Why Waiting for Your ERC Refund is Costing Your Business
An Employee Retention Credit advance allows you to access your pending ERC refund in weeks instead of waiting 12–18 months for the IRS to process your claim. Here’s what you need to know:
Quick Answer: How to Access Your ERC Refund Faster
- What it is: Sell your pending ERC refund to a purchasing fund for immediate cash.
- How much you receive: Typically 70–90% of your total claim value upfront.
- Timeline: Get funded in 1–3 weeks vs. 12+ months waiting for the IRS.
- How it works: A third party purchases your claim and collects the full refund when the IRS processes it.
- Best for: Businesses needing immediate working capital who can’t afford to wait.
The Employee Retention Credit was a lifeline for businesses impacted by COVID-19, offering up to $26,000 per employee. But there’s a problem: the IRS is sitting on a massive backlog of claims, and processing times have stretched to 12–18 months or longer.
For many businesses, this delay creates a serious cash flow problem. Your money is stuck in bureaucratic limbo while bills, payroll, and growth opportunities won’t wait.
That’s where an Employee Retention Credit advance becomes a strategic option. Instead of waiting indefinitely, you can access 70–90% of your refund value in just a few weeks by selling your pending claim to a purchasing fund.
Is this the right move for your business? It depends on your cash flow needs. Some businesses need funds now to cover operating costs or invest in growth, while others can afford to wait for the full refund.
I’m Santino Battaglieri, and through SFG Capital, I’ve helped businesses access over $500 million in ERC advance funding while maintaining strict compliance. In this guide, I’ll explain how ERC advances work and help you make the right decision for your situation.
What is the Employee Retention Credit (ERC) and Why the Delay?
The Employee Retention Credit (ERC), or ERTC, is a refundable tax credit that rewards businesses for keeping employees on their payroll during the COVID-19 pandemic. It was a crucial part of the government’s relief efforts, offering up to $26,000 per employee.
For more details on the program, we recommend checking the official source: More info about the ERC program.
ERC Eligibility at a Glance
Eligibility for the ERC hinges on a few key factors:
- Gross Receipts Decline: For 2020, a business qualified if its gross receipts in a quarter were less than 50% of the same quarter in 2019. For 2021, this was lowered to a 20% decline.
- Government-Ordered Suspension: A business also qualified if its operations were fully or partially suspended due to a government order related to COVID-19.
- Recovery Startup Business: Businesses started after February 15, 2020, with annual gross receipts under $1 million could claim a limited ERC for Q3 and Q4 of 2021, even without meeting other tests.
The rules varied between 2020 and 2021:
- 2020: The credit was 50% of qualified wages, up to $10,000 per employee for the year (max credit of $5,000).
- 2021: The credit increased to 70% of qualified wages, up to $10,000 per employee per quarter. For most businesses, this applied to the first three quarters, totaling up to $21,000 per employee for the year.
Businesses that received Paycheck Protection Program (PPP) loans can still claim the ERC, but the same wages cannot be used for both PPP loan forgiveness and the ERC.
For a deeper dive into these complex eligibility rules, check out this resource: Find out more about ERC eligibility.
The Source of the Problem: IRS Processing Delays
Businesses in Travis County, TX, and across the nation are facing long wait times for their ERC refunds. The IRS has a significant backlog due to several factors:
- Manual Processing: Many ERC claims, especially amended ones (Form 941-X), require manual review.
- Increased Fraud Scrutiny: The IRS has ramped up fraud detection efforts due to unscrupulous promoters, which slows down all claims.
- Volume Overload: The sheer volume of claims has overwhelmed the IRS’s processing capabilities.
The result is that processing can take 12–18 months or longer. For businesses in Austin, this isn’t just an inconvenience; it’s a critical cash flow challenge.
We understand the frustration. We’ve even written about it in detail: Expediting Your ERC Refund: What You Need to Know.
Your Option for Immediate Funding: ERC Advance
Waiting over a year for funds you’re owed can feel like an eternity, especially when your business needs capital now. That’s where an Employee Retention Credit advance comes into play. It’s a financial bridge that allows you to bypass the IRS’s processing delays and access your money when you need it most.
