Nobody wants to apply for a business loan, but business advances do provide a lifeline to individuals who desperately need access to cash before their next business. However, many people who took out cash advances end up in more debt because they did not make wise choices during the loan process. Thankfully, the below article provides lots of advice on business loans so that your business loan experience goes as smooth as possible.
Although there are laws to protect consumers from the predatory practices of business loan companies, such companies have found ways to work around these laws. Sometimes, this involves leveling fees on a customer that essentially equate to interest rates. The typical annual percentage rate (APR) on a business loan is hundreds of percent, which is 10-50 times the standard APR for a personal loan.
Generally, small business loans must be repaid within two weeks of the closing date. However, there are sometimes unexpected circumstances that may arise, and if you cannot pay the loan off by the due date, you don’t have to default on it. Most business lenders will allow you to refinance the loan for another two weeks, but you will have to pay an extra fee each time you do this.
Be sure you have cash currently in your account for repaying your business loan. Missing payments does not prevent the lender from pursuing collection activities. Your bank will charge you with overdraft fees and then you’re going to have to pay even more to a business capital formation loan company. Try to have the money in your account so that you can avoid further issues.
Cash advance loans are only for emergency situations. These type of loans can cost you a lot of money and entrap you in a vicious cycle. The amount you get will be less than you’ve earned, and you’ll be in dire straights yet again.
Make sure you are aware of any automatic rollover type payment setups on your account. Sometimes lenders utilize systems that renew unpaid loans and then take fees out of your bank account. Many of these require no action from you other than the initial set up. This can get you into a situation where you never actually pay down the principle and rack up hundreds of dollars in fees. Know what you are getting into.
The best tip available for using cash advance loans is to never have to use them. If you are struggling with your bills and cannot make ends meet, business advances are not the way to get back on track. Try making a budget and saving some money so you can avoid using these types of loans.
Consider all your alternatives prior to signing up for small business lending. Loved ones, banks and even your employer could help you out. You need to think about cash advances as help for emergency situations, even though it’s best to have some money available for things like this anyways.
Most business advances require the borrower to write a check that has been post-dated to the due date. You must be certain that you will actually have funds in your account to cover the check on the specified date. If your account cannot cover the check, you will likely be charged with overdraft fees from your bank as well as the fees incurred by the loan company.
Although there are a lot of negatives associated with cash advance loans, the major positive is that the money can be deposited into your account the next day for immediate availability. This is important if, you need the money for an emergency situation, or an unexpected expense. Do some research, and read the fine print to make sure you understand the exact cost of your loan.
If you are considering a business loan, there are several things that you must have in order to qualify. You must have a checking account, as well as be established in your job. Most small business loans require at least 3 months of continuous employment, before a loan can be made.
The information and advice in this article can help you avoid some costly mistakes. Cash advance loans are never a first choice when you need money, but they may be helpful in a desperate situation. Keep the information in this article in mind whenever you deal with business loan companies in the future.