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Have you considered the benefits of partnering with a consultant when applying for the Scientific Research and Experimental Development (SR&ED) Program in Canada? As the country’s largest source of government funding for research and development (R&D), SR&ED is designed to help businesses and researchers offset some of the costs associated with pursuing innovation by awarding eligible applicants funding in the form of tax incentives and/or refunds in viable expenditures.
When pursuing external funding, it is essential to ensure that your application is as accurate as possible and that you’ve correctly documented the required information. As this can be an arduous process, it’s recommended to consider hiring an external consultant. In addition to saving you valuable time that can be spent handling your day-to-day operations, consultants know the specific ins and outs of applying for government tax programs like SR&ED and can help you avoid costly reviews while maximizing your refund. At Venbridge, we know the value of ensuring you have everything you need to expand your capital stack, including access to non-dilutive interim Venture Debt Funding (VDF) to help keep things moving in the downtime between applying and receiving your SR&ED funds.
Below, we’ll explore some of the key points of the SR&ED program, as well as the benefits of using a consultant to apply. Read on to learn more.
SR&ED Summarized
This year marks the 40th anniversary of the implementation of the Scientific Research and Experimental Development (SR&ED) program, which was implemented to help Canada remain a valuable international contender where innovation and new technological advances are concerned. SR&ED has become the largest source of R&D funding through government means, and in 2021 alone, the disbursement values handed out through the program were valued at over $4 Billion in tax incentives.
It is important to note when applying for SR&ED that not all initiatives are eligible. Successful applicants are required to spend their incentives on R&D efforts conducted within Canada,
Who Qualifies for SR&ED?
Not all businesses in Canada qualify for the program’s tax incentives or refunds. Eligible companies must spend their incentive on R&D conducted within the country and must fall within one of the following categories:
Basic research: work was 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.
Applicants should note that SR&ED refunds are eligible once annually and can take weeks or months to arrive, making it vital to have contingencies such as VDF in place to cover upfront capital needs in the meantime.
How Consultants Can Assist
When applying for SR&ED, there is often a lengthy debate about the pros and cons of taking a DIY or externally assisted approach. While every business will have specific needs and details to consider, there are several benefits to working with a consultant, including:
1. Adhering to Changing Requirements
When handling the daily necessities of running a technology and/or experimentation-based business, it can be easy to miss various updates and requirements, even if you have previously been successful when applying. Hiring a consultant removes ambiguity and ensures you have the uninterrupted focus of a specialist that knows exactly what to look for to maximize your gains and reduce confusion in the process.
2. Airtight Documentation
Did you know that one of the number one causes of SR&ED reviews is inaccurate or improperly presented documentation? Having your application declined or being caught up in a lengthy review (which can cause your funds to take up to a full year to arrive) can be highly detrimental to your bottom line and set your progress back significantly. Consultants know how to finesse your documents and catch mistakes or lacking information before submission, significantly increasing your odds for a stress-free experience. If you’ve been subjected to a review in previous years or have concerns about being able to put your best foot forward when applying, you may want to consider using a consultant in 2023.
3. Better Returns
Why sell yourself short when ensuring you can get the best refund or incentive possible when applying for SR&ED? As with most debates surrounding doing things in-house to reserve funds, using a consultant is often a case of “spending now to save/win later.” Whether you’re a first-time applicant or have experience applying for SR&ED, an additional, highly qualified set of eyes can pay dividends in the long run and put you in a much better position funding-wise.
How to Find the Best Consultant
Finding the right consultant for your needs can be time-consuming without the right goals and knowledge in mind. While you can read our much more extensive guide on partnering with SR&ED consultants here, it is essential to know how to ask the basics, including:
- Who is preparing your claim, and what is their background of experience?
- How are claims processed?
- How does payment work?
- What happens in the event of a CRA dispute, and more.
Financing Your SR&ED Funding with Venbridge
Venbridge has provided hundreds of SR&ED funding and revenue-based financing solutions for businesses across Canada and is proud to empower SR&ED applicants to maximize their incentives and drive Canadian innovation forward with non-dilutive funding you can trust. We extend our VDF options for applicants with a minimum refundable SR&ED claim of $100k and one year of filing history. We can provide access to capital in as little as 3 business days upon approval from our underwriting team.
Contact our team today to learn more about partnering for interim SR&ED financing and funding!
