Unlocking ERC Funds with Intero Capital
This week, we're sitting down with ERC experts from Intero Capital Solutions - Gillian Gradidge, Darryl Stein, and Dan Leathers. Discover how Intero Capital Solutions aids contractors and small business owners in accessing their Employee Retention Credit (ERC) funds, providing invaluable insights into financing strategies and unlocking trapped capital. Whether you're seeking immediate liquidity or looking to navigate the complexities of ERC, this conversation provides essential information on how Intero Capital can help expedite your financial solutions. Don't miss out on this opportunity for game-changing insights!
Ready to learn more? Reach out to the Intero team at [email protected] and mention Route Consultant in your message.
About Intero Capital Solutions
Intero Capital Solutions is a U.S.-based firm specializing in Accounts Receivable transactions to help businesses unlock working capital without taking on debt. Since 2021, they've completed over 3,500 transactions for 300+ businesses, managing more than $2.5 billion in receivables. Intero designs custom financing solutions—from invoice monetization to tax credit advances—serving both traditional companies and emerging industries.
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All right everyone. Welcome to another episode, and today we have Daryl, Dan, and Jillian from Inter Capital. Now Inter Capital is a financing strategy company that helps contractors and small business owners access all of their ERC funds. That for some people they've been waiting for months or even years to access those funds.
So if this is you sitting out there and you've been waiting and asking the question. When am I gonna get my [00:01:00] ERC funds? This is the perfect episode for you. But beyond that, this is a team of experts and professionals that are excellent at accessing all of the capital that gets locked up in receivables and helping business owners access that capital.
So, uh, Dan Darrell, Jillian, welcome. I would say to the studio, welcome virtually, uh, to the studio today. Thanks, Josh. Thanks for having us. And, and so for each of you, I know you guys aren't all in the same place right now, but if you guys would at least just say hello and give a little bit of, uh, background on your role at Inter Yeah.
So we'll start with Jill. Ladies, go first. So my name is Jillian. I'm the operations manager at Intero. So my role basically involves me with our internal team, right through to our clients. So I ensure that everything from beginning to end runs as smoothly as possible. So, uh, my name's Dan Leathers. I, uh, joined in 2023.
As an analyst and I've recently moved [00:02:00] into a credit manager position. Uh, my current focus is on quality assurance. Reviewing, uh, each transaction in depth, validating the ERC submissions and confirming that the work performed by both the tax preparer I. Our internal underwriting team holds up with, uh, scrutiny.
Hi everyone. My name is Daryl. I'm one of the co-founders of Inter Capital, um, founded the company back in 2021, along with my other co-founder, Tom Deru, who sits in our London office. And together the team here joined with Jill and Dan. We operate out of our Florida location and looking forward to giving you guys some insights and overview on the ERC Advanced funding program.
And how we can look to help you unlock that cash that's trapped, um, currently with the IRS. Perfect. So, so Darrell, why don't we go to you first. So, uh, you know, how did Intero Capital come to be? You said your partner's in London, so how did you guys meet up and, and get this off the ground? I. Absolutely. So Tom and I, we've been [00:03:00] working together for the best part of a decade.
Um, spent most of that time transacting in the supply chain, actually on the import export side, but identifying the receivable and a payable in a transaction. Um, we looked to diversify our product range, both from a product offering to the market and also from an investor risk perspective. And that's how we ended up in the ERC space, taking risk on US government type receivables.
And still providing the benefit of working capital to the applicants in this case, the applicants, the taxpayers that are waiting for ERC refunds to essentially inject liquidity into operations. Um, bit of a different transaction structure to what people usually expect, whereby we're not transacting loans in that sense.
In the case of ERC, we're simply looking to buy the refund from the taxpayer in a, in exchange for an advance of capital on day one. Um, providing that injection of liquidity into operations. Okay. So, uh, before we go too far, I, [00:04:00] I know there's gonna be plenty of people who are listening to this that know everything about ERC and have thought nothing but uh, ERC for the last few years.
But if you've never heard those words, or if you're still trying to figure out what exactly is going on, what is the ERC program or maybe what did it start at? What is it evolved into? And, and kind of take us through that. For the employee retention credit, sometimes referred to as ERC or ERTC, is a program that was launched as a result of COVID back in 2020 originally under the CARES Act and then further amended under the American Rescue Plan Act in 2021.
The program was designed to reward, um, employers who retain staff on payroll during, during the COVID periods, and essentially act as a refund of payroll taxes. Provided that there's a basis of eligibility, um, there are a number of ways for taxpayers qualified businesses to gain access to the program, either through a full or partial suspension of operations or a decline in gross [00:05:00] revenue.
Essentially, the government is asking the question, was your business impacted by COVID? And can you show the, the, the effects of those impacts on the business, um, either through executive order or simply by a revenue decline. Okay, so was that many businesses that were affected or that were eligible for EC?
What was kind of that process like when it, when it rolled out? Yeah, so it was pretty, um, narrow in the beginning compared to how the program eventually became to be noting that the program is closed towards submissions now. Um, essentially whatever has been sent to the IRS is the inventory that they're working through.
