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One of the biggest challenges companies in Canada face when it comes to pursuing research and development (R&D) is securing adequate funding to facilitate operations. While ample grants, loans and even equity-based options are available, one of the most beneficial, non-dilutive avenues for scientific and technological-based initiatives to consider is the Scientific Research & Experimental Development (SR&ED) program. As the country’s largest R&D tax credit, SR&ED allows businesses to stay cash positive, reinvest some of their previous R&D costs and continue their push toward innovation.
At Venbridge, we know that Canadian technological developers in Vancouver, Toronto, Montreal and all across the country face unique market circumstances that often call for faster access to capital in 2023. As an experienced venture debt financier, we’re proud to partner with SR&ED-eligible companies to offer interim funding that allows you to move ahead with growing your business without getting stuck waiting for your government refund to arrive. Below, we’ll take a quick look at the SR&ED program, a few key scenarios that lead businesses to pursue R&D government funding, and the benefits of partnering with a proven lender like Venbridge. Read on to learn more!
Program in Review: What is SR&ED
As mentioned above, SR&ED is the Canadian government’s largest funding source for R&D. Since the early 80s, SR&ED has been aimed at supporting businesses across the nation in their pursuit of technological and scientific advancement in a bid to stimulate continued innovation and raise the nation’s status as a global leader. SR&ED incentives are available for a wide variety of eligible businesses in industries, including clean tech, software development, cyber security, food, beverage and agriculture, life sciences and pharmaceuticals, and more. The government offers SR&ED benefits in the form of:
- Investment tax credit (ITC)
- Income tax deductions.
Why Consider SR&ED Financing
While the incentives offered by SR&ED can be highly beneficial for your R&D bottom line, they do come with one particular challenge for owners to be aware of: receiving your funds can take a significant period ranging from weeks to months. For businesses that require quicker liquidity, venture debt partnerships can significantly reduce the waiting period for receiving active capital by leveraging your refund credit to provide interim funds. Instead of wasting valuable development time waiting on access to your capital, partnering with a lender like Venbridge can give you funds within a matter of days, allowing you to pivot your operations as needed.
Common occurrences that can spur the need to consider SR&ED financing include the following:
A Pressing Event or Circumstance Demands Cash
Startups in the early vesting and development phases often have to be able to pivot on the fly, which includes the need for capital to do so. From needing to hire new staff to sourcing materials, needing to submit proof of a concept, to a multitude of other events, short-term loans can keep you agile and avoid help avoid long-term production headaches.
Rapid Sales Growth
If sales of your product or concept have been rapidly increasing, your window for development can suddenly expand at a rate that demands extra funding. When rapid growth demands rapid funding, delayed grants or loans can place things on hold indefinitely.
Production or Development Slowdowns
Periods of heavy demand during your R&D project can lead to shortfalls in your revenue. When companies can predict these occurrences, partnering with a lender is an easy way to overcome the immediate challenges while extending your runway.
Venbridge: Making SR&ED Financing Easy
Finding the right lender is essential regardless of the direct situation pushing a company to pursue SR&ED financing. With an extensive portfolio of previous R&D success stories under our belt, Venbridge has provided hundreds of SR&ED funding and revenue-based financing solutions for businesses across Canada.
We aim to empower SRED applicants to maximize their incentives and push forward their innovative efforts by providing access to fast capital that removes barriers. We extend our VDF options for applicants with a minimum refundable SRED tax credit of $100k and one year of filing history. We can provide businesses with access to capital in as little as two business days (upon approval from our underwriting team.)
Learn how we can partner with your team to enhance your R&D initiatives through venture debt lending by contacting our team today!