How an ERC Claim Purchase Works

What is an ERC claim purchase?

An ERC claim purchase is the sale of a filed but unpaid ERC refund. The business transfers its right to the refund to a buyer and receives cash now instead of waiting for the IRS. The buyer collects the refund when the IRS pays it. It is a sale of an asset rather than borrowing against one.

That distinction matters for how the transaction is documented and how it sits on your books. A purchase transfers the receivable. A loan leaves you owning the claim and owing a debt.

Who provides liquidity on delayed ERC refunds?

Firms that specialize in ERC receivables, working with institutional or private capital rather than lending from a balance sheet. SFG Capital purchases pending ERC claims and provides refund-related liquidity through advances and funding. Each claim is underwritten individually, and terms are case by case.

What separates buyers in practice is which claims they will verify, not the headline structure they offer.

How does selling an ERC claim work?

You provide information about the claim, the buyer reviews the filing and supporting documents, and the claim goes through underwriting. If it is approved, proposed terms follow. Due diligence and transaction documents are completed, the transaction funds, and the buyer collects the refund from the IRS.

Most of the elapsed time is in the middle. Getting documents together and verifying the filing is the part that varies most between businesses, and it is the part you have the most control over.

What does the ERC claim purchase process look like start to finish?

The sequence is: you send information on the claim, the buyer reviews the filed claim and supporting documents, the claim goes through underwriting, proposed terms are provided if it is approved, due diligence and transaction documents are completed, the transaction is funded, and the buyer receives the proceeds when the IRS pays.

Seven steps, and the business is only actively involved in three of them. Sending the initial information, supplying documents during review, and signing at closing. The rest happens on the buyer's side.

Approval is never automatic. A claim that cannot be verified, or that carries risk the buyer will not take, is declined at the underwriting stage.

What happens to my ERC claim after I sell it?

The buyer owns the receivable and deals with the IRS from that point. You keep your filed return and your records, and you may still have obligations under the transaction documents, typically around cooperating with information requests. The refund itself is no longer yours to collect.

You are not stepping away from the claim entirely. Most agreements ask you to provide information if the IRS raises questions, because you hold the underlying records.

Who gets the refund if I sell my ERC claim?

The buyer, or the funding partner behind the transaction. The IRS still sends the payment to whoever is the filer of record, so the transaction documents set out how it reaches the buyer from there. Where a PEO filed the claim, the money moves through the PEO first.

This is worth understanding before signing, because the mechanics differ depending on how the claim was filed and who the filer of record is.

Do I have to give up the whole refund when I sell an ERC claim?

No. A claim can be sold in part. Businesses sometimes sell certain quarters and keep others, or transact on a portion of the claim, depending on how much liquidity they need. What is possible depends on the filing structure and comes out of underwriting.

Selling part of a claim is more common where some quarters are well documented and others are still waiting on paperwork.

What is an ERC receivable purchase agreement?

It is the contract that transfers the refund claim from the business to the buyer. It sets out what is being sold, the price and payment mechanics, what the seller confirms about the claim, and what happens if the IRS reduces or denies it. It is a purchase agreement rather than a loan document.

The section worth reading closely is the one covering a reduced or denied claim. That is where the parties agree who carries that risk, and it varies between buyers.

Who is involved in an ERC claim purchase transaction?

The business selling the claim, the buyer, and often a capital source behind the buyer. Attorneys are typically involved in preparing and reviewing the documents. Where a PEO filed the claim, the PEO becomes a party in practice because the refund passes through it.

Your own advisors are worth involving as well. A CPA can confirm how the transaction should be treated in your accounts, and counsel can review the agreement before signing.