SR&ED Funding & Finance

Canadian SR&ED Solutions (CSS) works with various lending partners. It is usually possible to borrow up to 80% of the claim amount (subject to fulfilling eligibility criteria which normally is not a problem) as soon as we file the claim on client’s behalf and without waiting for CRA approval. These lending partners are comfortable lending the amount immediately because of our 100% success rate.

A SR&ED loan is an advanced financial tool that permits a company to use its future SR&ED tax claim as warranty for a reasonable loan. The SR&ED tax credit has been helping Canadian companies manage cash flow for decades. But the system releases cash quite slowly. So firms end up waiting for many months, sometimes even up to a year for CRA to get the essentials done. With SR&ED Finance, companies can get hold of that funding in a couple of weeks. This allows them to grow quicker than their competitors.

The SR&ED finance tax credit is an incentive program run by CRA that enables companies to claim 35%+ of their eligible expense in the form of a tax reduction or a cash expenditure. Companies can only claim this refund after the completion of the fiscal year in which it was acquired. This is where lending partners come in.

SR&ED funding

The most successful clients use advance funding to fast-track development or capitalize on an opportunity. Founders who start with more than one company immediately understand the value of non-diffusive funding.

Here’s an example:

A loan of $200,000 could be used to buy dynamic inventory, which when sold to the waiting client, will result in $500,000 of income. In that case, the small amount paid for the loan results in a big bonus for the company.

SR&ED advance funding works as effective cycle. As a rising, research or technology-focused company, you are more likely to sustain and take the route of technology investment. Very often, the SR&ED financing you obtain will stream back into more R&D. For example, if SR&ED loan is used to hire an additional programmer, around 33% of their incomes will add to a larger SR&ED tax credit at the end of the financial year. This can result in reduced fees or potentially to a net profit after financing.

Lending partners work in two ways. They finance SR&ED tax credit loans and seek to recognize client’s business, their expertise and their vision as well. This is where clients choose to become long-term partners with the lending companies because these lending companies trust their clients and can add significant value to their business.