Use Cases
Payroll Loans & Financing
Payroll loans improve cash flow so you can pay your employees on time.
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What is a Payroll Loan?
A payroll loan is a type of small business financing that improves cash flow during times when finances might be tight. It is a short-term loan designed to ensure businesses can always pay their employees on time before the revenue comes in. They are typically used when waiting on invoices to get paid from customers, waiting for insurance payments, or when you know the money is coming, but it hasn't arrived just yet.
How Payroll Loans Work
Payroll funding comes in multiple forms. Some businesses leverage traditional loans to cover payroll costs. These are longer-term loans spread over several months. A line of credit is another way for businesses to access fast cash. Then there are merchant cash advances which get repaid over time with a business's credit card sales. Each type of loan has different terms and interest rates. Businesses take out the loan to cover payroll costs and as revenue comes in, they pay back the loan.
Use Cases
How To Use Payroll Financing
Payroll loans are a good indicator that a business is experiencing a cash flow problem. They can cover costs associated with wages, bonuses, commissions, and even payroll taxes that get paid to the IRS. There are many ways to use small business payroll loans.
Retain Employees
Paying your staff on time every time helps you retain employees, and using payroll financing ensures you always have the means to give them a reliable income.
Hire Extra Workers
Growing your business sometimes means you need to hire more staff before you have the income. Payroll loans help you hire more people.
Manage Short-Term Cash Shortages
Payroll loans can bridge the gap during temporary cash shortages and create better cash flow when needed.
Why Apply for a Payroll Loan?
Access Additional Cash
Business payroll loans give you access to another cash flow. This is especially helpful during seasons when you need it the most.
Keep Business Operations Running
No business owner likes to run out of cash. A payroll loan can help free finances in other areas of the business so that everything runs smoothly.
Keep Employees Happy
Don't be the employer who is always paying late. Payroll loans keep employees happy so they will never know when there is a cash flow problem.
Minimum Eligibility Requirements
Many businesses can qualify for a payroll loan if they meet the minimum requirements. Here’s what you need to get payroll funding.
Minimum Requirements
| Time in Business | Minimum 6 Months |
|---|---|
| Business Annual Growth Revenue | $240K+ Annual Revenue |
| Business Checking Account | Yes |
| US Citizen/Based Company | Yes |
| FICO Score | 570+ |
| Other Financing | None |
| Bankruptcies | None open |
Better Your Business With Fora Financial
Grow Your Business
Get Quick Access to Cash
Retain Valuable Employees
Improve Management of Inventory
Manage Cash Shortages
Avoid Having to Cut Costs
Case Studies
Featured Funding
Delivery Service Expansion
Funding Amount: $7,000,000
Industry: Construction
Use of Funds: Bridge funding
Featured Funding
Communications Expansion
Funding Amount: $1 Million
Industry: Telecommunications
Use of Funds: Expansion
Business Expansion Loans FAQ
What Are The Different Types of Payroll Loans?
Lines of credit and merchant cash advances are the two most commonly used types of payroll loans. Traditional loans and factoring are two other options when businesses need better cash flow for their payroll expenses.
Are Payroll Loans a Good Idea?
Yes, they are a great idea if you're at risk of being late paying your employees. While they are typically used as a last resort, paying your staff on time is critical if you want to stay in business and hire great talent to work for you.
How Do You Apply For a Payroll Loan?
If you meet the minimum eligibility requirements for a payroll loan, you bring proof of your business longevity, income, and other requirements to a lender, and fill out their application. The process often takes less time than traditional lending.
What are Payroll Loan Rates?
The rates for payroll financing varies, but can be anywhere between 15 and 30 percent. These loans have higher interest rates because they can be more risky for the lender. You may qualify for discounts on the interest rate if you've taken out and successfully paid back a payroll loan.
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