Joe Merchant

While business loans and cash advances serve the same purpose they are really a lot different. Obviously business loans are more suitable for businesses while cash advances are more suitable for the common individual. Business loans have much stricter qualification requirements while cash advance requirements are much more lenient. The pay back method also varies between business loans and cash advances. Cash advances tend to be short term and business loans are usually long term.

The requirements for qualifying for a business loan are very strict. If you’re planning on taking out a business loan for whatever reason it is a good idea to prepare for a month or so before you actually fill out an application. There are a number of documents needed to qualify for a business loan. You will need an extensive business plan. You will also need three years of tax information for your business and personal taxes. Be prepared to show the bank financial statements for at least three years. Experts say it is better to plan extensively the first time around because each time you file for a business loan it is added to your credit report. So if you are rejected once the next company or bank you approach will know that you were previously turned down. While this doesn’t always destroy your chances it can significantly lower them in certain cases.

Paying back your business loan is completely different than paying back a cash advance. Banks or loan providers will usually take all payments from your businesses’ income for credit cards. Meaning you will still get income made from cash payments but they will collect all payments made from credit cards. Some banks will only collect credit card payments made by certain brands of credit cards such as Visa, MasterCard or American Express.

Getting a cash advance is much easier. All you need to qualify for a cash advance is employment in which your employer direct deposits your pay check. Obviously with such easy to pass requirements cash advances are given more often than business loans. Cash advances are usually paid back rather quickly. Usually payments are automatically deducted from your paycheck. You and your cash advance provider will have to agree on a set amount to be deducted from each paycheck. Most providers only allow for advances up to one thousand dollars. Paying back a cash advance a quickly as possible is the best way to go otherwise high interest rates will kill you.