You ran the experiments, tracked the hours, documented the attempted-but-unsuccessful. Your SR&ED claim is filed. Now you wait. The CRA's review timeline runs 4 to 18 months depending on complexity, province, and whether they decide to audit. That's 4 to 18 months where your refund is sitting at the CRA instead of funding your next hire, your product roadmap, or your 2027 R&D cycle.
SR&ED bridge financing lets you borrow against the expected refund. You get 70-85% of your claim in your account within a couple of weeks, pay a modest monthly fee, and the lender is repaid when the CRA pays. This guide covers how it works, who qualifies, what it costs, and what to watch for.
Why SR&ED Financing Exists
The SR&ED program refunds roughly $3-4 billion in credits annually to Canadian companies, making it the largest source of R&D funding in the country. For a CCPC, the federal refundable portion is 35% of qualifying expenditures, and most provinces layer on additional credits (Ontario OITC adds another ~8-10%, BC SR&ED tax credit adds 10%, Quebec R&D credit up to 30% depending on size). A tech company spending $1M on qualifying R&D often has a total refundable claim of $400-500K.
That's meaningful capital. But it only lands when the CRA is done reviewing — and in 2026, typical review times for non-flagged claims are 120-240 days, with audited claims running 12-18 months.
SR&ED financing bridges the gap. Specialized lenders (many based in Canada, a handful in the US focused on Canadian claims) advance most of the expected refund, secured against the claim itself. Your business gets capital when it needs it; the lender gets paid when the CRA pays.
How SR&ED Financing Works
The structure is straightforward:
- You file a qualifying SR&ED claim with your T2 corporate return, usually prepared by a consultant or tax advisor.
- A financing specialist reviews your claim for fundability — accuracy, documentation quality, lender fit, and expected refund size.
- The lender underwrites the claim: claim history, work quality, CCPC status, other CRA assessments, and general business condition.
- You receive an advance — typically 70-85% of the federal refundable portion, sometimes including provincial credits if documented.
- Monthly fees accrue against the advance until the CRA pays.
- When the refund arrives, it's directed to the lender (via an assignment or a controlled account), the advance and fees are repaid, and any remaining balance goes to you.
Eligibility: Who Qualifies?
Not every SR&ED claim is financeable. Lenders look at:
CCPC Status
The refundable portion of SR&ED is only available to Canadian-Controlled Private Corporations (CCPCs). Non-refundable credits for public companies and foreign-controlled corporations aren't financeable on the same terms because they only reduce future tax liability — they don't produce a cash refund.
Claim Size
Most specialist SR&ED lenders will look at claims starting at $75-100K of expected refund. Larger claims ($500K+) see more competitive rates and faster approvals.
Claim History and Work Quality
A first-time claimant with no track record pays more than a company on their fifth successful claim. Lenders look at:
- Prior claims and their outcomes (approved as filed, adjusted, denied)
- Quality of your SR&ED consultant (experienced, reputable firms reduce perceived risk)
- Documentation practices (time tracking, technical narratives, supporting records)
- Nature of the R&D work (software development claims are well-understood; experimental development in unusual sectors may face extra scrutiny)
Company Health
Lenders want to know you'll still be around when the refund arrives. They'll look at runway, recent financings, cash burn, and whether there are red flags like CRA arrears or secured debt that would get paid before the refund.
Clean CRA Standing
Outstanding CRA arrears (GST/HST, payroll, prior assessments) are a problem — the CRA will offset your refund against arrears before releasing anything. Most SR&ED lenders require CRA standing to be clean or to be rolled into the transaction.
Typical Terms
| Factor | Typical range |
|---|---|
| Advance amount | 70-85% of expected refund (sometimes higher for experienced claimants) |
| Monthly fee | 1.0-1.8% of outstanding balance per month |
| Setup / legal fees | $500-$3,000 flat, varies by lender |
| Time to fund | 10-21 days from application to cash in account |
| Minimum claim size | $75-100K expected refund |
| Maximum claim size | $5M+ possible; most deals under $2M |
On a $500K expected refund at 80% advance and 1.3% monthly, if the CRA pays in 9 months, your total financing cost is roughly $47K — effectively 9.4% of the refund, or ~12.5% APR annualized. Expensive relative to a bank, cheap relative to the value of having $400K in your account today vs. in a year.
