Emergency Money: 5 Best Borrowing Options for Financial Emergencies

According to statistics, the average American household carries over $100,000 in debt. 

This speaks of how important money is for Americans to pay for expenses they may not be able to afford. It also speaks of how important it is to learn the various ways to stay out of debt. 

Part of the answer to staying out of debt is having emergency money. 

Emergency funds, also known as rainy day funds, is nothing but a backup so you don’t have to put money on the credit card. It’s a relief system. It gives you some financial stability in case something unexpected happens. 

Here’s a guide on the 5 best borrowing options for financial emergencies. Now you can feel financially secure with these incredible borrowing options and payback without drowning in debt. 

1. Cash Advance Loans

A cash advance loan option is often short-term and can help you get an emergency loan.  Some terms can only be about a week or two, or you can find cash advance options that offer a repayment option within 3-months. 

2. Personal Loans

Irrespective of your credit score, some lenders offer quick personal loans that you can use for any purpose you like. A personal loan helps you get a specific amount at a specific rate. 

You can also get a personal loan for a small amount of money. Based on your credit, you can get a loan for an emergency situation based on what you need. 

3. Payday Loans

This is another great emergency loan option. Payday loans are paid back all at once on your next payday. 

Although they can have interest rates, payday loans are a great option when you need money right away and you can pay it back quickly. 

4. Low-Interest Credit Cards

Finding a low-interest credit card, preferably around 0%, gives you the option to borrow money with a credit card and pay it back in 6-months or however long before it starts accruing interest. 

Just remember, applying for a credit card means it will result in a hard inquiry, which can lower your credit score.

5. Home Equity Line of Credit 

Lastly, a home equity line of credit is when you use your home as collateral when you are paying for a loan. This gives you some flexibility if you have a home and need financial assistance. 

Just be aware of how soon you need to pay back the loan. You should also keep an eye on the interest rate of the loan, so you aren’t paying way more than what you originally borrowed.  

Why Emergency Money Isn’t an Option, It’s a Necessity

Emergency loan help is always available, it’s just a matter of finding where it is. 

You don’t want to get stuck with credit cards or forms of emergency money that will leave you a worse situation than before you borrowed the money.

You can also still find ways to get emergency loans with bad credit, no payback loans, and other forms of loans. You just have to be willing to find and apply to them. 

You can learn more about managing your money and financial tips on our website or by contacting us.  

Understanding Short Term Business Loans

finance

A big part of being successful in business is the ability to quickly get access to short term loans. Particularly in the early stages when you might not have the cashflow to meet your business needs, you might need some short-term assistance with bridging a gap until a client settles an invoice or to procure stock for sale. Short-term business loans are popular in these cases as you can settle them quickly, which means they aren’t attracting long term interest and commitment.

There are a few different options that you have for short-term business loans. 

Merchant Cash Advances

While this isn’t strictly a loan, it can often end up filling in the space where you might otherwise have needed a loan. A merchant cash advance is when a lender will buy your future credit card sales. You can see then why this might take on the same purpose as a loan.

You repay these loans through your point of sales device by allowing the lender to take a percentage of each credit card transaction you make towards repaying your loan. It’s a versatile and flexible way to get access to credit as you aren’t generally locked into a specific payment plan, but rather each day you process credit card payments, you’re slowly repaying your loan.

Lines of Credit

The easiest way to think of a business line of credit loan is that it works very much like a credit card. You’ll apply for a line of credit, and the lender will give you a credit limit. You can use this credit limit to access cash whenever you need it, and then repay whatever amounts you use gradually over time. 

It’s popular because of its flexibility, and it often ends up being cheaper than a business credit card, particularly if it’s cash you need as credit cards attract quite high cash advance fees.

Invoice Financing

A very specific, but also very useful, form of short-term business loan is invoice financing. As the name suggests, this loan involves your lender giving you an advance on outstanding invoice amounts. Once your customer pays that invoice, the lender will take their advance back, less the interest amount accumulated on that advance, and return the balance to you.

In essence, the invoice is being used as collateral against a loan; it is easy to get approval and it’s quite cost effective.

Short-Term Loans

A short-term loan is the most classic type of short term business loans. You’ll apply to a lender for a lump sum of cash, for which the lender will offer you a payment plan and interest percentage. If the terms are agreeable, the lender will pay you the agreed sum, and you will repay the loan on a regular schedule, including interest and fees. These loans are available over short terms, with very flexible repayment schedules – even weekly or daily payments.

While these four loan types are perhaps the most common, they’re not the only loans available to businesses. Understanding how to finance your business through equity and loans is imperative knowledge to have as a small business owner.