SR&ED vs. Grants: Which is Right for Your Startup?

Canadian founders have access to some of the best non-dilutive funding in the world. The two biggest sources? SR&ED tax credits and government grants. But which is right for your startup? ## SR&ED Tax Credits: The Reliable Workhorse **Pros:** - Retrospective - claim credits on work you've already done - Predictable - clear rules on what qualifies - Fast turnaround (60-120 days for simple claims) - Refundable for CCPCs **Cons:** - Caps on refundable credits (~$3M expenditure limit) - Requires proper documentation of your R&D process - Can trigger CRA reviews ## Government Grants: The Growth Accelerator **Pros:** - Can provide significant lump-sum funding - No repayment required - Often supports commercialization, not just R&D - Can fund non-R&D activities (marketing, hiring, etc.) **Cons:** - Competitive application process - Forward-looking commitments required - Milestone reporting and compliance burden - Can take 6-12 months to secure ## The Smart Play: Stack Them Here's what experienced founders know: SR&ED and grants aren't mutually exclusive. In fact, they complement each other beautifully. Grant funding reduces your SR&ED-eligible expenditures, but you can still claim credits on the remainder. The key is strategic planning - knowing which expenses to allocate where. ## Our Recommendation 1. **Start with SR&ED** - It's the most accessible and requires no upfront commitments 2. **Layer in grants** - As you grow, selectively pursue grants that align with your roadmap 3. **Plan holistically** - Work with advisors who understand both programs At Wavecrest, we help founders navigate both SR&ED and grants. [Let's talk](/contact) about building a funding strategy that works for your stage.