Applying for Payroll Funding
Loan applications are judged on a case-by-case basis to determine the loan size and type they qualify for. Overall, we keep our application process simple and the paperwork light, so you can get fast funding. We’ve outlined the main criteria our providers look at below.
Operating Revenue
Churning a profit is a clear indication of a viable business model. Lenders like to see your company generating at least $10,000 per month in sales. The more annual revenue your business brings in, the better.
Age of Business
Businesses operating for a long time are usually considered less likely to fail. They’re a safer bet from a lending perspective. Approval odds increase for companies in business for over six months and go up again at the two-year mark.
Liabilities
Keeping your liabilities low can help improve your debt-to-income ratio (DTI). Lenders typically use your DTI when determining how much you can afford to borrow. Having low amounts of debt relative to income can help you get approved for a large payroll loan.
Verification Documents
We keep paperwork light to keep things moving. All our lenders need is your last three bank statements. Your bank statements will be used to validate the financial information you’ve provided.
Credit Standing
Credit scores provide evidence of previous borrowing habits. Having a good credit history shows you’ve responsibly managed funds and can result in a more favorable annual percentage rate (APR).
Applicants with good credit are seen as lower risk and have access to some of the most competitive loan products in the marketplace. That said, all types of credit scores can be approved for financing. A less favorable credit score may result in a higher interest rate. It’s also worth noting that your business credit score will matter more than your personal one since you’re taking out a business loan.
Popular Uses for Staffing and Payroll Financing
Payroll loans are used for exactly that: payroll. That said, payroll funding frees up working capital, allowing extra cash to be allocated toward a variety of priorities. Below are some of the most common ways payroll financing is used.
Growing Your Team
As your business expands, you might need more help. It’s not uncommon for businesses to begin growing faster than their pocketbook can keep up with. Funding can be used to invest in the people you need to scale growth and build your empire.
Avoiding Layoffs and Furloughs
We understand how important your team is to the success of your business. Letting your employees go can have devastating consequences. Staffing loans can help you keep top talent, avoid turnover, and ensure you have the labor you need to get the job done.
Unexpected Expenses
Sometimes, we do everything right, and things still go wrong. If the money you allocated toward hiring ended up going elsewhere, we’ve got you covered. We understand that emergencies happen from time to time. A business loan for payroll can be used to replace lost funds.
Pandemic Relief
Many business owners have experienced a dip in revenue since the pandemic and require additional funds to cover cash flow gaps. Other companies have seen expenses rise after purchasing special supplies and sanitation materials needed to keep employees and the workplace safe. The U.S. government initiated the Paycheck Protection Program (PPP) to assist companies during COVID-19, but the program ended on May 31, 2021. Now, payroll loans can reduce the financial burden of staffing costs, freeing up additional working capital to be used for other business expenses.
Taxes and Benefits
Employees are an expensive but worthwhile investment. Small businesses are required to pay a 7.25% tax on every employee’s gross payroll. In addition to the payroll tax, employers are responsible for workers’ compensation and unemployment. A business loan can be used to help cover these expenses.
What Are Business Loans for Payroll?
Payroll loans are types of short-term financing. Under the umbrella of business loans for payroll, you’ll find a number of loan options, which vary in structure and loan terms. The most popular funding types are payroll cash advances and term loans.
Payroll financing is best used for covering short-term cash flow gaps rather than as a long-term working capital solution. Business owners who use payroll loans are typically seeking to solve an immediate need for capital.
At Clarify, we offer online payroll loans. The main benefit of this lending model is speed. Unlike traditional banks, online lenders have considerably fewer paperwork demands, which helps speed things up.
If you’re in a bind, we understand waiting may not be an option. We work quickly to meet your most pressing needs, distributing funds in as little as 24 to 48 hours.
How Does Payroll Financing for Employers Work?
Small business owners typically use payroll financing as a bridge loan to cover a short-term working capital need. In most situations, the funds are used to cover payroll costs.
Employers have a legal obligation to pay employees for their work. If a business owner delays payment for too long, there can be serious consequences. When cash is limited, business owners need to come up with a quick solution to ensure their employees get paid. Payroll loans provide a working capital solution where owners can borrow funds to be distributed to their staff immediately.
What Are the Benefits of Online Payroll Loans?
Securing financing through an online lender provides unique advantages. Below are some of the top reasons business owners choose to work with Clarify Capital over traditional lenders.
Competitive Rates
We use our network of 75+ lenders to get you access to the most competitive interest rates and loan terms. Low interest rate financing starts at just 7%.
Fast Funding
Unlike traditional bank loans that tend to be slow-moving, online lenders work fast. At Clarify, you can receive funding in as little as 24 to 48 hours. You get the working capital you need without the wait.
No Hidden Fees
When you choose Clarify, you can expect total transparency. Unlike other lenders, we don’t hide prepayment penalties within the fine print. Our contracts are written with simple terms that are easy to understand. What you see is what you get.
Fewer Documentation Requirements
We get that you’re busy. Our application process is streamlined for maximum efficiency. We keep documentation light and only ask to see recent bank statements.
High Approval rates
At Clarify, we understand that you’re more than your credit score. As an alternative business lender, we don’t have the same restrictions as large financial institutions. We look at applications holistically. We frequently approve borrowers who have had their applications denied at credit unions and big banks.
Flexible Financing
Choose from multiple loan products to find the right match for your needs. We understand that different business owners have their own preferences. We’ll tailor your loan offers based on the information you provide to your lending adviser. That way, you get financing customized to your unique situation.
