According to a survey conducted in 2018, it was found that at least 20% of start-up businesses had closed down during their first year because they could not handle the uneven cash flow strategically. It is not easy to start your own business. Unlike having a day job where your work is just from 9-5, you have to put in quite many extra hours of work just to establish your business.
In between handling many issues such as customer service, business operations optimization, and vendor management, a major concern gets sidetracked. Start-up businesses need to understand that not every single month will earn them a nice profit. There will definitely be months in between where they will actually suffer losses.
During this time, it is essential to know how to get cash fast at your disposal so that emergencies can be dealt with nicely. Businesses need to understand the importance of having some back-up cash with them for unexpected situations. They need to handle things at multiple levels, any of which can require some extra finances immediately. Here are a few reasons why fast cash is quite enticing for start-up businesses.
Unexpected work emergencies can be easy to handle with fast cash
Imagine a situation where you have barely covered all of your business’s costs for the month since it was a slow one. You only have $200 left, and suddenly your vendor calls you saying that the shipment you needed is here early and needs to be paid off right now.
In such situations, one can not even think of taking a bank loan since the process can take up to a month or even more. They do not want to go through the hassle of asking people around for money or even calling up their investors for the same reason.
This is where fast cash comes into play. If you do not have cash in hand to deal with unexpected emergencies, you can always apply for a payday loan. The loan amount is directly deposited into the borrower’s account, just minutes after the application’s approval.
This means that start-up businesses can rely on payday loans for extra cash whenever they might need it. This cash can be paid back to the lender within a month or on your next “payday.” This is quite an attractive feature for start-up businesses.
Free control over your money
Traditional bank loans have quite a few rules and regulations one needs to follow even after obtaining the loan amount. Some loans, such as a house loan or a business loan, can only be used for the same purpose. Even finances obtained through investors needed to be accounted for completely. The borrower cannot spend the money where they please. This can be quite problematic for a lot of people. For example, if a start-up business does not want to take out a business loan because they have money left over from their house loan, they still won’t be able to use the same amount for their business.
Payday loans offer the applicant free control over the loan amount. This money can be used for practically anything. It can be used for household bills, medical emergencies, paying vendors, giving out salaries, or even paying your office’s rent. This form of loan is quite versatile, making it quite enticing for businesses.
Fast cash can be given even with bad credit
Most start-up businesses are built on finances obtained through investors, personal loans, or even personal savings. A lot of business founders choose the first or the last path since a lot of them have bad or no credit history.
Traditional bank loans have a strict criterion for checking the credit score of potential borrowers. This is because they only give out loans to people with a very good credit score. Payday loans are much easier to obtain than traditional bank loans. These loans do not require extensive checking of an applicant’s credit score.
Most lenders agree to give out a payday loan to a borrower even if they have a bad credit history. This can be quite advantageous for businesses since it is quite easy to rack up a bad credit score, especially due to the failure of timely repayments of previous loans.
Applying for a loan has never been easier
Long gone are the days when you have to stand in line at a bank to fill out a loan application form. Traditional loans require the applicant to go through an extensive application process to check the person’s credit history.
An individual has to make multiple trips to the bank just to get their loan considered for approval. Payday loans do not have a very extensive process, like bank loans. These loans can be easily applied for online, offering the applicant utmost convenience. Business founders can easily go about their busy day without taking out a lot of time to fill out an application. All they need is a good internet connection and five minutes of their time to fill it up. Most payday lenders only ask for the applicant’s proof of income, a valid address proof, a Social Security Number, and for them to be of at least 18 years of age.
No collateral needed
In home loans, a property (usually the house itself) is kept as collateral. In case the borrower cannot pay back the loan amount at the specified time, the bank can seize the asset to get back the money they are owed. Payday loans do not require any collateral. In case the payment is late, most lenders will decide on a new repayment schedule or time with the borrower. This is great for businesses since anything can go wrong at any time, but their property will still be protected.
It is always important to have extra cash on your hands when you are running a business. Unfortunately, all start-ups can’t have this much cash in hand. This is the main reason why a lot of businesses slowly recognize the importance of fast cash.