Tips for Successful SR&ED Applications

Tips for Successful SR&ED Applications

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Do you know how to give your SR&ED claim the best opportunity to be approved or, better yet, maximize your refund?

The Scientific Research and Experimental Development program (SR&ED) is Canada’s largest government-funded source of support for companies pursuing research and development (R&D) and technological advancement across the country. The main goal of SR&ED is to support Canadian innovation and to help alleviate some of the financial burden faced by startups, as well as companies that continuously aim to increase technical understanding and initiatives through work conducted on Canadian soil.

As an extremely vital source of funding for businesses, knowing how to have a successful application is key to expanding your capital stack and making sure you have access to the finances you need when it matters most. At Venbridge, we are proud to champion Canadian innovation by partnering with successful SR&ED applicants to provide venture debt financing solutions that give you access to liquid capital to sustain and drive your operations forward. Below, we’ll take a closer look at some of the key factors that help determine a successful application, as well as the benefits of partnering with a trusted lender like Venbridge. 

Who is Eligible for SR&ED

Before you apply for SR&ED, it’s vital to be aware of the qualifying requirements for applicants, as not all research initiatives will be accepted. In order to qualify for SR&ED, your project must fall into one of the following three categories:

Basic research: Work undertaken to advance scientific knowledge without a specific application.

Applied research: R&D that enhances existing knowledge under the parameters of a specific application.

Experimental development: R&D designed to create new or improve existing materials, devices, products or processes.

Projects outside of this scope are not likely to be accepted or successfully receive SR&ED credits. To give your the best chances of being successful in your application, be sure to do the following:

Focus on R&D

As SR&ED funding is intended for R&D purposes, one of the most important parts of your application is focusing on providing clear deviance that your project aims to overcome scientific uncertainties and advance technological understanding. While it’s easy to get sidetracked by lesser details, one of your top priorities should be clearly demonstrating how your business conducts R&D, including highlighting your hypothesis, how you rigorously test this hypothesis through systematic investigations, how you analyze test results, and how you (intend to) draw conclusions based on your findings.

Proof of R&D intent and application is a major factor evaluated by the CRA, and applicants that fail to demonstrate this in a sufficient manner may be subject to further review and/or rejection.

Pay Close Attention to Your T661

The CRA determines your SR&ED eligibility based on the information provided on your T661, the SR&ED expenditures form. The details you provide will not only determine if your application is successful but will also influence your total refund, making it crucial to be as accurate as possible when filling out both parts (both the expenditure and project information sections). Be sure to fill out all information, pay close attention to line limitations in specific sections, and make sure you are aware of any and all changes that may be relevant at your time of application.

Document, Document, Document!

Did we mention how important it is to have clear and detailed documentation when applying for the SR&ED program? One of the most common causes of failure for applicants is missing key data points or providing insufficient documentation for the CRA to draw a confident conclusion with regard to your operations. The qualify of your documentation will directly influence the extent of your refund, so it is vital to have information pertaining to the claimed project and related expenditures, as well as key details like:

  • project schedules
  • experimental/R&D procedures
  • Prototypes involved
  • materials used
  • invoices, and more.

Don’t be afraid to document meticulously, even if it may feel cumbersome or unnecessary at times. Informal records like emails, meeting minutes and even paper notes of important conversations can cover you when you least expect it and prove to be a vital asset should you ever be subject to review.

Know the Common Points of Confusion

Applying for funding is rarely completely straightforward and free of minor points of confusion for businesses to navigate, and SR&ED is certainly no exception. First-time applicants or those applying on their own may miss key details or misunderstand certain requirements.

For example, one of the most prevalent misconceptions about SR&ED is that your project must be successful to be eligible. While successful projects are certainly welcome to apply, the CRA does not require success as a condition for acceptance. The reality of R&D is that failure can be just as valuable when it comes to overcoming uncertainties by demonstrating and proving a non-viable path forward. In such a case, though the project may not have succeeded with its original intent, it still has provided vital information that helps drive innovation and allows other initiatives to use the result of the project to revamp their own efforts without suffering the same pitfalls.

Consider Partnering with a Consultant

Finally, for those who want peace of mind while applying for SR&ED, it may be worthwhile considering partnering with a vetted consultant. SR&ED consultants specialize in knowing the ins and outs of applying for the program, including staying on top of any changing details and setting their clients up for success in the form of the best refund possible. A consultant is also able to help you compile your documentation and can even partner with an external venture debt partner like Venbridge to help you get the best terms for your financing loan after a successful SR&ED application.

Financing with Venbridge

Want the peace of mind of knowing that you’ll always have access to capital when it matters most? Venbridge is here to help! Our team has helped countless businesses across Canada procure SR&ED funding and revenue-based financing solutions, as well as maximize their incentives to extend their capital runway into the future. We proudly offer our trusted financing options for applicants with a minimum of $125k on their SRED claim and one year of filing history, with capital being available in as little as 2-3 business days upon acceptance.

We believe in the power of Canadian innovation and are always here to make sure that SR&ED applicants have the funding they need to drive forward with confidence.

Learn more about partnering with our team for interim SR&ED loans and funding by contacting our team today!

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