How Does Cash Advance Work?
There are many financing options available for self-employed individuals and entrepreneurs. For instance, you can apply with Giggle Finance for a cash advance for independent contractors. Your business will not have to reach into its own pockets for funds to maintain its cash flow with these financing options.
What is a Cash Advance?
A cash advance is simply money you borrow and repay using future sales. This loan is more flexible than other financing options for independent contractors. You only need to repay a fixed percentage of your future revenues every month. Fluctuating income means your repayment terms change each month, eliminating the risk of default.
A cash advance does not have strict documentary requirements. You only need to show the lender a recent history of profits in your financial statements. Aside from that, the approval process is quicker than traditional term loans. You can apply for up to $5000 and receive the funds within five minutes.
Why Choose a Cash Advance Over Other Loans?
There are several benefits to choosing a cash advance over the other financing options for independent contractors. These include:
Flexibility
Lenders will only charge you a percentage of future sales. Your obligations will adjust to your actual sales. You pay lower fees for slow months and more when you’re earning more in the following months.
No credit check
If you have a credit score of 562, you may still be able to borrow money from lenders who consider your sales history instead of your credit score. However, it’s important to note that a lower credit score can make it more difficult to get approved for loans and may result in higher interest rates. In any case, focusing on building up your sales history and improving your credit score over time can help you increase your chances of getting approved for loans and better interest rates in the future.
No late penalties
Cash advance providers will arrange an auto-debit facility that will automatically deduct your repayment from your account. You won’t have to worry about overlooking your payments and getting slapped with late penalties.
Convenience
Applying for traditional term loans is cumbersome with their comprehensive documentary requirements. With an independent contractor cash advance, you only need to upload digital copies of your previous bank statements through the lender’s website. You don’t have to visit a physical office either.
Transparency
You can view all the information about your cash advance in the contract. The lender will provide you a copy after approval for your signature. All fees are outlined in this document, so make sure you take the time to read it, including the fine print.
How Do You Apply for an Independent Contractor Cash Advance?
Your first step is to create an account on the lender’s website. You only need to provide your full name, e-mail address, contact number, and approximate monthly income. Afterward, you’ll have to link your newly established account with your bank so the lender can access your previous statements. You will then receive an offer from the lender and a contract.
The final step is to agree to the terms and sign the contract. You’ll receive your funds in your bank account within five to ten minutes.
How Do You Use the Funds From an Independent Contractor Loan?
Unlike loans like equipment financing, an independent contractor cash advance does not impose restrictions on fund usage. You’re free to use the money for any purpose, including:
Debt repayment
You can consolidate your existing debts by paying them in full using the cash advance.
Equipment financing
After receiving the funds, you can purchase new computer parts, office furniture, and tools. You can also spend the money on equipment repairs.
Employee salaries
Keep your workforce happy by paying their wages on time, despite a sudden decrease in revenues.
Purchase inventory
You can maintain optimal inventory levels ahead of big sales with the help of a self-employed cash advance.
Business expansion
Growing your business can be expensive. A cash advance can provide you with the funds to make your operations larger.
The Bottom Line
Self-employed individuals, 1099 workers, freelancers, and independent contractors have limited access to traditional financing. These institutions view your fellow self-employed individuals as a high risk due to fluctuating income levels. Contractors must have a good credit score or must pledge assets as collateral.
On the other hand, an independent contractor cash advance provides you with access to funding without banks’ strict requirements. All the lenders require is a copy of your bank statement. Lenders also provide an online platform where you can apply, link a bank account, and submit the necessary documents.
Cash advances for gig workers also have shorter approval processes than traditional loans. You can finish the application process in just five minutes. Once approved, the lender will instantly wire the funds to your linked bank account.
Thanks to these cash advances, you can rest assured that you can find financial help when in need.