Provincial Credits: The Stack Matters
Federal SR&ED is the base. Most provinces add on top:
- Ontario (OITC): 8% refundable credit on qualifying R&D; additional 3.5% Ontario Innovation Tax Credit for CCPCs under $50M
- British Columbia: 10% SR&ED tax credit (refundable for CCPCs)
- Quebec: R&D tax credit up to 30% depending on corporate size; Quebec audits independently from CRA
- Alberta: 8% Scientific Research and Experimental Development tax credit (refundable)
- Manitoba, Saskatchewan, Atlantic provinces: Various rates 10-15%
Most SR&ED lenders will advance on federal claims; provincial credit advances depend on the province (Ontario and BC are easiest; Quebec has a separate process due to the separate audit). Ask specifically whether the advance includes provincial credits.
Timeline: When Does the Money Arrive?
Typical flow for a first-time SR&ED financing:
- Day 1: You contact a SR&ED financing specialist with your claim information.
- Day 2-5: Initial review — claim amount, documentation, CCPC status verified. You provide recent financials and claim details.
- Day 5-10: Term sheet issued. Diligence on company finances, SR&ED consultant, prior CRA interactions.
- Day 10-14: Legal documentation, assignment of refund, closing conditions met.
- Day 14-21: Funds in your account.
Subsequent financings (second claim, third claim) run faster — often 10-14 days — because the lender knows you and your claim pattern.
What to Watch For
Hidden Fees and Prepayment Penalties
Read the term sheet carefully. Some lenders charge:
- Setup fees that aren't obvious in headline rate
- Minimum interest periods (you pay for 6 months even if refund arrives at month 4)
- Default rate escalators if the CRA takes longer than expected
The best-price lender on a headline rate may not be the best total cost. Compare offers on total expected financing cost, not just monthly rate.
Claim Risk Sharing
If the CRA adjusts your claim down (common — CRA audits frequently reduce claims by 10-30%), who eats the difference? Some lenders structure the advance conservatively so this rarely matters; others structure it aggressively and leave you on the hook for any shortfall. Ask what happens if CRA reduces your claim by 25%.
Your SR&ED Consultant
Your consultant's fee structure (often 15-25% of the claim, contingent on success) can reduce what's effectively available to finance. A $500K gross claim with a 20% contingent fee = $400K net to you; the lender may only advance against the net.
A realistic example
A Toronto-based software company files a $750K SR&ED claim (federal + Ontario provincial, net of consultant fee). Lender advances 80% = $600K, fee 1.3%/month. CRA pays in 11 months. Total cost: ~$86K (14.3% of advance, ~15.6% effective APR). Company had $600K in their account for 11 months instead of nothing. They hired 3 engineers, shipped a product feature, and closed a customer — estimated impact: $1.2M in new ARR.
When It Makes Sense
SR&ED financing works when at least one of these is true:
- You have specific capital needs now. A hire you need to make, equipment you need to buy, inventory for a contract.
- Your runway is short and the refund is your main liquidity event. Better to extend runway at 15% APR for 9 months than to run out of cash.
- Equity is expensive right now. SR&ED advances aren't dilutive — you give up no ownership, you just pay for timing.
- You claim every year. Smoothing out the cycle (advance in month 2, refund in month 11, next claim filed in month 14) lets you fund continuous R&D instead of cyclical.
It rarely makes sense when your CRA timeline is already short (some repeat claimants see 60-day turnarounds), when your refund is small relative to the setup costs, or when equity or cheaper debt is readily available.
How Alliance Places SR&ED Deals
Alliance has a specialized SR&ED desk that works with 8+ dedicated SR&ED lenders across Canada and the US. We're a commercial finance brokerage, not a direct lender — we shop your claim to find the advance ratio, rate, and terms that actually fit your situation. For tech and life sciences companies running continuous R&D, we also help structure multi-year facilities so each year's claim is already pre-placed when you file.