4 Ways Startups Can Use SR&ED Financing to Maximize Growth

4 Ways Startups Can use SR&ED Financing to Maximize Growth

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Wondering how you can accelerate your business growth? If you’re looking to fund your research and development (R&D) efforts in 2024, there’s no better time. Companies across Canada are busy looking for ways to extend their runway and boost their capital resources to offset the many costs that come with innovation. Exploring scientific and technological uncertainties isn’t cheap, and the payoff is often uncertain. This is why the Scientific Research and Experimental Development (SR&ED) Program can be an exceptional resource for eligible businesses. 

By providing financial support for R&D activities in the form of refundable and non-refundable tax credits, the SR&ED program allows entrepreneurs to invest in their businesses, attract and retain highly skilled workers, and enhance their competitiveness. 

Below, we’ll take a closer look at how filing an SR&ED claim can accelerate your growth, as well as the benefit of partnering with Venbridge for SR&ED financing. Read on to learn more! 

What is SR&ED?

To alleviate the uncertainty involved in conducting (and funding) research activities, the Canadian Government operates the SR&ED program. SR&ED was created to incentivize domestic development and innovation through financial support in the form of tax credits. The government recognizes that pursuing the unknown is not without significant costs, so SR&ED is designed to help alleviate some of the startup and maintenance costs associated with pursuing these activities. 

SR&ED-eligible activities include those dedicated to creating or refining technological assets through experimentation and analysis or exploring scientific uncertainties. Under the SR&ED guidelines, companies can claim certain eligible expenses (more on that below) and receive tax credits. 

So, what is SR&ED, and how can you use it to accelerate your business? The SR&ED program helps innovative companies grow and succeed by: 

Fueling Research and Development

One of the biggest benefits of the SR&ED program is that it provides companies willing to invest in research and development with capital to help offset the costs of R&D efforts. The program ensures innovative projects continue to be pursued in Canada. Attempting to discover the unknown carries a heavy cost, and there isn’t always a guaranteed profit in sight. Materials and general expenses run up high costs in these R&D-heavy projects and with often no revenue generation in the short term. SR&ED tax credits are a significant source of relief for entrepreneurs. 

By investing in R&D, entrepreneurs gain the knowledge they need to develop new products and technologies, enhance internal processes and operations and pivot as needed to stay competitive. SR&ED refunds make it easier to invest in new ideas with confidence and, best of all, allow you to do so without diluting your equity in the process. 

Finding the Right Talent

When we think of R&D, most will consider the more tangible elements that lead to a successful project, namely materials, technology and formulas used. What we don’t always consider is how essential it is to have the right talent on your team during all stages of development. 

When tackling the unknown, having leading minds with the knowledge and know-how to carry each aspect of your project forward is crucial. In an uncertain technological situation, often, the right talent is also the only talent who can meet your specific needs. 

Attracting (and keeping) top talent isn’t an easy feat, and there’s no denying that salaries play a vital role in employee retention. The SR&ED program acknowledges this factor and allows you to claim eligible employee salaries as a necessary expense for your operation, alleviating some of the burdens you face when honing your team. 

Enhancing Competitiveness

Investing in R&D and your team doesn’t just accelerate your overall operations and performance; it also gives you the ability to pivot as needed and stay competitive within your industry. With SR&ED funds padding your runway, you can continue to innovate and improve your products, services, and processes. This helps your business focus on building for the future. Innovation improves your competitiveness and ability to stay on top of industry-wide evolutions. 

SR&ED funds can also be invested into marketing and sales efforts, drawing more attention to your brand and increasing the potential for additional outside support. 

Improved Cash Flow Management

SR&ED advances help you get cash now, instead of in the future. This bolsters the company and helps your bottom line. 

This additional funding is crucial to overall business growth and allows companies to pursue new opportunities, revise significant portions of their scientific approach where necessary, and affords valuable flexibility when it matters most. 

Avoid Painful Wait Periods with SR&ED Advances

Innovation doesn’t always happen on a schedule, so getting plans in place and accessing tools like SR&ED advances can go a long way toward balancing scientific research and your bottom line. 

If you’re looking to sustain your research and innovation initiatives with SR&ED, Venbridge is here to help overcome the gap. We offer founder-friendly, non-dilutive SR&ED advances that allow you to pursue innovation with minimal stress. 

Contact our team today to discover how we can partner with your team to enhance your R&D initiatives by financing your SR&ED credit. 

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