High-tech companies represent the future of Canada’s economy, and the creation of well-paid high-tech jobs will be critical to ensure continuing growth of our economy. The SR&ED program will continue to be critical for high-tech start-up companies because it offers refundable tax credits for research and development expenses that are incurred. This means that the SR&ED program provides continuous cashflow (in the form of a cash refund) for startups companies for previous year’s expenses.
However, the downside of the SR&ED program is that it can take from 1-2 years before a startup receives the cash refund. Being first-to-market is critical for those in the high-tech industry, and the majority of startups simply cannot afford to wait for this refund. Thus, innovative firms such as North Innovation Fund have begun to offer SR&ED accrual debt financing. This form of SR&ED financing frees up cashflow in a non-dilutive manner, by lending against a SR&ED claim, before it is filed.
Amazing!