Can Personal Cash Advance Loans Help with Your Small Business in an Emergency?

If you find your business in need of emergency funds, you may be considering applying for a personal cash advance to cover sudden expenses and keep the business afloat. While this is certainly an option, it’s important to remember the facts about personal cash advance loans, including interest rates, pay-back period, and other factors that impact the loan itself as well as how much you’ll end up paying overall to borrow the money. Keep reading to learn more about personal cash advance loans for small business emergencies.

How Do They Work?

A personal cash advance loan works on the premise that you’ll pay the money back within a short amount of time, which is usually only a couple of weeks to a few months or longer; depending on the provider. Short-term lending options such as these differ from credit cards in terms of interest rates, repayment terms, and fees. 

A short-term installment loan can help with sudden expenses, whether those are business-related or personal. When your vehicle needs to be repaired or your business needs a new cash register, you may find yourself struggling to produce the money you need to cover these costs.

A personal cash advance loan can help you get back on your feet with flexible payment terms, even if your credit isn’t the best.

What’s The Catch?

You may be thinking “that all sounds well and good, but what’s the catch here?” Of course, lending of any kind isn’t without its drawbacks, and when it comes to cash advance loans, the interest rate is a crucial component to consider. 

Some cash advance providers charge an interest rate of up to 400%. The interest rate is added to the principal balance of your loan, as well as other fees that will largely depend on your provider. Installment fees are typical, with a fixed dollar amount per $100 borrowed. Rates and terms may vary based on lender and needs, so make sure to do your research to find the right one for you.

Is it Right For Me?

Before you decide on a cash advance loan, you’ll want to take a close look at your situation. Do you absolutely need money right away, or is your sudden expense something that can wait until you save a bit more? Some online cash advance loans are only meant to be used for unexpected emergency expenses, and not business expenses. So while some business items may seem urgent, it might be best to wait until you have the savings to cover them.

When sudden expenses occur, the best thing to do is wait. Give it a few days before deciding to borrow money. You may find that what you thought was a major expense is not actually so urgent.

Some Things to Consider Before Applying

Before you apply for a cash advance loan, consider the following:

  • Do you actually need cash right away?
  • Will you be able to pay off your principal and interest amounts/fees in the required time period?
  • Do you have a plan to pay off your loan?
  • Will you have to support the cost of the loan with business income or personal income?
  • Are you fully aware of the terms and conditions associated with one of these loans?

Knowledge is the key to a good loan. Always research the lender you plan to borrow from before you apply. Be sure they offer competitive interest rates, easy to understand terms, and a certain level of flexibility on the payback terms. Choosing an online lender is a popular option, and may even grant you access to better terms than traditional brick-and-mortar lenders.

The Take-Away

Personal cash advance loans can help you address sudden expenses that arise; whether it be broken equipment, damages, or even legal expenses that popped up. The best practice for borrowing money is to obtain as much information on the lender, loan terms, and your own financial situation as possible. With the right information, you’ll be able to decide if the loan is right for you; and whether or not you can afford the interest rates and fees. Read all of your paperwork carefully, and try to pay back your loan within the required timeframe to avoid any extra fees.

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