So from a basis of eligibility perspective and the who could benefit from this program, it, it applied to a broad range of businesses in the US generally looking at employee head counts, I would say as the main determining factor outside of the simple question of were you impacted either through suspension of operations or revenue decline?
There are some interesting little niche [00:06:00] ways to qualify for the program, but they don't, they didn't apply as broadly as those two, um, main categories of eligibility. Simply the government told you to shut down your operations in the form of an executive order, or you were able to show an impact on your, in, on your business, um, through your gross revenue declining.
Okay. So really, uh, a means to just like, like you said, a means to support people who had struggled and to incentivize them to keep employees when there was significant struggle during, you know, a, a huge global, uh, breakdown in the economy. So, uh, and, and I think a, just a really important note for anybody who's watching, if you haven't applied for ERC, even if it would've affected you at that time, you're no longer able to apply.
Is that correct? That is correct. Yeah. The window for, um, submissions to the IRS closed last year in 2024 at the end of the tax filing season, so April 15th. And then this year, the 2021 periods also were closed on April 15th. Okay. So is there any years [00:07:00] that you can still apply for, or is it basically at this point, no.
Okay. Yep. So at this point it is a, it is a retroactive look back on what the program is, and then trying to figure out ways to access funds you're still owed and, and so I think, talk about that a little bit. So how does Intero. Fit into this ERC equation and, and why is there even a need to access these funds?
Like, why did people not get these immediately when they applied for 'em? Right. So it, it comes down to the nature of the program and eligibility, given that it applied to a broad spectrum of businesses across the US in terms of why a product, like what, um, Interra offers exists. So essentially the Iris was overwhelmed with submissions.
The program had a, a far reach than was originally expected. And so it comes down to simple manpower operation at the IRA's site. In terms of processing these paper filings, they took a pause back in 2023 into 2024 where they looked to improve their back office [00:08:00] efficiency, identifying potentially fraudulent submissions, um, for the ERC and improving the way in which they issued the refunds coming out of the back of that reorganization of their back office.
So the product that we offer in the form of advanced funding where we buy the refund from you essentially makes the weight and game our problem. The taxpayer, the applicant or consultants in this case would apply for advanced funding to us. We underwrite the submission, looking to agree with the work that the tax preparer would've done, the, the company that would've assisted the consultants with preparing and submitting the claim to the IRS and we look to agree with it.
If we can agree that there's a basis of eligibility, we then purchase that receivable in exchange for cash today and we wait for the IRS to get around to eventually issuing that refund. So it solves the unknown duration problem from a tax base perspective, scratching their head, wondering when am I gonna get this refund?
That's where we can step in and provide a lot [00:09:00] more certainty in that environment. And, and do you have any idea of like what the average amount of time people are waiting right now? Um, it's hard to say other than really submissions from as far back as 2022 are still waiting for the IR Rs to be processed.
So the IRS has tried to, um, take a sort of streamlined approach in terms of issuing refunds. I. But in a way where there's no absolute certainty or predictability as to when a specific taxpayer's refund might, might finally arrive at their mailbox. Yeah. And you know, over three years at that point, who knows how much your business has changed and who knows how much benefit those funds would provide today if you could access 'em.
So. So is this how Inter Capital was founded? Is this, was it for this purpose or was this kind of something you guys realized there was a big need for? Hmm. So we weren't founded specifically to serve the market for ERC advance funding, drawing on an experience previously, [00:10:00] um, from a common and mark perspective in receivables and payables.
Um, ERC was a natural fit for the type of program that we were looking to deploy into the market. Again, both from serving the applicants or taxpayer. Yeah, providing working capital to them and also from a, an investment strategy de-risking investment strategies to essentially provide the capital to support the program.
We are not, um, advanced funding using government funds in that sense. This is private commercial capital that has been built into a program, again, to address the duration, um, or unknown duration around when the refund might arrive. Yeah, and I know, you know, I talk to people all the time who. Uh, there were plenty of people who had a, a, a great experience with ERC when they got their funds early, uh, and I know plenty of people that.
It's basically something they've stopped expecting to ever come. You know, it's something where, sure the government has it, I don't know if I'll ever get it. And so I think this really [00:11:00] does help address some of that uncertainty. So I, I think a, a good clarification, you've mentioned it a couple times, but is, is this is what you all are doing?
Is it alone? Like what, what is, how would you talk about what's actually happening here when, when you're providing the service? Right. So in its simplest sense, this is not a loan product. Okay. We are buying the refund, the check that the IRS eventually cuts. Mm-hmm. Um, think of it as us buying any other asset off of the taxpayer's balance sheet, be it a truck or a fleet vehicle, similar kind of transaction where it is an outright purchase of that receivable.
And what that means, and why we structure it this way is that there are no ongoing installment requirements. This is not a loan facility with monthly interest payments, capital payments, and so on. The economics of the transaction are priced upfront on day one and nets it off against the transaction.
We've tried to structure this so that ERC can be self-contained in the context of the business's ongoing operations, especially in a contract environment where the [00:12:00] balance sheet may be required to support growth, buying additional vehicles, taking out further loans to expand territories and route purchases.
