Things You Need to Know About Payday Loans for Business Needs
Anyone can take out a payday loan/cash advance loan. Typically, these loans require no credit check and put money in your account in as little as a day. There are risks, however, that should make you be cautious about taking out payday loans for business needs.
How a Payday Loan Works
Every company is different and state laws also differ, so fees will vary. Typically, when you apply for a business payday loan, you’re going to pay a fee to get that money. If the payday lender charges $25 for every $100 you borrow, when the due date arrives, you must pay the amount you borrowed plus $25 times whatever you borrowed. If you borrowed $1,000, you’ll owe $1,250. When you apply for the loan, you sign a postdated credit/debit card slip or postdate a check that the payday loan company uses to collect payment.
On the date the money is owed, if the money is not in your account, you face bounced check and overdraft fees. The only way around this is to ask to rollover the loan into a new one. This adds additional fees and interest to the original loan amount.
Differences With Business Cash Advances
With a payday loan for business, the amount you’re able to borrow is higher than with a personal payday loan. Some companies offer as much as $250,000. You are required to prove your business is well established and has revenue coming in every month. One more thing you will need to prove is that your business is registered/licensed in the U.S. You do not need to submit a copy of your business plan, which is a common request with a commercial loan through a bank.
A payday loan for businesses operates not on the equity in your business but on the revenue you’re about to make. The loan is typically paid back using the revenues from your next couple of invoices. The interest rate and fees are determined when you apply, but if you use a payday loan company that compares rates between different lenders, you’ll get the best rate on your payday loan for business needs.
