- June 5, 2021
- Posted by: admin
- Category: Payday Loans
How Cash Advance Loan Differs from a Payday Loan ?
One of the best ways to understand the difference between a payday loan and cash advance loan is that the former work for an individual identity and the later works for business identity specifically.
In payday loans, lending takes place in actuality, that is, the money is lent to the borrowing person on the basis of lending terms established beforehand. A specified interest using an APR is used by this type of short term loan.
However, transactions are not regulated in traditional lending ways and it is more of a business to business transaction.
How Business Cash Advance Loan Works ?
In fact, it is not actually a lending because the business getting payday cash advance actually sells some of their future earnings to a merchant cash advance company who agrees to purchase those revenue in exchange of some immediate upfront deposit to the borrowing company. Basically, payday lending company requires either the future bank account deposits of the company or percentage sale of the transactions volume done through the company’s credit card.
If yours is a small business, then it is wonderful because they can easily get pre approved within an hour or two by providing minimal personal and business financial documentation. The requested money is then transferred into a company’s business account within a few business days if not the same day.
What are The Requirements of the Business Cash Advance ?
Well, the requirements for the business payday loans online depend upon the different payday lenders as each lending company has a different set of requirements with variable funding options. Some lenders require a set of small businesses’ bank deposits whereas some of them ask for the percentage of credit card transactions.
Also, there are some lending institutions that go with the combination of both ACH(Automated Clearing House) and credit card transactions.
ACH cash advance is a small business loan to obtain cash flow and working capital without meeting the requirements of presenting credit and documents which are mandatory in traditional loans. It is a way of transferring money from one bank account to another through direct deposit via banking ACH transactions. These transactions can be set up as one time payment or recurring payments.
What Steps are Involved in Business Cash Advance ?
1. Application Process: A signed credit application is required to start an application process for a business payday loan. It helps the lender in verifying the personal and business credit status and also the existing tax issues. Along with that, 6 months bank statements are to be supplied by an applicant. It enables the lender to analyze the cash flow and ability of the business to pay back easily without taking any risk.
2. Processing Funds: Once the funding amounts are agreed and the applicant is pre approved, the contracts laying out the financing conditions accompanied with the list of stipulations needed to complete the funding are then supplied to the applicant. The list of stipulations may include business license, business tax returns, AR reports, site inspection, past bank statements, payoff letters from other lenders
3. Required Documents: Following documents are required for the business cash advance process : a driver’s license, voided check, confession of judgements(COJ) – often needs to be given to ACH lenders before the funding is completed from their end, completed contracts
What are the Benefits of Business Payday Loans ?
Money is money, its pros and cons all depend on the way it is being utilized. Undoubtedly, online short loans are expensive but if they are catering immediate business needs then they are of course very beneficial. Such a short term loan can make a big difference to running operations of small to large businesses. Ruin a company’s reputation by shutting it down due to lack of funds or apply for a business cash advance to keep it going – A small decision but an effective decision takes it all.