When you submit payroll, it is important to have enough working capital to meet your obligations. However, sometimes you may find yourself being short on money. Business can be slow, or a customer might be late paying their invoice.
If you find yourself in this situation and need money to cover payroll, you might benefit from a payroll loan. Payroll loans are short-term loans or advances that allow you to borrow a small amount of money to ensure that your employees are paid on time. If you take out a payroll loan, you will have the funds in your account within a day.
However, payroll loans are pricy, and the payroll funding company wants to be repaid as soon as possible. In this post, we will go over what payroll loans are and how business owners can utilize it best for their business.
A payroll loan is short-term financing that helps smooth a company’s cash flow. If you can’t meet payroll, you will have angry employees. The solution to this problem is the following:
Short term loans are meant to be repaid fast. Online lender process short-term payroll loans in one day but you will need the following to qualify:
You can sell apart of your business’s future credit card sales in exchange for cash. Merchant cash advances can be more expensive than small business loans in some cases, but they’re also easy to qualify for since your credit score is not considered. Instead, only your business’s credit card sales are examined.
If you have unpaid customer invoices, invoice can help you borrow the money you need. You can get a cash advance of up to 85 percent of the invoice total. Then, once you receive funding, you can use the unpaid invoice as collateral. Since the invoice is considered the collateral, you won’t need to show business statements or credit history to qualify with a factoring company.
Payroll loans should be used as a last resort. This is because interest rates are real high, as high as 30 percent! Consider all the options before you pursue payroll financing.
Payroll loans are easier to qualify for than bank loans or SBA loans. You will get the funds you need on time so you can pay your team. However, it still should be a last resort because it is a short-term solution. If you miss payments, you will face penalties.