For small business owners affected by this economy, it is a very hard time to thrive and support your family. The American dream for many people is to be their own boss, but in this economy many wonder … Is it possible to be a successful small business owner these days? Many entrepreneurs are looking for funding to help with their start up as well as small business owners who are struggling to keep up in a bad economy. It is very difficult to get a loan from a bank if you don’t have perfect credit, so many small business owners are turning to high interest rate loans, such as cash advances, and this is a very bad choice in most cases. Having trouble in business can cause trouble in every other part of life. Dealing with high interest payments that have high-risk collateral can be the most dangerous choice a small business owner can make.
High Interest Rates:
Cash advance loans may not require good credit, but it does require that the borrower pay very high interest rates in most cases. People think it is great that they can apply for a loan and have it almost immediately, but what they don’t think about it how high the payments will be with the large amount of interest the loan will be accruing. This can be stressful for the borrower, but more importantly, it can put the borrower out of business or just in deeper financial trouble, if they can’t afford to make the payments when they come due.
High-Risk Collateral:
Taking out a cash advance loan can be a very risky choice for your small business. You not only have to deal with the high interest rates, but you also have to put up collateral in a lot of cases. If you can’t make the payments, it could not only tank your business, but it puts whatever you used as collateral at risk as well. You need to decide if it is worth it to take such a risk with your business and personal assets before getting into a loan like this.
No Chance To Get Your head Above Water:
Unlike many loans that give you a grace period before you have to start paying back the loan, cash advances start paying themselves back through ACH immediately in many cases. The high payment will be taken out of your account daily basis for many loans. Traditional loans are often monthly payments instead of daily payments. Having the grace period and monthly payments gives you a better chance to use the money you borrowed, so you can get your head above water before having to start making payments on the loan.
Affect On Business and Personal Life:
When you are putting not only your business on the line, but your personal assets as well, it can put a huge strain on you as the business owner, but on your family and personal life as well. The stress of having a start-up or struggling business is difficult enough without taking a dangerous loan that could potentially make things much worse. These loans are dangerous for borrowers and not worth the risk in most cases. Make sure you do your research and can keep up with the payments you will have to make before getting into a cash advance loan. Also do your research and make sure it is the only option before jumping in. Sit down with your family and anyone else who is involved financially with you and your business. Known the risks and discuss what it will take to use a loan like this to help you, or go with another option to make things easier for you!