And so we leave the business relatively free to get on and, you know, run and grow their business from a daily perspective. But again, still providing the benefit of that cash injection without attaching ourselves to the company on an enduring basis. Yeah, and I think that's one of the easiest and simplest ways to think about it exactly like you phrased it, is, you know, if you're a business owner, if you're a contractor that has this potential amount of money that could come in a, you know.
Any number of years. It could be longer than, you know, it could even be a decade. Who knows how long this could actually take, depending on the person. But you have an asset that is worth an amount of money today versus what the, you know, the uncertainty of how long it could take. And you can sell that asset today and, and you all are willing to buy it and take on all the risks, take on all the uncertainty.
They'll, you'll buy it at a, you know, a price based on. Whatever you all determined [00:13:00] to decide that. And so we can talk a little bit about that. But it, it is simply an asset that you can sell and use that money today on however you want to in your business as opposed to waiting and, you know, years, however long it may be for you to ever get that money.
And so I think that's a, a really valuable. You know, way for someone to look at their business and decide, is it worth it for me to wait? You know, or do I need the cash flow today? How much will it impact and improve my business today to have that additional cash flow? And I think that's a, a conversation, especially from what you all are saying, that it's an immediate upfront conversation so you'll know what it's worth and you can decide at that point, uh, if you wanna proceed or not.
Exactly, and we've seen the, the benefits that it can provide to the business that's going through the transaction whereby they might be looking at extensive debt that was taken on either during the COVID period Yeah. Um, to get through that, you know, extended period of shutdowns and whatnot. Or even today, we are looking to expand a fleet or again, acquire additional, [00:14:00] uh, routes and territories where this transaction makes economic and commercial sense.
For the business owner when compared to more traditional, um, types of financing structures that may have been used. Yeah. And it, it, it is money that is owed to you by the government. It's a plan that they created specifically to help contractors and help business owners during a time period where the economy struggled.
And so it's just a matter of deciding is it more important for you to have it now versus waiting an uh, indeterminate amount of time. Exactly. Have, you know, I'm sure you've worked with contractors now, like what, what's been the impact of people who've taken advantage of this? Like, do you stay in contact with people?
Do they talk to you about how they plan to use it? You've given a couple of examples, but you know, what has that been like? Hmm. It's, I would say it depends on a case by case basis, and Jillian would be able to attest to this. We jump on calls a lot of the time with taxpayers that are going through the process.
And again, because this isn't a loan product, there aren't specific covenants around use of funds. [00:15:00] It's not as if we say, you know, we are going to give you this advance in exchange for your ERC claim, and you can only use it in, you know, the following five ways or whatnot. Yeah. It is really up for the business owner to decide how it would be beneficial.
So as we are having those conversations. Um, with the, the taxpayers, the consultants that are going through the process, we sometimes look to identify in their specific case why the transaction may be beneficial for them or in some instances, um, we advise them to wait. You would think that this would be a bit of a weird one where we are not selling our product in that way.
But again, it comes down to the specific needs of the taxpayer in, you know, their specific circumstances. So we would always advise that if there is a reason and the ability to wait for the refund to come naturally, then of course do that. Uh, however, again, in, in this time of the year as well as we, we sort of gear up for the busy season from a logistics perspective, everyone's getting their orders in and whatnot, and the supply chain's starting to rev [00:16:00] up.
This, again, is something that can provide that, you know, certainty around operations heading in towards the, the backend of the year. Yeah, I mean, I, I, we see the exact same thing all the time. When people are coming to sell businesses with us, when they're selling their, you know, they're selling a piece of their business, let's say, some people will say, you know, I don't have any real cash flow pressure.
I don't have any operational pressure. I'll wait. I, I'll price it or, or push for a high price and wait for a long time, and I'm fine with that. Uh, versus people who. For whatever reason, either because of personal reasons or because they need cashflow to, to grow the other side of their business. They're comfortable with selling immediately and they want to price it accordingly, and it's, it's the same type of just business conversation.
I'm happy to hear you guys kind of talk that through with them to help them make the right decision because that's, that's what it is, is you've got a valuable asset if you've got time to wait, you know, as long as it may take, and then maybe that is the right decision or. In other cases, there's times where you need that money now to invest in your business or [00:17:00] to, you know, for any number of personal reasons.
Maybe you wanna start a pizza shop, uh, and you want the the capital to get started. There's all kinds of reasons why you might need the money now versus waiting. Exactly, and the way that we structure the transaction in the form of buying the refunds. If you think about someone who's submitted a claim for ERC, there were multiple courses involved.
In some cases, um, taxpayers were eligible for up to six quarters, so we can transact one or all of them. And that way again, we flexible around the way that we can fit in with the needs of the business owner and their current circumstances. We have had instances where we've transacted one quarter today.
And in a month's time we go back and fund another quarter. So again, a nice flexible transaction where we are here available to the taxpayers. The consultants looking to take in advance. And looking to fit in with their needs and requirements around the, the program itself. Of course, there are, um, parameters of the program that are fixed in place.
