SR&ED Financing: Prefinance your tax credits

Prefinance your tax credits

If you have cash flow needs, here is a way to finance your R&D

Through this program, Investissement Québec offers businesses that are eligible for (federal and provincial) refundable SR&ED tax credits, guaranteed repayment of the net loss on the loan obtained from a financial institution.

In other words, the government guarantees an advance on the estimated future R&D tax credits receivable. The company thus has better cash flow while it is carrying out its R&D projects.

How much can we get?

Interim tax credit financing (the loan) can reach 75% of the refundable tax credits receivable, and the guaranteed repayment on the net loss by Investissement Québec can reach 80% of this loan.

What types of expenditures are eligible?
Because this is essentially an advance on SR&ED credits, the eligible expenditures correspond to the ones in the program; namely, salaries, subcontracting, equipment, materials, and overhead.

For how long?

Interim tax credit financing can be requested for one or two fiscal years. Consequently, loan disbursements are made periodically (usually quarterly) while the business is carrying out its R&D project.

When credit repayments are issued by the Canada Customs and Revenue Agency and by Revenue Québec, these amounts are first assigned to loan repayment.

What is the procedure?

Businesses that have a previous history of R&D credits can take the necessary steps at any time

Businesses that have not received R&D tax credits before must first obtain an official opinion from the Canada Customs and Revenue Agency on the eligibility of technological projects subsequent to a Preclaim Project Review (PCPR).

You must also inform your financial institution of your intention to apply for the program.

How can Emergex help us?

Throughout the process, Emergex Subsidies can help you get the loan you want by preparing a complete file in compliance with program criteria. Emergex then follows through on the request for financing including the technological preparation for the Preclaim Project Review, if required.