What is SRED Financing?
The SR&ED tax credit often appears as an intangible asset on a company's balance sheet. The majority of financial institutions do not have the understanding to place a hard value on this intangible asset. This provides an opportunity for SR&ED experts to unlock the value of the SR&ED tax credit through the loaning or factoring of the asset.
SRED Factoring versus SRED Financing
SRED financing can be in the form of SRED factoring and SRED accrual financing. Several institutions offer SRED factoring, which finances SR&ED claims after they are filed with the CRA. However, SRED financing is much more useful, from a cash flow perspective, when it can be provided to the company before the SR&ED claim is filed.
Some institutions, such as the North Innovation Fund, specialize in providing accrual debt SRED financing to support Canada's knowledge-based industries. North Innovation Fund lends against ongoing SR&ED accruals in advance (before the filing date) in order for companies to meet their cash flow needs and grow their business.
What is SR&ED?
The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive program that encourages Canadian businesses of all sizes and sectors, to conduct research and development in Canada. The SR&ED program provides companies with both refundable and non-refundable tax credits for eligible R&D conducted in Canada.