Things like pricing, advance rates and [00:18:00] whatnot. Those are driven more by the, the market conditions. Essentially. What is the IRS doing today? We look to respond to that environment as well. Always positioning ourselves as a competitive product, um, in the marketplace. Got it. Uh, so, so talk to me a little bit about, like, you know, we've touched on it, but what is the actual process if somebody wants to do this program?
Do they just call you, like, you know, what, what is, what does that kind of timeline look like? Hmm. So generally we, we don't, um, run an open program in the sense that we like to have a closed network, hence this type of conversation taking place with the the right consultant network. The process is really simple and straightforward, and I'll bring Jillian in here as well to get a bit of an overview as to how this all works.
But yes, it does start with an initial introduction to the inter team, at which point Jillian, myself, or one of the other team members jump on a call and start running the, the business owner through the process. So I'll hand over to Jillian to give a bit of an overview of what that [00:19:00] experience may look like.
For the business coming into the inter process, um, what kind of questions we may ask, how long this takes mm-hmm. And what they can expect while waiting for the refund to finally be issued as well by the IRS to finally settle the transaction. So basically we'll interact with the customer at the first level.
We'll go through the whole process with them, explain what it entails and what you'll need for them. We also work closely with their preparer so that they can help us with all the document collections so that it's not a struggle for the consultants. The few consultants we have worked with so far, we've learned that their working hours are quite different.
The beauty of inter is that we do almost have a 24 hour team being based all over the world. So we've got staff members in a few different countries that help. Have that time coverage. So with that, um, there's always somebody available really to work on the applicant. Work with the applicant. We've got different [00:20:00] teams that handle different parts of the processes.
So this will ensure that the applicant is informed throughout the process, you know, helps along the process. We've got internal platforms, so basically everything is handled by us. Um, we are not. Rigid. We're very flexible, so we're able to work with applicants in unique situations to get, you know, to find a solution for them.
So, so you mentioned unique situations. Are there times where people wouldn't be, you know, wouldn't apply to, to, to working with you all? I. So I think if you just compare it to a traditional lender mm-hmm. With very rigid, um, criteria. Yeah. At Interra we are able to work with an applicant. We really get involved and work with the person and the business.
So, you know, if there could have been a litigation a couple years ago, there's still ongoing, you know, we get into that with the applicant, we can work through it, find a solution and see if we can still go ahead and fund them. Okay. Are there any, are there any [00:21:00] scenarios where they, they wouldn't be eligible to move forward?
Yes, definitely. So, um, you know, we do have to look at certain things, especially your tax records. So if you have got, you know, civil penalties, severe arrearages, we can still consider those, believe it or not. Okay. But. We have to, you know, it has to be within a certain threshold. Got it. And again, this is something that in the past we have worked with people where we could potentially advance one of the quarters in order to help them.
Settle any outstanding arrearages and then we can work with them to fund the rest. But it will just depend on each applicant. Yeah. Okay. And, and I think that's just really helpful for people to hear is that if you call in, it's a conversation and y'all's goal is to learn whatever you can. And if there is a scenario where you can help, regardless of how.
Uh, difficult. It may be to help in some scenarios. That is the goal is to try to make a, make it work and that [00:22:00] it is a conversation, a back and forth to talk through it. There may be some times where it doesn't, but in most cases y'all are finding that there's at least some portion of it, that there's a conversation that could be had.
Yeah, absolutely. And I think, you know, business owners who may feel that they're in a bit of an awkward position at the moment, and, you know, they can't approach a bank. Mm-hmm. Give us a shot, you know, we'll work with you and definitely see what we can do to help you. And is there any fee to speak with you guys?
Like, is there anything they pay? You know, do they have, are they locked into something by having a conversation? No, not at all. Okay. Everything. They're not bound to the transaction until contract execution, which is really the second last step. So right in the beginning, you know, we get access. Um, we ask them to sign documents to get access to their tax records.
We can go through the whole process. We can even get up to offers at that point. They can back out at any moment. They're not eligible for any fees at that stage. Perfect. And how long do you [00:23:00] typically find the process takes from beginning to end? So this is a tricky one, Josh, because. It, it really depends on a few variables.
So we've got the applicant, the preparer, you know, if we've come across some tax records that are, have gaps in the information, it'll be about how quickly the consultant can respond to us with answers. So in a perfect world, we can start the process on a Monday and you can have the funds by Friday. Oh, wow.
Okay. That's significantly faster than I would've thought. That's great. Yeah. So it just depends, you know, how engaged the applicant is, information that's missing or if we find anything on statutory checks. Um, so it just, it really is an individual basis. Okay. Okay. That's great to hear. I, I know one of the big questions people are always gonna have, there's still a certain amount of uncertainty for some people on if their, uh, ERC funds will be declined by the IRS.
So what is the, you know, [00:24:00] if, is there any. Risk that still lies with them. If you all purchase the ERC funds in advance and they ultimately get declined at a later point, what's, what's that kind of part of the process look like? I think with this one, uh, I'll hand, I'll let Dan address some of the questions around this because this is one of the biggest concerns from an applicant's perspective.
