Non-dilutive funding refers to any capital that a business owner receives which does not require them to give up any equity or ownership in their company. Non-dilutive funding is, for many, a requirement to get their business off the ground.
Tax credit programs, grants, competitions, contributions from family and donors are all examples of non-dilutive funding. The single largest source of non-dilutive funding in Canada is the $3 Billion annual SR&ED tax credit program administered by the CRA.
Why pursue SR&ED non-dilutive funding in Canada
The Scientific Research and Experimental Development (SR&ED or SRED) tax credit program is the largest tax credit program in Canada. Every year the federal government distributes over 3 billion dollars to over 20 000 companies in Canada.
Almost any company in Canada can qualify for SRED tax credits. Generally, if some of your staff are engaged in solving technological problems to which a solution is not readily apparent, there is a good chance that the work they are doing is SR&ED qualifying work. Alternatively, even if your staff are not engaged in SR&ED qualifying work, if your company has paid subcontractors to conduct SR&ED qualifying work you may also be eligible for SRED credits. The government also provides SRED funding to offset material costs incurred while performing SR&ED qualifying work.
SRED is a terrific source of non-dilutive funding in Canada. The government provides tax credits to offset up to 70% of qualifying payroll costs, as well as up to 40% of subcontract and materials costs. SRED funding is taxable, but it is taxed very favourably. Instead of being taxed in the year in which it is received, SRED is taxed in the next year, providing a built in tax deferral advantage over other sources of non-dilutive funding.
Many companies fail to pursue SRED non-dilutive funding due to it’s complexity and overwhelming nature. There is a lot of expertise required to discern qualifying work from non-eligible work as well as to complete tech writeups in such a way to maximize your chances at government approval. This is where SRED consultants some in.
SR&ED consulting outfits such as G6 Consulting work on 100% contingency, and never get paid until you get your non-dilutive funding from the CRA. We work with you to build your claim, fill out your forms and submit your application at no-upfront cost. We are by your side and handle the entire review process up to the approval of your claim.
We only bill you for a percentage of your non-dilutive SRED funding after you receive your direct deposit from the CRA.
G6 Consulting can work with you to build your claim, co-ordinate with your accountant, submit your claim and get you your cheque. No cost until you get paid
Check our our SR&ED overview page to learn more about SR&ED and how to qualify
Contact an Expert for a free no obligation consultation to see if your business can qualify
Check out our SR&ED calculator to get an idea of how big your SR&ED cheque could be