If you’re looking to finish the last quarter of 2023 on a strong note and ramp up your operations for 2024 (it’s never too early to plan ahead), expanding your capital stack is a great way to widen your opportunities for the coming year. For businesses conducting research and development (R&D), particularly those that are pre-revenue, traditional capital sources may not be accessible or viable. Seeking additional funding options serves as a valuable way to improve your cash flow, offering businesses flexible and tailored solutions that best meet their needs and preparing them to deal with unforeseen headwinds.
The Scientific Research and Experimental Development (SR&ED) Program remains one of the Government of Canada’s highest-paying incentive programs for businesses. SR&ED offers over $3 billion in tax credits to more than 20,000 Canadian businesses annually. SR&ED can provide crucial capital to fund initiatives, but its annual disbursement cadence doesn’t sync up with the cash flow needs of a growing business. Below, we’ll explore three core benefits to claiming SR&ED credits, as well as the benefit of partnering with a trusted SR&ED financing provider like Easly to help cover the gap between SR&ED expenditure and refund so you can stay on top of your overhead or get started on new projects sooner. Read on to learn more!
Enhanced Cash Flow
Research and development is rarely a “budget” friendly process, with new endeavours and experimentation demanding continual funding in order to garner results and keep your projects moving forward. The SR&ED program offers generous tax incentives designed to help businesses recoup a significant portion of their eligible expenditures through tax credits. These credits help businesses to continuously innovate while alleviating some of the pressure of spending without certain returns.
Businesses can use their SR&ED refund however they please, from funding projects, hiring personnel, investing in strategic initiatives and pursuing other activities.
Supports Innovation and Growth
The core objective of the Scientific Research and Experimental Development program is to recognize that research and development work is essential but not without risk and high costs to businesses. By providing tax credits, the Government of Canada seeks to stimulate and support continuous innovation in the Canadian market that helps to establish the nation’s position as a global competitor. The SR&ED program is designed to reimburse expenditures that are part of R&D activities. The credits received for qualifying expenditures enable businesses to submit a claim with their income taxes to receive either a write-down on taxes owing or a refund – that means even pre-revenue companies that don’t owe any income tax can take advantage of the SR&ED program.
Through continuous innovation and refinement enabled through the SR&ED program, businesses can focus on long-term R&D projects without sacrificing equity and losing control of the vision that drives their projects in the first place.
Did you know? Your project does NOT have to be successful to qualify for SR&ED credits.
SR&ED Financing with Easly
There’s no denying that the SR&ED program provides immense value to businesses across Canada. Your SR&ED credits can go a long way toward helping your company succeed in the long term. There is, however, one caveat that those participating in the SR&ED program will want to be aware of: you are only reimbursed on an annual basis and only after you’ve submitted your annual claim. Even after you’ve submitted a successful claim, it can take months to receive your cash.
Financing your refund with a firm like Easly can help alleviate the cash flow issues resulting from the lumpy nature of SR&ED refunds. SR&ED refund financing is a strategic source of non-dilutive capital that provides a valuable alternative that smooths your cash flow. The terms are founder-friendly, and no personal guarantees are required. Easly is proud to support Canadian R&D initiatives and, to date, has helped nearly 300 businesses by:
- Financing over $150 million in Canadian refundable tax credits
- Facilitating individual claims ranging from $50,000 to over $2,000,000.
When you partner with Easly, you gain access to secure capital you can trust with an approachable application and approval process designed to help you get what you need when it matters most.
Learn more about leveraging your refundable SR&ED tax credits with Easly by contacting our team today!