Can you get SR&ED financing while your claim is under CRA review?

Approved. A claim under CRA review doesn't close the door to SR&ED financing. It changes how much a lender will advance, not whether it will lend.

This one is for Canadian founders and CFOs waiting on a refund that CRA has pulled for review, and wondering if financing has to wait until it clears. It doesn't.

The situation

A biotech company that had been operating for more than 10 years came to us for SR&ED financing. Its expected refundable credit was in the range of $1M to $1.5M, and the claim was already under review by CRA when we spoke.

Most founders assume that detail rules them out. It doesn't. A review is CRA taking a closer look at a large claim, not a verdict. But it does take time: for a refundable claim under review, CRA's processing standard is generally 180 calendar days. That's a long time to sit on your biggest receivable.

How we looked at it

A claim in review carries one extra risk: CRA might reduce it. So the question I ask isn't "will this clear?" It's "if CRA trims this claim, does the refund still repay the loan?"

Three things got us comfortable.

The track record was strong. The company had a long, consistent history of filing SR&ED and receiving its refunds. That history tells me the claim is built the way CRA expects.

The right people were in it. The team was heavily involved in the R&D. That's what a strong technical claim rests on, and it's what holds up when a reviewer starts asking questions.

The rest of the file held up. Nothing else in our underwriting changed the picture.

Then we sized the advance to match the risk. Our advances typically range from 75% to 100% of the expected refundable credit. Here we came in at about 50% loan to value. That gap is the cushion: CRA would have to cut the claim roughly in half before the refund stopped covering the loan.

An illustrative example: on a $1M expected refund, a 50% advance puts $500,000 out the door. If CRA reduced the claim by 15%, the refund would be $850,000. The loan is still covered with plenty of room to spare.

The decision

Approved, with no conditions, at about 50% loan to value.

The review is the reason the advance sat where it did. A lower advance protects the borrower as much as it protects us. If CRA reduces a claim, the loan doesn't shrink with it, and any shortfall has to be repaid from somewhere else. A bigger cushion makes that much less likely.

What to do instead

1. Don't wait for the review to clear before you ask. If the cash gap is now, a smaller advance today can still bridge it.
2. Have your filing history ready. A consistent record of claiming and receiving refunds does more for your file than any single year's number.
3. Keep the technical story with the people who did the work. Reviews reward claims your R&D team can explain, and lenders lean on the same strength.