CASH ADVANCES & PAYDAY LOANS

Maintaining sufficient inflow of working capital is a major concern for any business venture irrespective of its size and area of operation. While profit-making concerns find it easier to manage its capital requirements, the new firms or firms undergoing losses may find it relatively difficult to maintain a continued flow of working capital. Though there is no dearth of financing option in the market, the selection of proper source of financing has a major influence in determining the future profitability of a company. The source opted to finance a company’s working capital requirement varies in each case. An option that is good for a specific organization may not have the same positive effect for a different organization. Every funding source has its own terms and conditions that the borrower should comply with. Lack of proper finance knowledge can lead to a wrong choice that in long run can have an adverse effect on the company. So proper knowledge in this regard is essential. Loans are by far the most common form of financing. They are of two types: secured and unsecured. Secured loans are handed in exchange of security. On event of non-repayment of the loan amount, the security/ collateral is forfeited to the lender. Unsecured loans do not require any collateral or security from the borrower. The rate of interest depends on the principal, duration of loan, repayment period and the credit history of the borrower. However, as unsecured loans are not secured with a collateral, the interest rates are usually higher than the secured loans. Apart from the various conventional loans on offer, a business cash advance is a very good funding option for the small businesses. While other financing schemes come with the burden of a monthly repayment plan and bank heavily on the credit history of the borrower to ascertain eligibility and interest rates, a cash advance requires neither of these two. A two-year-old business accepting Visa/ Master card as a form a payment is all that is needed to be eligible for a business cash advance. The loan amount is repaid through the future credit cards sales receipts. The choice of the mode of finance depends of the borrower’s affordability. If one is comfortable with monthly repayments then a secured or an unsecured loan is the way to go. On the contrary, if one finds such periodic repayments burdensome then a business cash advance is certainly a better choice

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Financing a new and growing business can be very challenging. As most business owners know, going to the bank for business financing can be challenging. Unfortunately, banks will seldom give business loans to companies that don’t have a long track record, audited financials and substantial real assets. And banks usually don’t finance startups or very small businesses. This leaves the business owner in a bind. How can they finance their growing small business?

Recently, factoring financing has emerged as a financing solution for companies that need to working capital. Factoring is suited for companies that sell to other businesses or to the government. As you know, one of the biggest challenges of selling to other businesses is that they usually pay their invoices in 30 - 60 days. Unless your company has enough cash to wait for payment, you find yourself in a bind. Soon, you’ll have to decide between paying suppliers or employees. It won’t take long before the company enters into a downward cash flow spiral.

The solution to this problem is accounts receivable factoring. Factoring provides you with an advance on your slow paying invoices, giving you the capital you need to pay employees and suppliers. This ensures that your business operates smoothly and positions you to accept new or larger orders, without having to worry about waiting 60 days to get paid.

Factoring receivables is easy to implement and can be set up in days. It works like this:

1. Your company invoices the client

2. The factoring company advances you 80% (some times more) of the invoice immediately

3. After 30 to 60 days, your client pays

4. The factoring company rebates you the remaining 20%, less their fee

The factoring fee varies based on a number of criteria including, the quality of your customers and the amount of financing you need. Generally, rates go between 3.5% and 1.5% per month depending on these criteria. However exceptions apply.

There are a number of advantages to working with factoring companies. For starters, factoring is easier to obtain than bank financing. The biggest requirement is that you do business with credit worthy companies. And, an invoice factoring program can be set up fairly quickly, usually in days.

If you own a business that invoices large customers and need working capital to finance operations, you should consider using factoring financing.

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Paycheck advance is a short-term loan, for the period between two and four weeks, that is intended to cover a borrower’s emergency expenses until their next payday. Paycheck advance provides quick cash loan with minimum requirements to fulfill. The loans are popular among people who have bad credit history as there is no credit check involved as part of loan qualification process.

The loan amount for a paycheck advance loan is small between $100 and $1000. There are some paycheck lenders who are willing to lend you over $1000 with some additional requirements. Finance charges on paycheck advance loans are normally in the range between $15 and $20 per $100 borrowed, which may seem higher than typical credit cards and bank loans. However, paycheck lenders argue that their operating cost and risk of giving loans are much higher than that of bank loans.

Requirements for a Paycheck Advance Loan

Paycheck advance loan comes under several names such as payday loan, cash advance, or postdated check loan. When you search for a loan under those names you basically refer to getting an advance loan until your payday. The requirements for the loans are not complicated. You simply need to meet some qualifications which include:

- You must be over 18 years old

- You must be currently employed

- You must be paid on a regular basis

Some lenders demand that you must be at the same job for at least three months with minimum salary varied from lender to lender.

Applying Online is Easy

You basically have two options as to how you obtain the loan. You can either drive to a local paycheck lender shop or simply visit a lender’s website online to apply for the loan. Applying online saves you time and money and gives you opportunities to shop around and compare several online paycheck loan lenders to find the best offer in terms of interest rate, approval time, repayment scheme, etc.

With online paycheck advance loan you simply need to complete an online application form with all your details, including your phone number, social security number, driver’s license, employer’s name, references, and more importantly your bank account. It takes less than 7 minutes to complete the form.

If your loan application is approved, the lender will transfer the money directly into your bank account right away. When the loan is due the lender will automatically deduct your bank account for the repayment amount plus interest and any fees.

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