate cash flow loan of 70% of that amount generates some real cash back into your firm. Which of course, per the program, is in effect a non repayable grant.
Could the benefits therefore be any clearer - The Canadian government is reimbursing you with your R&D funds and you are accelerating that re imbursement straight back into working capital. Use the funds for whatever general corporate purpose - pay payables, buy new equipment, re invest in more R&D, it’s your call!
The mechanics of sred finance are simple - have a claim prepared by a credible consultant or accounting firm. Complete a simple business financing application, go through standard due diligence as you would any type of financing, and execute a financing document which in effect collateralizes the sred for your sr&Ed loan. The entire process can be completed with a couple of weeks with the right amount of commitment on your part.
If your sred claim was prepared by a consultant who did it on contingency you can even pay them out of the financing - at that point everyone is happy!
Your competition probably finances their cra sred claim - why not increase your own cash flow and maximize your refund for the best uses your company can utilize. That’s a competitive financing strategy that works!
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/sred_financing_cra_sred_sr_ed_tax_credit.html
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