Advancing your ERC is a terrible idea. You need Working Capital instead.

Benjamin Sterling
April 23, 2024

Don't get me wrong, taking 'advance cash' or a 'buyout' against your ERC check can be a good possibility.

Especially if you really have no other choice and your refund amount is in the low 6 figures, and you don't need to pay another 15% or 20% to the firm that helped you with the filing..

But, if you're like most businesses, getting an advance cash or a 'buyout' over your ERC check is simply a terrible idea.

Let's say you're going to qualify, (which really depends on your state and nature of the claim, not only you're going to pay an extra 20% or 25% from your total ERC amount, and not only it's going to take FOREVER until the lender actually gives you the money, in most cases, you also going to have a personal guarantee over it.

Nonetheless, why would you even need this whole amount? I've seen hundreds of businesses that could actually manage to get along with only 20 or 30 percent of their ERC calculated amount.

By now you're probably wondering what is the alternative I'm talking about, and how can you avoid taking an advance, without taking a loan. Well, there’s only one way to get around this:

Working Capital

If you think you know what I'm talking about, but not entirely sure, don’t worry, I'll be explaining this in a bit.

What I want you to keep in mind is that unlike a buyout, with working capital:

• There is NO personal guarantee or collaterals.

• The rates are EXTREMELY lower.

• Almost anyone can qualify.

• It's not affecting credit score.

• The repayment is dynamic and based on your sales.

Let's start with the personal guarantee or collaterals.

As simple as it sounds, no small letters, no hidden things, there is no personal guarantee or collaterals needed.

If, for example, you decide to take financing, and after a month your business goes bankrupt, there is nothing we can do, you will not be personally liable for the repayment.

Yes, it definitely makes the rate higher, because the risk we take is bigger, but, trust me, it will be nowhere near what you would have paid for a buyout.

Now that we took the personal guarantee out of the equation, let's move on to the rates:

The rates for working capital couldn't be any simpler, what we do is a ROI Financing, meaning we won’t give you financing unless it provides a positive ROI for your business.

For example, let’s assume traditional banks won’t give you a loan but you need $100K for a marketing campaign.

Seeing how your previous marketing campaigns have generated $300K, you know it’s worth it, but you can’t reach that point unless you’re able to get capital.

In that case, you reach out to us, we underwrite your financing…

And immediately approve you because of it.

Yes, our interest rates are MUCH higher than banks, primarily because we take on more risk.

If you weren’t able to get an ROI from it (i.e. cover payroll), then we wouldn’t do it, but if you’d make more money with this loan than without — then we’ll likely approve you right away.

Doesn’t matter if the loan was 30% APY, it’s more than worth it if you’re getting a 5x ROI, so that’s how we underwrite…

So, let's say it might make sense to your business, how can you actually qualify, and how long it takes? Also, Does it affect credit? 

Let me put it like this - there is NO business that is eligible for the ERC and not for our alternative financing solutions, because the only requirements are:

  1. at least $5,000 monthly revenue
  2. Business bank account
  3. You're in business for over 6 months

Matter of fact, the only thing we care about is your last 3 months business activity.

As long as your business is active and stable, we will be able to fund you, and no, we don't care about credit score.

For those of you who wonder, there are no effects at all on credit score, we don't do hard pulls, like those done by 'ERC Advance' lenders.. And, most importantly, the whole process takes less than 4 hours until we get back to you with a final approval.

From there, you get a wire under 48 hours and you can put the money to work.

After we covered all the points above, let's finish with the more questionable point - The repayment.

So, if this is not a loan on paper, and, this is not a buyout, and, there are no fixed payments, how does the repayment actually work?

The repayment is where the real magic happens.

We integrate to your bank or payments processor automatically, then, after we agreed on a certain % of your sales, every week or month it will be transferred to us automatically, making it super seamless to you, until the financing is repaid.

The best part here is that if things go slower, the payment is lower.

The payment is always relative to your sales, for example, if we decided on 5%, then, it doesn't matter if you generated only 100$ in sales in this week or $100K. We will take 5%, until the financing is repaid. (Probably good time to mention that there is no time limit on the repayment, making it super flexible).

The Recap

To better outline the differences between a buyout and working capital, I created a quick comparison:

Long story short, even though there’s a lot of issues I see in the "ERC advance” space today, I’d say most of the business who look for that can actually get much more value with alternative financing.

P.S: Working capital is only one example, whether you decide to go with us or other lenders, make sure to ask all the options you can qualify for, we always offer a plethora of all the solutions you can qualify for. (SBA/Equipment/LOC/Term loan/etc).

So just keep this in mind.

If more capital can boost your business, don't wait for your ERC check because it can take a while (I've already seen 1.5 and 2 years), make sure to check all the solutions you can qualify for before taking an advance, which is probably the last option you should go for.

Hope it helps.

-Ben |