Some business expenses are “extra”, small or easily cut out when things get tight – but payroll isn’t one of them. Payroll is one of the most consistent costs your business will have. Whether they work for you on a contract, part-time, or full-time, your team expects to be paid on time, every time.
Of course, slow seasons come and – as witnessed over this past year – markets can take a downward turn without warning. The next big question is how are you going to pay those essential expenses on time, keep things running smoothly and maintain productivity? One answer for bridging the cash flow gap might be a payroll loan.
What is a Payroll Loan?
Essentially, a payroll loan is a small business loan that provides the cash you need to pay your team. There are several different types you can use, some are more flexible than others. They are specifically designed for covering all payroll costs, including salary, payroll taxes and employee benefits.
When Should You Consider a Payroll Loan?
The next question business owners usually have is when should a payroll loan be utilized? How do you know your cash is simply not enough and your financial situation could spiral downward without outside assistance? If your business is large and payroll costs are a bigger expense, you might struggle with payroll occasionally.
Likewise, if you have many full-time employees, you may need a boost of cash from time to time. If you’ve run into unexpected expenses, you might also struggle to cover payroll. Rather than pay your staff late, you can opt for a payroll loan to get back on track and cover costs until you’re in a stronger financial position.
3 Types of Loans You Can Use to Cover Payroll
If any of these scenarios sound like a situation you currently find yourself in, then you might be ready to take the next step and apply for a loan. Here are a few types of loans you can use for payroll. You have several different options:
SBA Loans. The Small Business Administration (SBA) has different loans that you can use for payroll and other key business expenses.
Business Loans. There are both long-term and short-term loans available from banks and online lenders if you choose this route. Keep in mind, the higher your credit scores, the lower the rates you will receive.
Merchant Cash Advance. This option is well-known for being the best when you needed cash yesterday. You can easily secure cash in as little as 24 hours, thanks to a streamlined application process.
The key is to make sure the lender understands your situation and your business type. Every industry has its own challenges and opportunities, they should be aware of them and have the right support and tools to assist you. Our team at firstamericanmerchant.com, for example, has years of experience in helping merchants cover daily and essential operating costs like payroll. Get in touch with us today to learn how our merchant cash advance or other payroll loans can help.