What It Really Takes to Get Payday Loans for Small Startups

A small startup is a venture started by an enthusiastic entrepreneur with an idea and a vision to achieve success. Small startups have the ability to become hugely successful, but the problem they face is that of capital.

The main source of capital for small startups is funding from venture capitalists or banks and financial institutions. Sometimes, even with funding, a small startup may run out of money and need urgent money.

Most small startups are run by entrepreneurs who would have used up all their savings and have no money to meet their urgent requirements. In such a situation, a loan is a good option to help them get money.

Getting a loan from banks is not so easy mainly due to the cumbersome procedure. An innovative alternative option for small startups and businesses is to get a payday loan as a short-term measure to help meet their needs.

Payday loans are designed for individuals who are in urgent need of money for a short period of time. According to a  Pew report, 12 million Americans take out payday loans each year.

As of 2022, payday loan lenders operate brick-and-mortar stores in 32 states. About 5.5% of all American adults have used one within the past five years, with three-quarters of borrowers using storefront lenders and almost one-quarter borrowing online.

A small startup or rather the entrepreneur behind the startup can apply for a payday loan, get the money immediately, and use it for urgent needs, such as utilities. This is an option that small startups can consider since it is very easy and convenient to get a payday loan.

But what does it really take to get a payday loan for small startups and businesses?

Steps to Get Payday Loans for Small Startups

Here’s how a small startup can get a payday loan and use it for their needs:

1. The first thing is to look for a payday loan lender. It is better to apply online at a portal. The benefit is that such a portal would have a network of lenders. The lenders would have the option to decide who to lend. Similarly, the applicants can compare rates offered by different lenders and choose one of them.
2. Applying online is easy. A simple application form has to be filled in with all basic details, bank details, SSN, etc. Usually, no documentation is required to apply for a payday loan.
3. Payday loans do not have complicated procedures and are approved very quickly. There is no collateral needed nor is there a guarantor required.
4. The loan is given on the basis of the employment of the applicant. The loan is given on the expectation that it will be repaid next month on payday. Since an entrepreneur running a small startup may not have a salary, the lender may insist on a credit check. Since most entrepreneurs would have gone through the credit verification process while getting funds for their venture, this should not be a problem.
5. Once the application is verified, the lender would inform details of the loan, and a contract is prepared. The contract would contain details of the loan amount, interest to be paid, APR, date of repayment, and other terms. It is important to go through the contract in details before signing. The contract can be signed and sent online.
6. The lenders would usually require a bank authorization so that they can debit the applicant’s bank account to collect the loan amount once the due date is over.
7. Once the contract is signed, the loan amount would be directly credited to the bank account of the entrepreneur. The entire process can even be done within 24 hours making it a very convenient way of getting money.

In conclusion

Small startups can easily get a short-term payday loan (typically due two to four weeks), or even a 24-hour payday loan. It is a convenient option to get finance urgently.

The speed at which the loan is approved and the ease at which it is obtained makes it an option for small startups when they need quick money to pull you out of a small financial crisis.

However, like any other loan, you need to have a solid plan for repaying the payday loan on time. Also, make sure you clearly understand the terms of an agreement before signing.