Expense Reserve

An Expense Reserve is a separate account from the SPVs main bank account, oftentimes set up by the Organizer in the name of the Organizer, to collect funds from investors that will be used to pay the SPVs expenses. When an Organizer uses an Expense Reserve account each investor that wishes to participate in the SPV will be required to send their investment funds into the SPVs bank account and then send additional and separate funds to the expense reserve account. Sometimes an expense reserve account is  used by complex structure entities who have a known expense coming up (such as a large legal bill). The alternative to an expense reserve is to have investors send funds into the SPVs account and then the Organizer will carve off a small portion of those funds for expenses. The benefits of an expense reserve can be cleaner books showing which funds are designated for investment and which funds are expenses. However, the negative is additional and more complex tax filings. The majority of SPV Organizers do not use expense reserves.