I take this money today and what happens if the IRS finally rejects it? So the basis of our transaction, there are a limited number of scenarios where we would look to unwind it. And ultimately a complete disallowance by the IRS is one of those conditions, simply puts the receivable, the refund that we were looking to purchase, failed to materialize.
Broader than that, um, generally there, there are limited instances where the, the transaction may need to go to a payment plan. These aren't generally as a result of taxpayer behavior. So for example, if we transact today, the town between transaction and the refund being issued, [00:25:00] we're exposed to the taxpayer's IS environment.
So if there are rearages penalties, that kind of thing that are run up in the intervening period, that's the part of the transaction that we would then look to reconcile. Essentially the, the asset we bought the refund was used to pay the taxpayers liabilities, which is what we then need to correct. Dan and the underwriting team from a sort of holistic perspective, as well as the final stages, uh, toward moving to contract.
Always look at the submissions through that lens of eligibility. If we are uncertain, we do not transact, and this is for two reasons. One, it doesn't make sense for us to put private commercial capital into a transaction with uncertainty. And also it's not fair then on the, the consultant coming through the process where if we're not certain and things don't work out, they are then loaded with a liability that they would've to repay.
So we remove any uncertainty and I'll let Dan explain some of the checks and balances that we perform in our [00:26:00] underwrite. Touching on what Jill mentioned there about the information that we gather, um, while ingesting tax records, um, historic behavioral. And some of the other elements on the underwrite, such as liens and litigation that may impact our underwrite and final decision as to whether or not there's a transaction to be done.
Yeah, great point, Darryl. Yeah, so just to touch on that a little bit more. So most of the work, uh, that is done in, in regards to the ERC submission has been done by the preparer. So a lot of the documents that we require. It's easy. One step, we just gather it from them. Um, but once it comes to our team, the submission goes through multiple layers of analysis.
So we're reviewing key areas such as eligibility, statutory and tax compliance, uh, credit history, things along those nature. So specifically with things like liens, litigation, your status with the Secretary of State, all things in that realm. Um, and we work closely with the tax [00:27:00] preparers like Darrell said, to make sure we're only funding high quality, well supported submissions.
Uh, we don't want to touch or work with any quarters that have some sort of subjectivity with the eligibility. So we're strictly doing the most, um, thorough quarters that we see fit. And then if it does become disallowed and. This does happen, but it's very rare. We, uh, we'll help you through the process and we can help you gather some, uh, ways to dispute that with the IRS.
But like I said, it doesn't happen too often, but we will be there to support. Okay. Yeah, so it could be that in your analysis you find, you know, three of the four quarters that were submitted, we feel great about we'll buy those. The fourth one, there's a little, there's enough uncertainty where it's not fair for either of us for that to be, you know, a purchase that we make because there's too high of a risk that potentially that quarter.
Could be, you know, rejected by the IRS. Are there ever a time, is there ever a time [00:28:00] like that where you'd say, Hey, you know, this one we're uncertain about, but you could take the risk like that you offer it up to the, to the contractor, like what's, what's kind of the, the gray area there? I. So in that specific scenario, uh, if we have as any hesitation in the quarter, we, uh, won't fund.
Got it. Uh, like I said, we do a very thorough underwrite, so, and we've been doing this for multiple years. Yeah. So we understand exactly what the IRS most likely will look at. So if it is that scenario where we're unsure, we just won't transact that specific quarter. Yeah. And, and I think that should add a lot of confidence for people because it means that if you all are saying yes after reviewing, you know, hundreds of these and, and not wanting any uncertainty before you say yes, then it's not one that's gonna have a lot of, you know, liability at all on them.
That they's a chance later they're gonna have to pay it back. Exactly. And these are, this is private funds that are advancing this money. Uh, it's in everyone's best interest to have this go well. So yeah, we, we don't wanna put [00:29:00] anything at risk. Yeah. Now, now talk a little bit more about, you know, uh, I know it's a really rare scenario, but talk a little bit more about how you might support somebody who's ultimately gotten a denial, how you might help in that dispute Back to the IRS.
Yeah, certainly. So what we see, and these are typically for later 20, 21 quarters, so Q3 submissions primarily, which centered around supply chain, supply chain disruption. So, um, the IRS reviews these and they're essentially telling the applicant or the consultants that we couldn't find enough evidence from, um, executive orders, or we saw your decline in gross receipts wasn't exactly what you told us so.
What we do is we could help you if you get that letter, for example, we could help you find that supporting evidence and we could help fight that from the IRS. Okay. Is that, is that typically a long process? I'm not super familiar with how far, how much back and forth there might be, but I wouldn't imagine [00:30:00] it's a short process to dispute the IRS.
Um, I, I wouldn't say it's too long. Okay. But, uh, like I said, we review it, it comes in and I think it has, there's up to two years where we could review the submission and fight the dispute. Yeah. So we try to do everything timely. We've dealt with them before, so we know exactly the best way to, to frame our, um, I guess our claim against the, this allowance.
