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If you are thinking about the payday loans, you must have been facing certain questions. However, it is best to find the answers for them. After all, it is wise to look before you leap. Hence just go through the following lines.Q1. Why should you appeal for the payday loans?You should apply for the loan if you need money very ardently. If you are thinking about buying something that can be done later or looking at money whose interest may take away all the money of your next month’s salary without any particular necessity, payday loan is not the ideal solution for you. Otherwise, you can, rather should go for the loan.Q2. For how long you need the cash advance?Basically these payday cash advances are meant for the short term. They act as a bridge between the two paydays. So, if you are thinking to pay the loan at a later stage, the payday loan is not ideal for you. However, you can extend the day of the payment for months. But, in the mean time, you have to keep on paying the interest of the loan for every month. Since the interest in the payday loan is higher, that will not be a healthy idea.Q3. What amount should you borrow?Here, the payday advance loan does not give you too much of options. Normally, you can get an amount starting from £80 to £800. However, the maximum amount may come down if your income is not sufficient. Naturally, if you don’t fulfill this criterion to avail the money, you have to think about the other options.Q4. What are the criterions for a payday loan?You should be more than 18 years of age. You must have a full time job. Again you must have a bank account and a debit card for it. Of course, you should be a citizen of the UK. Naturally, the payday loan is not available to you if you are a student or have lost your job. Therefore, you have to look for other means to avail the money then.Q5. How is the wages paid?The debit card is crucial here. Most of the companies will ask you to transfer your wages directly on to the account that has the debit card. So, you won’t get the money if you are paid through cash or check.Q6. Can you delay the payment?This is certainly a poor idea. So, it is better to consider the other loan options if you think that you can not make the payment within time.Q7. What are the different processes available for the payday loans?Frankly, there are plenty of them. Some of them will ask you to submit detail documents. Naturally, they will take time to dispatch the money. Then, there are companies that offer fast cash advance. They are relatively hassle-free and you will also get the money quickly. No fax payday loan is also a good option if you have a good credit history.Q8. What is the cost of the payday loans?Generally, the companies charge a 25% interest on the money that you borrow. So, it is important to calculate the amount of interest on the money that you are going to lend.Q9. Can the situation go out of control?If you have already quite a few loans, then yes. So, it is advisable to avoid the payday loan in such situations.Q10. Is it the best option?The conclusion to this question can be drawn only after you make a thorough survey of other options. So, start doing that now.

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?