How to Leverage an ERC Advance Loan for Your Business | Swift SBF
Understanding the Employee Retention Credit (ERC) Advance and Its Benefits
In today's competitive business landscape, financial stability is crucial. For businesses seeking to bolster their cash flow and seize opportunities for growth, the Employee Retention Credit (ERC) Advance can be a game-changer. Swift SBF is here to guide you through the process of leveraging this financial lifeline for your business.
What Is the ERC Advance Loan?
The ERC Advance Loan, facilitated through Form 7200, is a powerful tool that enables businesses to request advance payments from the IRS before the close of a quarter. It's designed to provide immediate financial relief, helping businesses retain their workforce and thrive in challenging times.
Key Criteria for ERC Advance Eligibility
Before you decide to file Form 7200 for an ERC Advance Loan, it's essential to assess whether your business meets the necessary criteria:
1. Eligible Business Size
Only small businesses that averaged 500 or fewer full-time employees in 2019 are eligible to file for the ERC Advance in 2021. This restriction is subject to aggregate rules for controlled groups.
2. Calculation of Advance Amount
The amount of the advance is limited to 70% of the average quarterly wages in 2019. If your business didn't exist in 2019, you can use the average quarterly wages for 2020. Seasonal businesses can use average quarterly wages from the same quarter in 2019 as the quarter they are filing the Form 7200.
Filing for ERC Advance: What You Need to Know
Filing Form 7200 for the ERC Advance is a strategic move that can significantly benefit your business. Here are some critical insights:
- Filing Form 7200 is not the same as claiming the credits; you claim credits on your quarterly or annual employment tax returns.
- You will need to reconcile any advance credit payments and retained payroll tax deposits on Form 941 each quarter.
- If your business plans to file multiple employment tax returns, you must file a separate Form 7200 for each return.
- If your business uses a third-party payer, like a PEO or CPEO, they are not entitled to the credit or the advance – you are. It's your responsibility to account for the credits and provide your third-party payer with a copy of your submitted form for future reconciliation.
Deciding if the ERC Advance Is Right for Your Business
To determine whether filing for an ERC Advance is the right choice for your business, consider the following scenario:
Imagine your business is entitled to an ERC of $100,000 and was required to deposit $80,000 in employment taxes. The credit allows you to retain the entire $80,000 of taxes and file for an advance payment for the remaining $20,000.
If this scenario aligns with your situation, filing Form 7200 might be a smart choice.
Seek Expert Guidance from Swift SBF
Filing for an advance on your ERC credit may be just the tool you need to keep your business running at full capacity. Swift SBF's experienced team can help you determine if filing Form 7200 is right for you. We have the expertise to ensure all the necessary requirements for filing are met, documented, and substantiated.
Don't miss out on this opportunity to enhance your business's financial stability and secure its future. Contact Swift SBF today to explore the possibilities of leveraging the ERC Advance Loan.
Frequently Asked Questions
Q1: What is the ERC Advance Loan?
The ERC Advance Loan is a financial lifeline for businesses, allowing them to request advance payments from the IRS before the close of a quarter. It's designed to provide immediate financial relief.
Q2: Who is eligible for the ERC Advance?
Small businesses that averaged 500 or fewer full-time employees in 2019 are eligible to file for the ERC Advance in 2021. However, this eligibility is subject to aggregate rules for controlled groups.
Q3: How do I file for the ERC Advance?
To file for the ERC Advance, businesses need to complete Form 7200. This form is separate from claiming the credits, which are done on quarterly or annual employment tax returns.
Q4: What if my business uses a third-party payer?
If your business uses a third-party payer, such as a PEO or CPEO, they are not entitled to the credit or the advance. The responsibility for accounting for the credits and filing Form 7200 rests with your business.
Q5: Is filing for the ERC Advance the right choice for my business?
Filing for the ERC Advance is a strategic decision that can benefit businesses with specific financial needs. To determine if it's the right choice for your business, consider your eligibility and financial circumstances carefully.
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https://www.swiftsbf.com/blog/what-is-an-erc-bridge-loan-and-how-can-it-help-your-business
Understanding the Employee Retention Credit (ERC) Advance and Its Benefits In today's competitive business landscape, financial stability is crucial. For businesses seeking to bolster their cash flow and seize opportunities for growth, the Employee Retention Credit (ERC) Advance can be a game-changer. Swift SBF is here to guide you through the process of leveraging this…