Got it. And I guess for, for whoever wants to answer this, I know that there's been conversations in, in, you know, recent months around new administration, how it's affecting and tightening potentially the IRS and things like ERC. How do we feel kind of the, the current state of ERC and where this program may go?
Do we think it's gonna continue to operating as it is, or are there worries or concerns or thoughts about how the program could continue to evolve and change over the next, you know, months and years? So this is a question that's on everyone's mind at the moment. Yeah. And is really appropriate given the, um, work [00:31:00] that's going on in congress at the moment around the, the current tax bill.
So if we look back at January, 2024, there was an attempt to essentially sunset the program early. And if we think about what January, 2024 looked like, it meant that there was still a couple of months to go where submissions to the program for 2020. Could still be submitted to the IRS and of course there would've been about another year and a half or 2021 submissions to be, um, sent to the IRS claiming the, the refund itself.
So the program went through a period where the government was essentially saying, look, it's been a number of years since COVID, I. By now businesses have recovered. Surely you don't need this program, you know, to come right and support the business itself. But what the, IS sort of failed to realize, or not even necessarily the IRS, but Congress as a whole trying to bring these changes and amendments to the law into place, is that the effects and impacts are lingering and businesses are still suffering from the the COVID period, especially while still waiting for the refund that was meant to help them, you know, [00:32:00] during the 20 20, 20 21 periods.
When the impacts were direct and harsh. So where it stands at the moment is that there's a draft bill that's with the senates. They busy kicking it around at the moment, arguing about the various points and whatnot, that the draft legislation as of, um, at the moment now, it, it essentially, it sunsets or retrospectively kills off submissions for Q3 and Q4 21.
Submitted to the RS after 31st of January, 2024. So while they originally tried to apply sort of a quite a broad retroactive downsizing of the program, the attempts failed during 2024. It was never passed into law. And so where we finally sort of. Um, found ourselves now in the current tax bill is that it's a limited scope of amendments to the program itself.
And when we look again at the, the quarters being impacted, Q4 2021, there is only one way [00:33:00] to qualify for that quarter, and it's something that's not generally spoken about. It's called the recovery startup business, and essentially that means that you just had bad luck as an entrepreneur trying to get set up and start your new business.
You started operations after the 15th of February, 2020, and your revenue was below a certain threshold. So if we look at Congress, looking to remove that quarter Q4 21, it's limited in scope. Similarly, Q3 21, as Dan mentioned, it's is sort of one of these quarters where the IRS as well look at it as well.
It was the tail end of COVID. Surely the impacts in terms of executive orders demanding that your business be shut down or adjusted. To support, uh, COVID environments are now over. So the tax bill, in its current draft form provides the best case scenario for the ERC program, both from a government perspective and a taxpayer perspective, whereby taxpayers are given clarity and certainty as to how the government is going to see this program through to conclusion.
And similarly, from the government's [00:34:00] perspective, where they are able to get some, you know, savings out of the program. Looking at specific quarters where the impact may, in their view have been insignificant. And so it's a win-win for both parties. Everyone walks away sort of, you know, relatively unhappy.
But it's the best case scenario when compared to the, the proposed legislation that was floating around last year where they were looking to take an X through submissions across all quarters. Submits an author the 31st of January, 2024. Okay. So, yeah, so, so if I'm hearing you right, basically there's a government.
A federal stance of, Hey, we should cut off this program. We need to, to limit it. And this is a bill that, it does limit it, but it's, it's a pretty insignificant effect compared to what it could be. But it still leaves the, the government and Congress feeling happy, like, Hey, we've limited it, but if you're an ERC applicant, like it's not gonna have a huge impact on the, the, the funds that you would receive anyway.
So looking at one of the things that Dan was talking about, about [00:35:00] gray area transactions, and would we enter into something that's, you know, we're uncertain around. And again, touching on your question of are there courses where we just simply don't transact? So if the current tax bill then passes as it exists today, a Q3 21 submission sent to the IS after 31st of January, 2024, would be one of those quarters that we just don't transact.
Because as the bill exists, it would retrospectively repeal those submissions ultimately. So that gives the, the real clarity on, hey, we know the ones that don't count. We know the ones that do. We know how to determine if something is, you know, has a risk level or not. And it just kind of clarifies the situation and it, it helps everybody feel good about the fact that now that a bill's passed, they're probably not gonna try to pass another bill immediately to, to change it again.
So it, it kind of helps solidify the situation. Exactly. Essentially Congress has scratched that itch of looking to make adjustments to the program. Yeah. But in a way that is still beneficial to the [00:36:00] taxpayers because this is one of those things, again, when you look at the business community. The refunds and the ERC program is still providing Ben benefit to small businesses, providing them with the cash flow, the liquidity to run their operations to grow and to to carry on operating.
So it is still a program providing economic relief and benefit to taxpayers. But yes, there is a little ground to look at it and say, you know, we are in 2025, we are a number of years past COVID, so let's rationalize it in the current context of the economy that we live in. Perfect, and, and I know nobody wants to guess on how quickly Congress will move, but is there any thought process on when we might know when that bill will pass or not?
