When we find ourselves in need of financial assistance, we often look at different types of loans and cash advances. However, before taking that step, we should first carefully go through all the alternatives as we might find a better solution to cover our bills or fund our business. So let’s have a look at some of these options.
Emergency Cash Options
Friends and relatives
Borrowing money from family and friends may be a relatively easy source of funding. This source of funding is considered an internal source because it’s obtained solely through close, personal relationships. Usually, this type of funding doesn’t require complex applications or checks on credit scores.
However, if you choose to borrow money from friends or family, it should be done with the same formality as in borrowing from a lending institution.
This means creating a formal loan document that includes the amount of money borrowed. You should also take into consideration the potential fallout with friends and family if something goes wrong and you can’t repay the loan on time. So it’s really best to establish a clear understanding and plan for scheduled repayment.
Savings and home equity loans
Borrowing money from the equity you have built in your home or using personal savings are the most inexpensive ways to obtain funding for your business. Using your own funds will let you maintain control of your business. However, before pooling these funds into your business, you should take a few issues into consideration. Firstly, what impact could be losing this money have on your future? How will using your savings or home equity impact your financial security? You may also want to take into consideration when you develop a relationship with a lending institution or a bank and repay the loan on time your business will be creating the much needed good credit record.
Get a personal loan from a credit union or a bank.
The downside to this is that you’ll need to have good credit to qualify for an unsecured loan at a reasonable interest rate.
If your credit is not that good or if the bank requires some other forms of security or collateral that you simply don’t have, then this won’t be an option.
Advance on your paycheck
If you have a good relationship with your employer, he may be able to give you an advance on your next paycheque. You’ll just have to repay the advance on the following payday. All workplaces are different, so depending on where you work, they may have established policies in place.
Larger companies may have policies to adhere to while a small business may be able to work something out. Whatever the case, it costs nothing to ask.
However, like borrowing money from your friends or family, be careful not to make a habit of it.
You could potentially generate some cash by selling some of your stuff on online, renting out a room in your home, getting a second job or renting out space in your garage. It’s important to know your options so that you can make the best decision that suits your personal situation. Whether you choose to use the services of a lending institution, if you go through the borrowing process with caution and a touch of creativity, you can find a way out of your financial problem.