If you’re looking to expand your budget for scientific experimentation and research and development (R&D), the Canadian Government’s SR&ED program is a valuable resource to consider. The SR&ED program offers eligible business owners tax credits to help fuel their efforts to innovate.
SR&ED is the Canadian government’s largest program dedicated to R&D support. The SR&ED program offers tax credits based on eligible expenditures. While this is highly beneficial to businesses, there is one caveat that filers should be aware of: claims are only submitted annually, creating a long gap between expenditure and refund.
In addition, businesses might need to cover higher than average overhead during the R&D phase. Financing your SR&ED tax credits with Venbridge can help you overcome this gap so you can keep moving forward.
Below, we’ll take a closer look at some of the basics of the SR&ED program, as well as the benefits of financing your SR&ED credits with Venbridge. Read on to learn more!
What Are SR&ED Tax Credits?
SR&ED has become Canada’s largest source of government support for R&D. The SR&ED program offers tax credits totalling approximately $4 billion dollars each year to businesses across the country conducting domestic R&D. Unlike many other external sources of funding, which may be contingent on the success of a project, SR&ED is accessible to companies whether or not their R&D projects ultimately succeed.
SR&ED is intended to be a government investment in innovation happening on Canadian soil. Despite the importance of doing this kind of work, scientific development or R&D projects are not always profitable. They require a considerable financial outlay for an often unpredictable reward. Your R&D efforts may ultimately fail to successfully prove your hypothesis or result in a viable new product. In such cases, while the failure is unfortunate, the process of investigation and development is a very valuable undertaking as it leads to previous unknown insights.
This is the intention behind SR&ED: to provide financial relief to the businesses that do take these scientific risks.
You can learn more about SR&ED, specifically common misconceptions, here.
What Are the Benefits of Financing Your SR&ED Tax Credits?
As much as the SR&ED program offers businesses access to reliable capital, the wait times for funding can be tricky to navigate. If you’re in an aggressive ramp-up (or even start-up) phase, your business requires capital to cover cash burn.
Financing your SR&ED credits with an advance from a trusted lender like Venbridge helps to cover the cash flow gap between eligible expenditure and refund.
With an extensive portfolio of previous success stories spanning multiple industries, the team at Venbridge knows just how important it is to have easy access to capital throughout the year. We’re proud to partner with successful SR&ED filers to ensure they can access capital when they need it.
Some of the core benefits of partnering with an SR&ED lender like Venbridge include:
Reliable Funding
As any seasoned entrepreneur knows, having cash on hand is crucial. SR&ED financing isn’t just about plugging any immediate gaps in your cash flow or fleshing out your operations and research efforts. It also empowers you to make strategic decisions about how to grow your business.
From hiring new staff with the expertise to help with core research components to purchasing materials for development and even helping you attract other external investors, accessible capital is necessary for the long-term viability of your business and research efforts. SR&ED financing allows you to continue to grow without damaging disruptions or downtime.
Liquidity
While the long-term benefits of SR&ED funds, as mentioned above, are apparent, there is no denying that having cash on-hand is essential when it comes to resolving in-the-moment issues and pivoting when necessary.
The reality of working with unknown variables is that you will often encounter unforeseen challenges (the documentation of which is essential to proving the validity of your SR&ED filing). SR&ED financing ensures you have the capital you need when it matters most, allowing you to react when necessary, plan ahead, and adjust along the way.
No Need to Give Up Equity
When you’re conducting R&D and wading into uncharted waters, it’s important to remain the captain of your own ship. Many external funding options require you to sacrifice equity in exchange for capital, which can hinder your ability to make key decisions and leave you trying to please investors rather than pursuing the original intent of your project.
SR&ED financing is a non-dilutive solution that keeps you in the driver’s seat.
Expertise That’s On Your Side
Sacrificing equity can be a recipe for (costly) disaster. However, when you partner with a non-dilutive funding provider like Venbridge, you’ll access capital through an SR&ED financing process designed to be as transparent and minimally disruptive to your operations as possible. We’re here to help you grow on your terms and to make sure that capital woes don’t cost you valuable potential and growth along the way!
Invest in Your Future
Venbridge is proud to partner with SR&ED-eligible Canadian businesses to offer non-dilutive financing that gives you the capital you need to succeed with R&D.
Learn how we can partner with your team to enhance your R&D initiatives through SR&ED financing by contacting our team today!
Want to see how much your SRED tax refund could potentially be? Use our free online tool here!