An ERC advance is a service where a third-party purchasing fund, like SFG Capital, buys your pending ERC refund. In return, you receive a lump sum payment upfront—typically 70% to 90% of your total claim value—within weeks. We then take on the responsibility of waiting for and collecting the full refund from the IRS, converting a future receivable into immediate working capital for your business.
This immediate infusion of cash can be a game-changer for businesses looking to seize new opportunities and take control of their financial destiny.
Find how this kind of funding can transform your business: Funding Growth: How ERC Can Power Your Business Forward.
Your Option for Immediate Funding: ERC Advance
While the IRS works through its backlog, your business’s needs don’t pause. An Employee Retention Credit advance is a valuable solution for businesses in Travis County that need capital now.
This service is not a loan. It is a buyout where we purchase your future refund at a competitive rate, providing you with immediate liquidity. We then take on the responsibility of waiting for the IRS to process your claim and collect the full refund when it’s paid. For businesses in Austin looking to reinvest, pay off debt, or manage cash flow, an ERC advance puts your refund to work when it matters most.
Ready to see how fast funding can power your business forward? Explore our insights here: Funding Growth: How ERC Can Power Your Business Forward.
ERC Advance at a Glance
Here’s a quick overview of how our Employee Retention Credit advance buyout model works:
| Characteristic | ERC Advance (Buyout Model) |
|---|---|
| Transaction Type | You sell your future ERC refund to a purchasing fund. |
| Funding Amount | Typically 70% to 90% of your total ERC claim value. |
| Risk | The purchasing fund assumes the risk of IRS processing delays and collection (assuming a valid claim was submitted). |
| Repayment | None. This is not a loan. You receive a lump sum, and the purchasing fund collects the refund from the IRS. |
| Best For | Businesses needing immediate liquidity who cannot afford to wait 12-18+ months for the IRS. |
Is an ERC Advance Right for You?
Deciding on an ERC advance involves assessing your financial situation. Consider these questions:
- How urgently do you need capital? If you require immediate liquidity for payroll, inventory, or new opportunities, waiting for the IRS isn’t an option.
- What’s your risk tolerance? Securing cash now offers peace of mind and control, even at a discount.
- Can you use the funds effectively today? If you have a clear plan for how immediate funds can strengthen your business, an advance is a strategic move.
- Are you comfortable with a discounted payout? You receive a significant portion of your refund now, and the purchasing fund receives the rest later.
You can also sell a portion of your ERC refund for quick cash while retaining the rest. For many businesses, getting funded in weeks far outweighs waiting for the full amount.
How Does an Employee Retention Credit Advance Work?
The process for an Employee Retention Credit advance is straightforward and efficient. Instead of waiting for the IRS, you can open up the value of your pending refund now.
Our service involves our purchasing fund buying your pending ERC refund. You sell us the right to the future payment from the IRS, and in return, we provide you with a lump-sum payment of 70% to 90% of your claim value. We handle claims from $25,000 to over $10 million for businesses of all sizes in Austin.
Once the transaction is complete, we assume the risk and responsibility of waiting for the IRS. This allows you to focus on your business without worrying about delays.
Learn more about our transparent process here: Our Process.
The Step-by-Step Employee Retention Credit Advance Process
Our path to funding is a clear, five-step process:
- Submit Documentation: Provide us with the necessary paperwork to evaluate your ERC claim. We’ll guide you on what’s needed.
- Claim Analysis & Valuation: Our experts review your documents to verify the claim’s validity and determine a fair valuation.
- Receive & Review Term Sheet: We present a clear term sheet outlining the advance amount and terms.
- Undergo Due Diligence: We conduct final verification of your claim and business details to ensure a compliant transaction.
- Get Funded in Weeks: After the agreement is finalized, you receive your lump-sum payment in 1 to 3 weeks.
Documentation You’ll Need
To ensure a rapid process, please have the following documents ready:
- IRS Form 941/941-X: Your quarterly federal tax returns and amended returns claiming the ERC.
- Payroll Data: Detailed payroll records for the claim periods.
- Financial Statements: Your business’s profit & loss statements and balance sheets.
- ERC Eligibility Documentation: Proof of gross receipts decline or government suspension orders.
- Proof of Claim Submission: Confirmation that your claim was submitted to the IRS.
