The Truth About Cash Advance Loans

A lot of money is spent advertising different types of cash advance loans. Many lenders have found them to be highly effective at generating a return on their investment because of the type of service being provided. In the simplest terms a cash advance loan is an up-front payment made towards a business or individual based on their future earnings.


Cash advance loans are often taken out for a wide variety of reasons:


Bill Payment


From time to time one may find their self in a situation where they are unable to pay for a crucial bill or that bill may put them in the situation where they can afford food or other goods. A cash advance loan can be a temporary solution in which a long-term solution has already been determined but the cash advance loan is required for the short-term. In these cases, the cash advance loan could be the size of the entirety of a pay check minus the fee paid to the lender or it could be a portion of the paycheck with an additional portion being promised to the lender. These are also known as payday cash advance loans.


Holiday Season


Some parents may decide to take a payday cash advance loan as a means of being able to afford additional gifts and festivities during the holiday season. While it causes difficulties for the following months, some take out the loan in order to have an influx of cash in order to purchase more expensive gifts.


Business Operation


In a similar spirit there are businesses that rely on merchant cash advance loans as a means of being able to purchase additional goods and services during busy times of the year. While the business may be able to afford their goods during normal times of the year, it could be financial advantageous for retail businesses and restaurants to have extra capital available during the busiest part of the year. These types of arrangements are generally made against future credit card sales, thus reducing the risk compared to a standard business loan. The company producing the loan has a clear track record of the company’s past credit card sales and can therefore make a solid judgment about lending money to the business.


Bad Credit


Businesses with bad credit often turn to merchant cash advance services when traditional lending is not an available option. While a merchant cash advance may potentially cost more than a traditional loan, merchant cash advance companies are more willing to lend the amount to businesses where they can see an obvious ability to earn back the amount being given. Some businesses, especially businesses in high risk industries, often do not have a choice when it comes to methods of obtaining additional capital.

cash advance loans

Find the truth about cash advance loans.

A Basic Guide to Small Business Loans

Over the past twenty years the cost of doing business has increased while it has become more difficult to turn a profit. With a large pool of competitors, higher costs for common goods, and a current trend of finding everything online, small businesses are finding it more difficult to compete in the marketplace. With limited access to finances many entrepreneurs are finding it near impossible to get their business started and operating in the black. Luckily there are resources available that many small business owners are currently unaware.


Small business loans are loan programs backed by the U.S. Small Business Administration (SBA) which provide small businesses with access to funds to help them grow and push towards operating in the black. These loans are produced by the SBA in an effort to help small businesses compete on more even terms with their large counterparts and to help local economies thrive in such an environment. Such resources are valuable to small business owners looking for a way to make their business a reality.


Each of these small businesses are backed by the Small Business Administration which implies a guarantee that should the business default on the loan, the SBA will help pay off a portion of the loan. Businesses that take advantage of these loan programs put themselves in an advantageous situation to be able to acquire a larger inventory or prepare to offer products or services using capital previously unavailable to them. It is an essential part of the small business strategy in this day and age.


Getting a Small Business Loan


While these loans are backed by the Small Business Administration, these loans are actually produced by banks and other financial institutions. This means there are a variety of different loan programs your business may qualify from with different fees, rates, and expectations. With any kind of financial arrangement it is crucial to understand the terms of an agreement prior to engaging in a loan with a bank or credit union.


A common strategy involves contacting numerous lenders in order to learn more about the fees involved with the loan and the terms of the loan. Keeping a track of the fees and costs of the loan is important for comparison purposes. It is important to find a loan that works for your business by ensuring the fee is the lowest available. Many credit unions will provide lower fees to their members compared to what banks will.


Determining a Need


Before you apply for a small business loan, it is important to understand whether your business actually needs a loan or not. A loan is a great idea for businesses who have a financial need towards expansion or towards take advantage of a situation where the finances could produce a substantial return on the investment. These loans may not be suited for businesses that are struggling to make ends meet when being used simply to pay off debts or to pay for bills.


Rather than a small business loan, some businesses may be more keen to equity financing as a means of putting them in a better financial situation.

small business loan

A guide to small business loans.