I. So we are expecting the draft text to come out of the Senate toward the backend of this week, and they've set a goal of the 4th of July weekend, okay. To have the tax bill essentially signed into law. So it'll come out of the Senate, they've made adjustments to it. Um, and it'll go back to the house. The house thing will [00:37:00] need to reconcile all of the adjustments proposed by the Senate and settle on a final bill.
For the president to then sign into law. So they have given a target of, you know, early July, but really there is a fixed deadline for them to enact this tax bill. And that goes around, you know, funding the government fundamentally. Yeah. And this is something that should be in place, uh, at least by the end of August.
Perfect. Yeah. So a relatively short time horizon, which is good clarity. Sooner is better than later. Right. Exactly. Exactly. And again, the, the clarity is a, is a common theme here, both from the taxpayer's perspective of what's gonna happen to my refund, what's gonna happen if I take advanced funding? And similarly, you know, from our side of the transaction, clarity allows us to deploy a product into the market that is fit for purpose.
And it's important to note that the basis of our underwrite, when we take a submission in from the applicant and we analyze it and scrutinize it for suitability for advanced funding, it's on the basis of eligibility. [00:38:00] So, as Dan said, the focus of most of that work is the work done by the preparer. We are looking to agree with what they've essentially put together in the form of a report that is submitted to, to the IRS, um, as the application.
If we don't agree with the basis of eligibility from a funding perspective, that's not to say necessarily that the refund won't come, it just doesn't make sense for us to transac it again in the context of if it doesn't go the right way, we don't want to load up the, the, the consultant with unnecessary liabilities.
Yeah. Yeah, that's perfect. And, and I really think that helps illustrate both you all's intention here and, and the clarity and transparency you're putting on this process of we want to provide an avenue, um, for you all to get these funds quickly. It's an asset that we see value in and we know how to analyze it, and we will, you know, we'll give you those prices, those options upfront, and you can decide if the cash flow for your business now is more important than, [00:39:00] than waiting an indeterminate amount of time.
Um. Now it. We've Mo mainly talked today about ERC, but is this, you know, when clients come to you, this is kind of a one-time transaction, but are there clients that continue to work with you or are there ongoing ways that people work with inter capital? So the whole purpose from an inter perspective is we look to identify a receivable in a transaction.
That's usually our anchor points. We can look on the other side of the receivable being the payable itself as well. So while ERC is a program that's, you know, something that's had a lot of attention over the last couple of years because of the need for, you know, the refund cash to reach the taxpayer, it's not necessarily the only thing that we do.
We do have other working capital, uh, programs, again, looking to identify a receivable. So if I look at this in a traditional sense, these would be akin to factoring or invoice discounting type structures. Where we can see that there's cashflow coming somewhere down the line, but the consultant [00:40:00] may be waiting, you know, 90 to 120 days because those are the terms on the invoice.
So the same way that we buy the refund, removing the duration risk, we can do the same with, you know, high quality debtors from a consultant's perspective in that instead of waiting 90, 120 days or whatever. The terms of that invoice may be, we can structure a transaction around it today to provide liquidity to that, um, that those operations.
Yeah, and that can be huge from a cashflow perspective for businesses. Uh, you know, there's some people that will need that cashflow much quicker than 90 to 120 days, but based on business reasons, that's the soonest they can receive it in standard conditions. So that can be a, a really significant way to unlock liquidity, either on a regular basis or just at certain points in the year where you need it sooner than that 90 to 120 day.
Exactly. Seasonality is a big component of a receivable type transaction because again, this isn't a loan structure with say, a line of credits that you know sits in the background. [00:41:00] Really, you can think of the receivable transaction. While we may have a relationship with the company that's going into it almost as one off transactions.
Where the receivable is identified, it's underwritten and assessed for suitability, and we transact that specific receivable. So from a seasonality perspective, we do see this as a complimentary product, again, to traditional lines of credit, working capital structures to bring liquidity into, let's say, for example, a consultant.
Who has the need to acquire additional trucks, you know, to, to improve the, the depth of their fleet heading into a busy season. Yep. Yeah, and I think that that perfectly explains it. So, you know, we, we've talked about a bunch of things here, but I, I really, you know, if somebody wants to reach out to you to get started, we, we know the timeline, but what's the best place for them to contact you?
So the easiest way to get hold of us is directly through email engagements. We have set up an email address, ERC [00:42:00] at Intero Capital that makes its way to Jill and Dan and the team that support them. And it essentially kickstarts the onboarding process, be it with, you know, an e, an email exchange, a phone call, whatever the, the, the taxpayer's comfortable with.
We address all the questions, we go through the onboarding process, and finally arrive at contract execution. Perfect. Yeah. And, and so, uh, I think that really helps everyone who's on this call to see that, you know, if you've been stuck in ERC limbo for years now, there are options and it's not an option where you're taking out, you know, some significant loan against the value of your business, but you can look at.
You know, talk to Intero and get a real value on this asset and decide if today, if I need capital now versus waiting. And it's a, a simple business decision, and I think you all have talked about it. It's gonna be pretty transparent and open and communicative process where they're not talking, you know, just to a chat bot.
