Finance & Lending

 

07 27 2017

Payroll loans

07 27 2017

How A Payroll Loan Can Help Support A Small Business

Starting a small business is exciting and challenging at the same time. For many newly opened businesses in the U.S., the first one or two years will be filled with obstacles, but most will overcome them.

However, many small businesses struggle to find continued success past their fifth anniversary. About half will close within five years, according to the Small Business Administration Office of Advocacy.

Slow finances cause undue stress

Financial challenges are common in new businesses. An inability to keep up with debts - whether in the form of loans, money owed to suppliers or payroll costs - is often the final nail in the coffin. In 2016, 37,918 businesses filed for bankruptcy, according to the American Bankruptcy Institute. More than 9,000 followed suit in the first quarter of 2017 alone.

Lack of funds is a tricky problem for entrepreneurs. If they have a sound business model, they know the money will come in - eventually. But many times, immediate cash is what they need to survive.

After paying bills and debts, a shortage of funds may fall on the shoulders of employees - which, in turn, results in a sour company culture or even a loss of workers.

Many companies survive these unpleasant circumstances. It's all about how you choose to navigate the situation.

Here's what you can do when you're lacking the funds to pay your employees:

Small Business Payroll Loans

Be open and honest - no matter what

As a business owner, if you're carefully and responsibly watching your books, you know when you will or won't be able to make payroll. And, you usually know well in advance, Inc pointed out.

Don't lie to yourself or your employees when this happens. Come to terms with the situation quickly, and pass the information along to your employees.

"What I have found in my consulting business is that, more often than not, small business owners are embarrassed and worried about results, so they typically handle [the situation] emotionally," Donald Todrin, founder of Second Wind Consultants in Massachusetts, told Inc. "This usually means that they don't tell anybody until 10 minutes before they're supposed to get their checks."

By keeping employees in the dark, you're taking away their ability to plan for the gap in payment. Coming clean sooner rather than later is the best thing to do.

Consider a payroll loan

For some business owners, missing payroll is not an option. If it's happened before, or if you can't afford to disappoint employees, it's imperative that you find the funds to issue paychecks.

An alternative lending solution may be the way to go. Alternative lenders can offer quick cash so you can make ends meet. Then, the short-term loan will be paid off incrementally.

Other options might include staggering pay or requesting that employees not cash checks right away. Both of these are generally unadvisable, and Inc pointed out that the former is illegal in some states. But beyond that, these practices aren't a good foundation for a dedicated employee base.

"Once you start owning your employee's payroll, the employee is unsatisfied, will not put in his whole effort typically, and you're sowing the seeds for further erosion," Todrin pointed out.

The payroll loan allows for all paychecks to be paid in full, on time. And that, for many employees, is enough to keep their enthusiasm up during a rough patch for your business.

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Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.