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Financing tax credits: a growth lever for Canadian businesses

The health crisis will not have spared Canada. Canadian businesses have also suffered from the slowdown in economic activities. A situation which leads to cash flow problems which could lead the most fragile companies to certain bankruptcy. Although the Canadian government has implemented aid programs, the services offered by some specialized structures could be beneficial. For years, financial institutions have been offering the financing of refundable tax credits.

Financing tax credits: how does it work?

The operation simply consists of advancing the payment of tax credits reimbursed by the State. The company will thus obtain valuable liquidity. This solution helps prevent unpaid debts and late payments. Enough to ensure the smooth running of activities. In this sense, this type of service constitutes a serious boost for young businesses. The services offered by establishments such as RD Capital should therefore arouse the interest of more business creators.

A study dating from 2019 (1) maintains that nearly 39% of companies go bankrupt after barely 5 years of existence. If we rely on the testimonies of entrepreneurs, these bankruptcy filings are mainly linked to cash flow problems. At the start of its activity, the company posted negative results and struggled to cover its costs. This situation often lasts for the first 2 years and even later, the brand will always remain fragile due to lack of sufficient funds. Financing tax credits will help remedy this.

Of course, financial institutions that specialize in this area require certain guarantees. Still, in Canada this operation is relatively accessible. It is therefore advisable to consult the specialized structures directly to check your eligibility. Such services could well prevent a business manager from going out of business in the face of an unfavorable situation for his activities.

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Financing tax credits and associated services

Specialized companies do not only offer financing for your tax credits. These financial institutions also operate as consulting firms. Thus, they help businesses manage their tax returns. Fully understanding the procedure to follow for paying tax credits, these establishments provide strategic and operational support to optimize the financial management of your business.

The support offered will help many business creators make the necessary decisions to obtain tax credits. This service concerns companies working in the field of technology, telecommunications, aeronautics, renewable energies or biotechnology.

Contrary to popular belief, tax credit financing is not only aimed at young businesses. It also has clear advantages for well-established companies wanting to offer innovative products. Innovative projects generally qualify for tax credits. Tax credits that will help amortize expenses incurred for research and development. This financing therefore once again constitutes a real boost which will raise the company to the top.