Cash Advances – The Pros and Cons
When you run a small business, there are so many expenses such, as credit card processing services, rent and employee payroll, that it has probably crossed your mind to get a cash advance. Most people are weary of these quick cash fixes and rightfully so. But cash advances have both pros and cons. Here are some of them outlined below:
- PRO – You have cash at your fingertips pretty much immediately, which is often necessary in small business settings. You can’t always wait for your clients to pay up before another expense heads your way.
- CON – If it takes you a while to pay back the cash advance you can end up paying an astronomical amount of interest and fees. Make sure that you only use cash advances when you know you will shortly be able to pay back the money.
- PRO – You do not need collateral or a credit check for most payday loans or cash advances. With little to worry about in regards to losing property or a lowered credit score, your worst enemy is interest fees.
- CON – The interest rate is not fixed on most loans, so the longer you take to pay it back, the worse the interest rate can get.
- PRO – When you’re in a financial bind, cash advances and payday loans are very easy to obtain and usually funded very quikly.
- CON – Cash advances and payday loans are illegal in some states, even the larger states such as New York and Pennsylvania. So be careful before you try to obtain one and make sure it’s legal where you are.
Have you used a payday loan or cash advance to help your small business out of a financial bind? How did it work out for you? Comment and tell us your story.