The Employee Retention Credit (ERC) has helped many businesses recover some of the costs of keeping employees on payroll during challenging times. But as we move through 2025, one big question keeps coming up:
Should you sell your ERC credit—or wait for the IRS to pay it out?
The answer isn’t the same for every business. An ERC buyout can be a smart financial move in some situations and a poor one in others. Understanding the difference is key to making a confident decision.
What an ERC Buyout Really Is
An ERC buyout allows a business to convert a future ERC refund into cash now. Instead of waiting months—or longer—for the IRS to process the claim, a third party purchases the credit and provides an upfront payment.
This isn’t the same as a traditional loan. There are usually no monthly payments, no interest, and no long-term debt added to the balance sheet. The trade-off is simple: you receive less than the full refund in exchange for speed and certainty.
When an ERC Buyout Makes Financial Sense
You Need Immediate Cash Flow
Cash flow problems don’t always mean a business is failing. Sometimes they’re just a result of timing.
If payroll, rent, vendor payments, or inventory purchases are putting pressure on your business, waiting a year or more for an ERC refund may not be realistic. In these cases, accessing capital now can stabilize operations and prevent larger issues down the road.
IRS Delays Create Too Much Uncertainty
One of the biggest frustrations with ERC refunds is not knowing when they’ll arrive. Planning around an unknown timeline makes budgeting and forecasting difficult.
An ERC buyout turns uncertainty into clarity. You know exactly when the funds will arrive and how much you’ll receive, making it easier to plan and move forward.
Borrowing Money Is Too Expensive
Interest rates and lending standards remain tight in 2025. For some businesses, traditional financing simply isn’t attractive.
Compared to loans, lines of credit, or merchant cash advances, selling an ERC credit can be a lower-cost option—especially if you don’t want monthly payments cutting into cash flow.
You Want to Avoid Taking on Debt
Not every business owner is comfortable adding liabilities to their balance sheet. Even if a loan is available, taking on debt can limit future flexibility.
An ERC buyout appeals to debt-averse businesses because it monetizes an asset they already have rather than creating a new obligation.
You Can Use the Funds Strategically
If immediate cash allows you to:
- Expand operations
- Invest in marketing
- Pay down high-interest debt
- Strengthen reserves
Then the opportunity cost of waiting may be higher than the discount applied in a buyout.
When an ERC Buyout May Not Make Sense
Your Business Has Strong Cash Reserves
If your company is financially comfortable and can easily operate without the ERC funds, waiting may be the better choice. Receiving the full refund later preserves maximum value.
You Don’t Need the Money Right Away
If the refund timing doesn’t affect operations, growth plans, or stability, there may be little reason to accept a discounted payout.
In these cases, patience can be the most profitable option.
The Buyout Offer Is Too Aggressive
Not all buyout offers are created equal. If the upfront percentage is significantly lower than expected, the cost of speed may outweigh the benefit.
Understanding the true trade-off is critical before moving forward.
Your ERC Documentation Isn’t Solid
ERC claims rely heavily on proper documentation. If records are incomplete or unclear, buyout offers may be reduced—or unavailable altogether.
In these situations, it may be better to resolve documentation issues first or simply wait for the IRS process to play out.
Partial ERC Buyouts: A Middle Ground
Some businesses choose a hybrid approach by selling only part of their ERC credit.
This allows them to cover immediate needs while preserving the remaining portion for a future refund. Partial buyouts can be a practical compromise for owners who want liquidity without giving up the entire upside.
Questions to Ask Before Deciding
Before choosing an ERC buyout, it helps to ask:
- How long can my business realistically wait?
- What problems does immediate cash solve?
- How does this compare to other funding options?
- Have I reviewed the decision with my CPA or advisor?
Clear answers to these questions often make the right choice obvious.
Common Myths That Lead to Bad Decisions
A common misconception is that ERC buyouts are only for struggling businesses. In reality, many financially healthy companies use them as a cash-flow strategy.
Another myth is that buyouts are “basically loans.” While structures vary, many are asset sales—not debt.
Understanding the facts helps business owners avoid emotional or rushed decisions.
Using ERC Buyouts as Part of a Bigger Strategy
The most successful business owners don’t look at ERC buyouts in isolation. They evaluate them alongside cash reserves, financing options, and growth goals.
When used strategically, an ERC buyout can be a smart tool. When used impulsively, it can be an unnecessary cost.
Final Thoughts
An ERC buyout isn’t automatically good or bad—it’s situational.
For businesses facing cash flow pressure, high borrowing costs, or uncertainty around IRS timelines, selling an ERC credit can make real financial sense. For others with strong reserves and no urgency, waiting may be the smarter move.
The key is understanding your position, your priorities, and the true cost of waiting versus acting.