subject: Cash Advance: A Remedy For Business And Individual Bankruptcy [print this page] Have you ever experienced running out of cash? In finance, running out of cash is called bankruptcy. Bankruptcy is divided in two categories: business and individual bankruptcy. Business bankruptcy refers to financial failure of a business. Bankrupt businesses have run out of resources, and they make far less money than they are spending. On the other hand, individual bankruptcy is called personal bankruptcy. A bankrupt person has run out of budget long before the next payday.
Nowadays, banks and credit agencies have developed ways to provide financial assistance to businessmen and employees. This is widely known as cash advance. Cash advance is a modern credit scheme popular among employees these days. Lending companies allow businessmen and employees to borrow money at a fixed interest rate. Creditors and debtors then agree on payment duration. Usually, payment due date is set 14 days (2 weeks) after requesting the cash advance.
Banks have cash advance provisions for businesses and employees. Creditors lend money to businesses in two ways. Some creditors require collateral for business loans, which come in the form of properties and ownerships. These include houses, insurance accounts, cars, and business titles. Creditors get collateral when the borrowers cannot pay loan. Conversely, cash advance companies do not require collateral. Nevertheless, they impose higher interest rates for cash advances. The average interest rate for business cash advances is 8%.
Business cash advance payments are obtained from a companys future sales. Debtors pay loans in a periodic method. They can pay loans monthly, quarterly, or annually. Companies allot a percentage from their monthly sales for loan payment. Percentage depends on the agreement between debtors and creditors. Cash advances do not have a definite payment due date. Hence, debtors are expected to give periodic payment until they cover the total loan amount.
Moreover, employee cash advance is called payday lending. In payday lending, creditors allow regular employees to borrow a specific amount of money. Creditors automatically deduct payment from an employees salary. Cash advance is a fast and easy credit method for regular employees. They can immediately get the requested amount after application.
Cash advance is one of the most convenient credit schemes available today. Cash advances are ideal for financial emergencies. They also serve as an effective remedy for business and individual bankruptcy.
