The Scientific Research and Experimental Development tax credit program can be a huge opportunity for companies to earn benefits from their R&D and innovation activities in Canada. In fact, the program doles out over $3 billion a year to qualified companies. As great as the program is, there are a few frustrations that surround it: One being that it can take 6 months to a year to receive any funds or credits. What if you need the money now, not 6 months from now? That’s where SR&ED financing comes in.
While you’re waiting for the SR&ED benefits to go through the system, you can apply for a bridge loan. These loans are available from a few banks and a variety of lenders that specialize in SR&ED financing. Once your SR&ED claim is complete, the lender will take a look at it themselves to make sure it is completed properly and the claims look legit. In fact, some companies usually require a few prior SR&ED claims with a positive outcome, although this may be waived if the claim was completed by a SR&ED consultant.
There are definitely some obvious pluses to taking advantage of this type of funding. Here are a few thoughts to consider when making the decision of whether or not this is the route you are going to take:
Just like most things, there are a few caveats to consider as well. As alluring as the idea of getting your benefits early is, it shouldn’t necessarily be your first plan of action. Lenders and banks usually charge fees for using their services and this can include a percentage of the entire claim, SR&ED reviewer fees and possible legal fees. It’s also extremely important to remember that you’re on the hook for what you borrow – whether the claim gets accepted by the CRA or not. If the claim is denied, and you have already used up the money you were loaned, you still owe that money to the lender.
If SR&ED financing seems like an option you may want to explore, it is best to get a SR&ED Consultant to prepare the claim. Not only can they offer suggestions on both the pros and cons of the financing process for your particular situation, but you may find the process goes a bit smoother as well. Lenders tend to be much more comfortable and confident in the success rate of claims submitted by SR&ED consultants.
Contact BeneFACT Consulting Group today and make sure you’re on the right track to SR&ED success right from the beginning.
*The information above is meant for informational purposes only, and not to be used as financial or legal advice.