The Strategic Advantages of SR&ED Financing: Preserving Equity, Mitigating Uncertainty, and Accelerating Innovation

For businesses striving to innovate, access to funding is essential. With owners and operators facing increasingly higher capital costs, securing the right financial support has become an even greater necessity for current and future projects. The Scientific Research and Experimental Development Program tax credit program (SR&ED) is a particularly valuable financial resource for Canadian businesses but does come with a challenge for those who need liquidity immediately: refunds issued by the program are only provided on an annual basis after a claim is submitted and approved by the CRA. This leaves companies waiting up to 18 months to be reimbursed for their eligible expenditures.

SR&ED financing can be used to assist companies that earn refundable SR&ED credits by offering a non-dilutive funding solution tailored to support innovation and R&D across Canada. Below, we’ll take a closer look at some of the core strategic advantages of working with an SR&ED financing partner like Easly.

Preservation of Equity

The exchange of equity for funds can be beneficial when partnering with capable venture capital partners but can also have long-term negative consequences for startups and their founders.

In contrast to funding sources that require you to relinquish some equity for funding, SR&ED financing allows companies to secure funds without diluting their equity and relinquishing ownership. This means that you don’t have to worry about giving up valuable control and the potential upside benefits of holding equity in your business and can still access the working capital you need to grow.

Mitigating Uncertainty

SR&ED financing can mitigate cash flow uncertainty by giving companies control of their funding timelines. Since SR&ED financing is backed by earned SR&ED tax credits, if your company is on top of your SR&ED reporting, you’ll have a clear idea of how much funding is available to you. Easly has simple, standardized terms, making SR&ED financing a predictable cash flow solution.

Rather than waiting for an annual reimbursement that can take months to receive after a claim is submitted, SR&ED financing provides funds on your schedule at any and multiple points throughout the year.

Efficient Capital Utilization

Efficient capital utilization is vital for project success. When it comes to allocating your capital, SR&ED financing can be extremely useful for freeing up funds that would otherwise be tied up awaiting a disbursement from the CRA. Having this kind of flexibility in your capital stack is crucial for managing R&D projects.

SR&ED financing is a powerful tool to preserve equity, mitigate uncertainty, and accelerate innovation. By providing predictable, flexible, non-dilutive funding that allows you to stay in control of your operations, SR&ED financing can boost your potential and help you avoid cash flow pitfalls during key periods of development.

Finance Your Earned SR&ED Credits with Easly

At Easly, we’re proud to support innovation across Canada. We know that having access to reliable working capital is key for many innovative businesses and that unpredictable funding can often put significant stress on operations without the right solution in place. With over $170 million in capital deployed to customers across multiple sectors, including aerospace and defence, computer & IT, media, healthcare and more, Easly has the non-dilutive capital you need to keep your R&D initiatives rolling with minimal delays.

Learn more about the role of SR&ED refund financing in your company’s capital-raising efforts by contacting Easly today!