Weighing the Pros and Cons: Benefits vs. Risks of an ERC Advance
An Employee Retention Credit advance is a strategic trade-off, balancing the immediate need for cash against waiting for the full refund.
The benefits are compelling for businesses in Austin and Travis County:
- Immediate Liquidity: Get cash in weeks, not 12–18+ months.
- No Monthly Payments: An ERC advance is a buyout, not a loan, so there’s no debt to manage.
- Reinvest in Your Business: Use immediate funds to hire staff, expand services, or launch marketing campaigns to accelerate growth.
- Pay Off Debt: Improve your balance sheet by paying down high-interest debt.
- Seize Opportunities: Gain the agility to act on unexpected opportunities that require quick capital.
We’ve explored how businesses can leverage these funds for strategic growth: 5 Ways to Use ERC Funds to Strengthen Your Business.
Key Risks and Considerations of an Employee Retention Credit Advance
While an advance offers advantages, it’s important to understand the considerations:
- Discounted Payout: You will receive 70% to 90% of your total claim, not 100%. The fee covers the service of providing immediate capital and assuming the risk.
- Ensuring Claim Validity: Your original ERC claim must be valid and properly documented. Our due diligence process helps verify this, but a claim based on faulty information can create complications.
- Potential Tax Implications: Consult with your CPA or tax advisor to understand how an advance might impact your income tax situation.
Choosing a reputable partner like SFG Capital is vital to mitigate these risks.
Key Questions to Ask Before Selling Your Credit
Before proceeding, ask these critical questions:
- How urgently do I need the capital? Does the need for immediate cash outweigh waiting for the full refund?
- Is the discount worth the speed and certainty? Consider the opportunity cost of waiting.
- Is the buyer reputable and transparent? Work with a trusted partner with a proven track record.
- Have I discussed the tax implications with my advisor? Always consult your tax professional.
Navigating IRS Scrutiny and Compliance
The IRS is concerned about improper ERC claims filed due to aggressive marketing from some promoters. This has led to heightened scrutiny and longer processing times for all claims, even legitimate ones.
The IRS has issued warnings about ERC scams. Red flags include:
- Unsolicited ads promising quick and easy ERC money.
- Eligibility determinations without a detailed review of your financials.
- Large upfront fees or pressure to sign up quickly.
- False claims that “everyone qualifies.”
The IRS is actively reviewing returns that claim the credit, so ensure your claim is valid and well-documented. For the latest updates, refer to the official IRS page: Check the IRS’s official ERC page for updates.
What if Your Claim is Ineligible?
If you believe you filed an ineligible claim, the IRS has relief programs to help you come into compliance and avoid future penalties.
- ERC Withdrawal Process: If your claim hasn’t been processed, you can request to withdraw it. This makes it as if you never filed. Learn more here: ERC withdrawal process.
- Voluntary Disclosure Program (VDP): If you’ve already received and cashed an ineligible refund, the VDP allows you to come forward and repay a portion of the credit (typically 80-85%). In exchange, the IRS may waive penalties and interest.
- Amending Tax Returns: You may also need to file an adjusted employment tax return (Form 941-X) to correct or eliminate the claim and amend your income tax returns accordingly.
These programs can be complex. We strongly recommend working with a qualified tax professional to determine the correct steps for your situation.
Conclusion: Is an ERC Advance the Right Move for Your Business?
The Employee Retention Credit was a vital lifeline, but the extended IRS processing delays have turned a much-needed benefit into a significant cash flow bottleneck for many businesses in Austin and across Travis County. You’ve done your part by keeping employees on payroll; now it’s time to get the funds you’re owed.
The decision to pursue an Employee Retention Credit advance boils down to a strategic trade-off: the immediate availability of capital versus waiting indefinitely for the full refund value. For businesses facing operational needs, growth opportunities, or debt reduction goals, accessing 70% to 90% of your claim now can be far more valuable than 100% years down the line.
An ERC advance isn’t just about faster cash; it’s about putting your refund to work when it matters most, giving you control and flexibility. By partnering with a trusted provider like SFG Capital, you gain not only rapid access to funds but also the peace of mind that comes from working with experts who understand the intricacies of ERC compliance and the IRS landscape.
Don’t let IRS delays dictate your business’s future. Take control of your finances and open up the potential of your ERC refund today.