You guys have teams across the world where you can [00:43:00] really talk with them, make sure this is something that works, make sure it's something they're comfortable with, they know the value, and then they can make. A business decision for them today. And, and I think that's a, a really valuable proposition for, for many who've been waiting a long time for a lot of money.
Hmm. Exactly. And I, I'd like to highlight the points again, that we can go all the way up to contract execution and it's non-binding, non-committal. So from a an applicant's perspective, we can go through the process, underwrite the transaction, and present offers as to what a transaction may look like at essentially no cost.
And the transaction is structured so that all fees are contained within it. There's no out-of-pocket costs in that sense. Um, everything is netted off. So it's, it's quite a turnkey solution for the, the applicant going through the process. Yeah, it, it's one of those situations where if you're waiting, it's a why not See, see what the value is, see what you guys will offer, and if it works, great.
If it doesn't, you're in the same spot [00:44:00] you were already. Exactly. And again, um, while we do sort of have the parameters of a product that we are looking to scale and grow, as Jillian touched on, we are rational. We understand that everyone's circumstances may be different, so if there are rearages penalties, liens, litigations, that kind of thing, we are really trying to ask, answer a simple question, is there anything blocking that refund that we are purchasing from arriving at us?
Once it's issued by the IRS and we look to mitigate those risks or build them into the transaction if necessary. Yeah. Perfect. So I, I think that gives a really clear picture for anybody who's wondering. I know that for me this was really helpful to just kind of see what this process looks like. And I'm sure anyone who's been on the fence on if this is something they should look at, because you hear a lot of things of just like, ah, they're just trying to take your money.
They're just trying to, to scam you. And it's like, this is just an option. You guys are looking to buy, uh, a receivable. This, you, you'll put a value on it. A business owner can decide if it's the right move for them or not, and I think that's as simple as [00:45:00] it needs to be for somebody. Have the conversation, decide if it's the right fit for you.
That's that's where it'll start. And it, it's where it can end. Or like, like Jillian said, sometimes you'll call on a Monday and you'll have your money by Friday. And for a lot of people, that sounds like a beautiful world compared to waiting for who knows how long for ERC. Exactly. And again, we're always adapting to the markets based on the needs and how the IRS is going on with processing refunds.
So never looking to be predatory in that sense and take advantage of taxpayers, um, consultants that have been waiting a number of years for this refund. Yeah. Perfect. Well, Daryl, Jillian, Dan, I really appreciate you all's time today and kind of outlining what this program is. Now, before I let you go, everyone who's on here, I always make sure, uh, they have to answer this one last question, and it's not, it shouldn't be too hard.
Um, I'll give you the option to either give favorite book you've read recently or favorite movie you've seen recently. Uh, and so whoever wants to go first can, you don't have to do both, [00:46:00] just choose one or the other. I can start. This is an easy one for me because I'm a real book nerd. Okay. So I just read the Magnolia Park series.
Okay. About a week ago, and it's my second favorite series I've ever read. Wow. So recent read and it's already up there. And you said you read a lot. Okay. Yeah. What's it about? What's Magnolia? What's the Magnolia Park series? Uh, it's really like a British gossip girl. Okay. Maybe not anybody, but I really enjoyed it.
Oh, that's awesome. Okay. Who's up next? I can go, um, between, uh, a book I recently read Atomic Habits. Yep. And then just say, uh, thriller movie. Um, runaway jury. Not sure if you've heard it, but runaway jury. Basically there was, uh, an individual or two individuals corrupted on a jury of a large trial. And, um, it was just, it was a great thriller and a great twist at the end, uh, looping everything back.
So, okay. I would recommend it if, uh, you haven't seen it. Is, is it a true story or is it. [00:47:00] You know what? I'm not, I'm not sure. I think it might be based on, on the facts. Okay. But I think it might have been, uh, overdone over-dramatized, but still for, in a fun way. Yeah. Alright. Darrel, you're last said, I'll, I'll go to the movie Ross.
Okay. Um. How to train your dragon? Oh, was it good? Okay. The one that's just been released with the, the light option in it took my daughter, my wife. We went and watched that and just enjoyed watching a different version of a movie. I've seen a million songs now, so that was really good. That's, that's what I generally heard is that it's, it's just, it was good because the original was good and it's like, it's still a great story.
Exactly. You, you never know when they try and do a live action remake of, you know, an animated feature. But this, this was really good. It helped through to the original story, the characters. And I'm sure I'll be seeing it a couple more times in the coming weeks. Yeah. Yeah. As soon as it's on DVD, well shoot DVD Wow.
Streaming. Nobody does DVDs anymore, but I, yeah, as soon as you have it at home, I'm sure you'll [00:48:00] be, you'll be watching it regularly. Um, okay. Well perfect. Thank you guys so much for being on here for, for being candid and, and kind of talking through this process. Uh, and I appreciate you all being in the studio or being here virtually.
Thanks Josh. Thanks Josh. Thanks for having us. Alright, thanks guys. See ya. Bye.
