While the ERC can be quite helpful for businesses, waiting a year or more to get the refunds isn’t reasonable for small, cash-strapped businesses. Fortunately, ERC loans and advances come in handy for companies that have already claimed their ERC but cannot wait for the long processing times. These loans allow quick cash access that enables businesses to cater to their operational expenses, pay debts, and invest in new products.
Note that the IRS doesn’t offer ERC loans. They’re provided by trustworthy third-party companies or tax firms specializing in ERC services. Highlighted below is how to apply for an ERC loan.
1.File your ERC claim with the IRS
To be eligible for ERC loans, businesses must have valid ERC claims with the IRS. Determine if your company qualifies for an Employee Retention Fund. Once you confirm your eligibility, use either of the following options to file your ERC claim.
Do the application yourself
It involves the business owner filling out the IRS Form 941-X to amend your company’s 2020 and 2021 quarterly tax returns. The process is complex and time-consuming as it requires knowing how to calculate ERC. Your ERC should be accurately calculated because any miscalculations may result in ERC funds repayment, interest, and penalties. You can leverage online resources like the official IRS website for guidance on how to file your ERC claim.
Hire an ERC service
Hiring an ERC provider means leaving the ERC claim filing task to a professional, including a CPA or companies specializing in ERC funding. While the service isn’t free, it ensures everything is done correctly, saving time and alleviating stress.
2.Gather your ERC loan documentation
Your ERC lender requires you to provide specific documents for your loan application to proceed. They include:
- A complete application form
- IRS Form 7216 and 8821
- ERC calculations
- IRS Form 941-X (amended) and 941 (original) for every quarter filed
- Bank statements
- The latest business tax returns
- Government-issued IDs for every business owner
- ERC qualification documentation
3.Research ERC loan providers
Different ERC loan providers offer varying fees, repayment terms, and rates. Researching loan providers helps you determine ERC loan terms and how they impact your refund. In addition, research is key to finding reputable and affordable lenders. It also keeps you from falling prey to ERC loan scams.
4.Submit your ERC loan application
Upon finding a reputable ERC loan provider, start the loan application process. You can do so by filing an online form that needs basic details, like:
- Business name
- Legal name
- Expected ERC refund amount
- Contact information, including email address and phone numbers
Upon submitting your loan application form, a loan representative contacts you to ask more questions to determine your loan eligibility. The loan assessment should be free, and you shouldn’t be obligated to accept any loan offers.
5.Give more ERC loan details and documentation
If the first evaluation demonstrates that you qualify for an ERC loan or advance, your provider may require you to provide additional documentation. Ensure prompt response for any documentation requests to ascertain fast ERC loan processing. Consider asking your ERC loan provider some questions, such as:
- How much the loan/ advance will cost
- When you get cash from your ERC loan provider
- When you should repay the loan
- Any other ERC loan questions you might have
6.Understand and sign the ERC loan contract
If you’ve met all the ERC loan requirements and have already submitted your application, plus all the required documentation, await your loan application request to be approved. Upon approval, your loan provider will provide you with a loan contract to sign. Read through it carefully to ensure you understand each detail, including critical information such as loan fees, interest rates, and repayment terms.
Before signing the ERC loan contract, consider consulting an ERC loan specialist, because they’re well-versed with ERC loan application processes and have access to many ERC loan packages. Their advice will help you get the best ERC loan package because their recommendations are unbiased. If you’re happy with the ERC loan terms, sign and return the contract to the lender.
7.Receive the ERC loan funds in your business account
Often, direct deposits are sent to business bank accounts. Based on the lender you’re in partnership with, you might get the cash within a few days to a month or longer. Most ERC loan providers require repayments to start immediately after the funds’ disbursement. Familiarize yourself with the repayment terms and adhere to them to avoid extra charges that could raise your borrowing cost.
Endnote
ERC loans/ advance is an ideal solution for cash-strapped companies that cannot wait until their ERC refunds are processed. Learn how to apply for an ERC loan to ensure a seamless application process.
