As a business owner, there are few worse feelings than the fear of missing payroll. A missed payroll period could lead to a mass exodus of employees, very low morale, a poor reputation for your business and/or other negative consequences.
Being in fear of missing a pay period does not mean a business is unsuccessful or indicative of poor ownership. Many companies have legitimate reasons for lean times, such as the natural seasonality of many industries. Other companies might be waiting on payment for a delivery, could be very close to closing a deal with a large client or have other reasons for being short on cash.
Another stressful time for a business could be if a pay period depletes a significant portion of their cash on hand, making it impossible to invest in a worthwhile opportunity or causing them to let other areas of the company go by the wayside in order to pay their employees.
If you find yourself in any of these scenarios, there is a great option which can keep your employees happy and your business operational: payroll financing. Some business owners are hesitant to take out a loan, but payroll financing is not a long-term debt burden and can be secured with reasonable rates. Because it is designed exclusively for payroll, and can only be used for payroll purposes, payroll financing is a great solution for many of the scenarios we mentioned earlier.
Payroll financing is available to companies with at least five employees (W-2 employees, 1099 contractors do not qualify) and which have a positive business history. Since payroll financing is designed to meet the unique needs of businesses which need a quick influx of cash to pay their people, funds are available very quickly and all you need to qualify are six months of bank statements. Instead of waiting on complicated underwriting or experiencing funding delays, you can rest easy knowing if you are approved, the funds will be disbursed quickly.
These short term loans have a repayment period of 28 days, and can be paid off at any time during those four weeks. Depending on your payroll needs and your company financial standing, you can be approved for loans between $20,000 and $500,000.
Payroll financing is simply borrowing funds exclusively for payroll purposes with a short payback period. Many people advertise invoice factoring as payroll funding, but these are two different things. Invoice factoring allows you to “sell” your open invoices of your clients to a financier, who buys them from you at a discounted price and then collects the full amount. While this is a valid option for some companies, this is not what we mean by payroll financing.
If your company could benefit from payroll financing or you have additional questions, our team is here to help. We are a payroll services firm located in the Bay Area, and we have helped countless businesses with payroll financing and other business administration needs. Give us a call today, we would love to partner with your company to help reach your goals.
