ERC Buyout FAQ's

Loans are almost entirely based on 2 things.

1) The detailed ERC breakdown of how you qualified under the IRS guidelines

2) Your monthly business revenue.

3) Loans have a monthly payment, buyouts do not.

Buyouts are an asset purchase, therefore no additional debt will go on your books.  While still important, Buyouts are less dependent on revenue.

1) 2019-2021 - 941s

2) 2020-2021 – 941X (MUST HAVE proof of filing, tracking numbers)

3) 2019-2022 – Business Tax Returns (PnL + Balance Sheet for 2022)

4) 2019-2022 - Quarterly Financials (PnL & BS)

5) 3 Months Business Bank Statements (main operating account)

6) Signed Application – We will send to you

7) Signed Program Agreement – We will send to you

8) Debt Schedule* - Only if there is existing debt. We will send you a template if applicable.

9) ERC Calculations & Summary - MUST HAVE Proof of Eligibility. Must provide ERC calculations with quarterly breakdowns of eligibility. Please provide any available CPA Opinion Letters or Eligibility Reports. You need to make sure this includes a per employee breakdown for each quarter qualified.

Loans are offered at 60-80% LTV (depending on qualification)

Buyouts are offered at 70%-90% (depending on qualification)

In this specific case, LTV (loan to value) is also referred to as a holdback. Whatever portion you don't get funded, you will receive the rest from the IRS.

Example: A 70% LTV on a $100K claim means you would walk away with $70k. The remaining $30k you receive from the IRS whenever they finally send your checks. This example excludes fees.

Loans take 5-7 business days. Buyouts take about 10 business days. Both depend on how clean of a file you have and how quickly you are able to turnaround documents the underwriting team might need to properly review your file. 

Loans cost 4-5% of the approved amount upon funding and they charge 1-2%/mo in simple interest until the IRS sends your checks. Loans are offered at 60-80% LTV of the total ERC amount and they can close much faster than buyouts.

While there is a substantial amount of due diligence that goes into preparing these ERC fundings, there is still a chance the IRS can come back and request more information, or they could ask for the money back if they find something wrong.

If you received a buyout or loan and the IRS decides to clawback the funds or decides not to pay out on your claim, you would be responsible for paying the money back.

Rest assured, insurance is available at an additional fee to completely mitigate any risk involved with non payment or clawback.

Buyouts charge 13-20% of your ERC amount. The final amount is ultimately determined by the strength of the overall file.

As a broker, we charge 5% of the funded amount. Clients will pay this fee immediately after successful funding. Ask us how you can save up to 20% on your fees.

We are not a direct lender or buyout source. We are a broker with direct connections to 5 capital sources to send your file. By working with us, you will not need to search all over for the best deal, as we will engage as many sources as possible to close your deal on your behalf, with the best terms possible.

This industry is very small and there are only a few real players in the space. We are connected with all of them and will most assuredly be able to provide you the options you need to get funded. 

1) Bankruptcies within the last 5 years.

2) Previous business loan defaults or collections.

3) Back taxes (Personal or Business) will need to be resolved prior to funding.

4) Criminal records can present challenges with certain sources but aren’t an automatic decline.

5) Poor revenues below $10k/mo

6) Not having a detailed eligibility report with the breakdown of calculations for each quarter that was qualified.

7) Incorrect or overly aggressive ERC calculations

This is quite possibly the most important document of all. The IRS offers guidelines for qualifying that include a Full or Partial Shutdown of Operations (FPSO - Government Orders), or a Substantial Decline in Gross Receipts (SDGR - Revenue Reduction).

However you qualified, we need to have a the calculations the were used to qualify the claim.

Files qualified under SDGR with a clear calculation breakdown are very attractive to lenders and they are the easiest to underwrite. FPSO files are much harder and require a significant amount of detail and substantiation in order to get funded.  In your ERC calculation sheet, you MUST have a quarterly breakdown with every employee who had qualified wages for every quarter you want to sell. 

That’s not an easy task to do, and get right. So congratulations to you if you did! Our lenders have found that 90% of self filers have not completed their file correctly and will usually require additional work. In either case, no source will accept a file to fund without a licensed tax professional's eligibility letter with a detailed breakdown for each quarter.

You can choose the quarters you want to sell. You can do all or one. As long as they meet the minimum dollar amounts, any single quarter is able to be sold. Even if you’ve already received payment for some quarters but not all, you can still sell the remaining unfunded quarters.

Loans Minimum - $100k

Loan Max - $5,000,000

Buyout Minimum - $75k

Buyout Max - $10,000,000

Yes we do! If you are able to collect the full document package from the client, we will share 50% of the fees collected. If you just want to send us your clients who are waiting for money and have us take care of the rest, we will share 25%. 

Because we have such an extensive network of capital sources, we have the best chance of funding your file. In most cases we are still able to help, even if you’ve been declined.

We have partners who can potentially help fix the errors previously identified, and resubmit for funding.

Telling us about this right off the bat will ensure we waste no time in reviewing the reason and rendering our opinion if we can help or not.

There are many cases where a decline at one firm means a decline at all of them, but due to our extensive relationships, we will be able to easily spot the problem and provide a solution or tell you straight up that you will need to wait for the IRS to send your money.

Of our 5 Capital partners, only 1 doesn't require a PG. All the other partners will require a PG of some kind.

If your business has existing debt, your senior creditor would be required to sign a subordination/carve-out agreement. The firm who buys your ERC will place a UCC3 lien on the business until the funds are fully repaid. Once the IRS funds your ERC claim and the lender is fully repaid, the lien will be removed.

We have 2 Capital sources that can fund an ERC claim filed with a PEO. We must be able to engage with the PEO management team in order obtain the necessary paperwork approving this transaction.

For Buyouts - PEO must be willing to be a 3rd party and remit funds to the purchaser upon receipt from the IRS.

For Loans - PEO must be willing to sign an agreement stating they will notify the lender when the funds have arrived from the IRS. 3rd party not required.