In the corporate world, there’s such a thing called Bridge Financing. In simple terms, it’s about a company taking a temporary, emergency or short-term loan to acquire an asset immediately, maintain liquidity or support business continuity until the next anticipated cash inflow takes place. The term “Bridge” says it all. Usually, it’s just a short-term loan that can be paid back by another loan, usually planned to be secured and with a longer maturity term. Often companies resort to this when some unplanned or unforeseen requirement crops up that should have been covered by a scheduled loan but came in earlier than expected. But one thing for sure, it’s a loan that needs to be paid back sooner than most other financing types.

A Personal Loan

Now that’s in the corporate world. On the personal level, there’s an equivalent to this called “Paday loans” or advance paycheck. It’s a personal loan, unsecured and short-term. It’s basically synonymous to a cash advance. But this is typically reserved for cash withdrawals against a credit card and is limited by your credit line or a percentage thereof. This time, an advance pay is made against your next paycheck which sets the limit. It’s a 2-week loan that lenders expect to be paid on your next payday.

Legality

The practice of payday lending is legal in the US with 37 states regulating it and the rest, around 12 states, either ban it or make the practice economically unsound for lenders to practice. Regulated lending in most states simply provide interest caps and lending limits, and where they are not explicitly banned, state laws stipulate lending usury limits and interest ceilings that often make it difficult for lenders to cover their cost of lending in such small amounts and short periods.

Obtaining the Loans

In the simplest process, employers can directly secure advance paychecks if the employer allows it. Otherwise, there are lending organizations in retail outlets and malls, as well as over the internet that provide the service. one-hour-cash-advance are short-terms uncollateralized or unsecured loans. Different lending firms have different processing qualification requirements. Borrowers may just be asked to show proof of sustained income in the form of their latest pay stubs, income statement, bank statement or any combination of these.

Then they are asked to issue a postdated check for the total amount including interest and they get the loan against current payday proceeds. Depending on your income level, that could range anywhere from $200 to $1200, with $500 being the most common. Lenders usually just round off the amount to the nearest hundreds, whichever is lower.

Being unsecured, the risk is entirely shouldered by lenders. To cover themselves, post-dated checks are required. Borrowers are asked to pay directly to the branch where the loan was issued. But should the maturity date comes and the borrower fails to pay, the lender can automatically have the postdated check processed in the traditional manner or through an electronic withdrawal facility on the borrower’s checking account. The borrower runs the risk of incurring additional overcharge or bounce check fees if the check is not funded. Because of the high interest rates, borrowers are advised to use these short-term one-hour-payday-loans sparingly and wisely. GP