Personal cash advances and business cash advances function in a very similar fashion However, there are some differences that are worth noting and I will go over some of those differences today.
Personal vs. Business Guarantee: Sometimes companies will advertise a business cash advance when they are really offering a personal one. The difference lies in who backs the advance. Even if the money is being used for business reasons, if you are backing it with your own personal paycheck and credit, it is actually a personal advance. If on the other hand cash is disbursed based on your companies monthly revenue, and the company itself guarantees repayment that is an advance for your business. This distinction is important especially if you are unable to pay back the loan at some point. Your company can theoretically dissolve and take its debts with it, if you personally guarantee any loan, you are ultimately responsible, not your company.
Interest: The interest rates on business advances tend to be lower than those for individuals, but not by much. It is understood by both parties that these are emergency loans. They are very fast to obtain, and don’t require much in the way of qualifications. However, they represent more risk to the lender, and they price them accordingly. They also tend to charge a premium because of the emergency circumstances. You should avoid using this service whenever possible by planning for emergencies ahead of time.
Amount Authorized: Typically for an individual you can borrow up to one month’s salary. You can also borrow this amount again in future through a streamlined process called recharging. Basically, if you have repaid a previous loan in full you can borrow the same amount again under the same conditions without applying again. Typically you can do this up to 2 times, and companies can do the same. The amount of money your company can borrow is usually limited to one month’s revenue, much like a monthly paycheck. Repayment must occur within 90 days in most cases or further interest will accrue.
So there you have it. Personal and business cash advances are very similar things. They both require you to demonstrate your current income (or revenue) and both charge high interest and must be paid back very quickly. I highly recommend that neither option be used for anything but emergencies.