Guides / ERC
How ERC Claims Are Underwritten
How is an ERC claim underwritten?
Underwriting works out how likely the IRS is to pay the claim, in full, and what could stop that happening. The reviewer examines the filed return, the eligibility basis, the calculation, the payroll records behind it, and any IRS correspondence. Each claim is assessed individually rather than scored against a template.
The business itself is a secondary question. Underwriting is looking at the receivable and at whether the IRS will honor it.
Is there an ERC funder that takes large claims?
Yes, though the pool is smaller. Large claims need buyers with access to institutional or private capital and the appetite to do more verification work. SFG Capital works with larger and more complicated claims, including multi-quarter filings. Whether a specific claim can be funded is decided in underwriting.
A decline from a volume funder on a large claim often reflects its capital limits rather than any judgment about the claim.
What do ERC claim buyers look for in underwriting?
Evidence, essentially. That the claim was filed, that the eligibility basis is documented, that the figures reconcile to payroll records, that the preparer's work holds up, and that no IRS correspondence is outstanding. Claims with a complete, coherent file move through most easily.
The common failure is not a claim that is wrong. It is a claim nobody can prove is right, because the supporting work was never handed over.
Does my business credit matter when selling an ERC claim?
Much less than in conventional lending, because the credit decision is about the IRS paying a filed claim rather than about the business repaying a debt. Ordinary entity and identity checks still happen. A weak balance sheet is not usually the obstacle it would be for a loan.
Where the transaction is structured as an advance with recourse, your position matters more, since you may carry the repayment obligation. Structure drives how much weight this gets.
Will an ERC buyer verify my claim with the IRS?
Buyers verify what they can through IRS records, most commonly transcripts showing the amended return was received and what it reports. That is a records check rather than a conversation with the IRS about the merits, and the IRS does not confirm or endorse claims for third parties.
Where a transcript is not available, as with many PEO and Schedule R filings, verification runs through the aggregate return and the allocation instead.
What makes an ERC claim hard to underwrite?
Missing calculations, no proof of filing, records held by a preparer who has gone out of business, aggregate filings needing tracing through Schedule R, open IRS correspondence, ownership changes since the claim period, and eligibility resting on positions the IRS has challenged. Usually several at once.
Hard is not the same as impossible. Most of these are verification problems and can be worked through by someone willing to do it. Many funders simply are not.
Why would an ERC claim be declined for funding?
Most often because it cannot be verified rather than because it is wrong. A claim with no supporting calculation, no proof of filing and no retrievable records gives an underwriter nothing to assess. Unresolved IRS correspondence and eligibility that does not hold up also lead to declines.
A decline from one funder does not mean the claim is unfundable. Funders differ substantially in what verification work they will undertake.
How long does ERC underwriting take?
It depends on what arrives with the claim. A complete file with the filed return, proof of filing, the calculation and payroll records is assessed comparatively quickly. An incomplete file waits on documents from third parties. No timeline can responsibly be given before the file is seen.
The delay is almost always in obtaining records rather than in the assessment itself.
Who buys large ERC claims?
Larger claims are handled by buyers with access to institutional or private capital sources, because the amounts exceed what smaller funders can deploy. Fewer participants operate at that level, and they generally undertake more verification work than volume funders will.
Size also changes which structures are workable. Larger transactions are more often bespoke than standard.
Is there a maximum ERC claim size for funding?
No fixed ceiling applies across the market. What is possible depends on the capital sources a particular buyer can reach and on what the claim's documentation supports. Larger claims attract more verification and closer scrutiny. Whether any specific claim can be funded is decided in underwriting.
Businesses with large claims often find the constraint is not the amount. It is finding a buyer prepared to do the verification work the claim requires.
Can I sell a multi-million dollar ERC claim?
Claims at that level are transacted, though the pool of buyers is smaller and the review is more thorough. Larger claims frequently involve multiple quarters, PEO filings or Schedule R allocations, all of which add verification work. Availability and terms are case by case.
Expect a longer diligence process and more questions about the eligibility basis. That scrutiny is proportionate to the amount at stake.
Why do some ERC funders turn down large claims?
Capital constraints and verification capacity. A funder built for volume transactions may not have access to capital at that scale, and larger claims tend to carry the complications, aggregate filings, multiple quarters, that its process cannot handle. The claim is often perfectly sound.
This is why a decline on a large claim is worth testing with a second buyer whose model is different.
Do large ERC claims take longer to underwrite?
Usually, yes. More quarters, more payroll data, more eligibility analysis and more documents to reconcile all extend the review. Where a PEO or Schedule R filing is involved, tracing the allocation adds further time. The work is proportionate to what is being verified.
Businesses can shorten it materially by assembling the calculation and payroll records before the review starts.
What is the minimum ERC claim size to sell?
There is no universal minimum, though most buyers have a level below which the transaction costs make it impractical. The fixed work of verifying and documenting a purchase is similar whatever the amount. Whether a smaller claim can be transacted depends on the buyer and on underwriting.
If your claim is small and well documented, it is still worth asking. Thresholds vary and are not always published.
Talk to a specialist about your claim.
Every claim is reviewed and underwritten individually.
SFG Capital underwrites each ERC claim individually, including larger and more complicated claims and those filed through a PEO or under Schedule R. Pricing and terms are case by case and subject to underwriting. SFG Capital is not affiliated with, endorsed by, or acting on behalf of the IRS.