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Cash Advance for Gig Workers: What is It and How to Qualify?

  • by Joseph Priebe|
  • 0 Comment |
  • Updated: September 27, 2022 |
  • Loans

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What is a gig worker?

Gig work refers to income-earning activities outside of full-time jobs. These can be part-time, contractual, or one-time arrangements to earn a little more outside your job.

Gig workers are usually freelancers or contractors who have multiple short-term clients. The work can be project-based, seasonal, hourly, or part-time. To earn enough money to pay the bills and save a bit, gig workers tend to take up a lot of clients per month.

What financial problems does the gig economy have?

Having a side hustle can help you save some precious bucks, but the gig economy has its ups & downs. There are various struggles that a gig worker faces, some of the biggest ones are discussed here:

No predictable income

Gig work is unexpected, and the workers may not always have a steady base of clients each month. Some months, workers may find more work than they can handle, while at other times, they might not have enough clients. The income will always be unpredictable in the gig economy. This is a risk every gig worker takes, hoping it will always help them cover their expenses.

No employee perks

Full-time workers can often access valuable employee perks, such as retirement savings, health insurance, and vehicle insurance. In contrast, gig workers are offered no such perks in their work. Also, a single paycheck can cover full-time employees' health insurance and retirement savings. Lack thereof causes more strain on gig workers to work more hours to make that money on their own.

what's required for a gig worker loan?

Types of loans for gig workers

There are numerous banks and credit lenders who offer a variety of financing options for gig workers. Here are some loan options for gig workers:

Cash advance for gig workers

Small business owners can take a cash advance if they need money for their business. For example, when you don't have enough income to cover the month's expenses for your business, you can take a business cash advance. The loan amount is not for personal use, but you can use it to pay off client expenses, payroll, and other things directly related to your business.

Credit card cash advance

A credit card cash advance can help gig workers pay off their bills if they have expenses outside the business. A credit card cash advance provides you with an amount you can for personal and business needs. However, cash advance credit cards may have a higher interest rate than normal credit cards. So, ensure you repay the full amount and the interest if you decide to go ahead with a cash advance credit card.

Payday loans

You may be familiar with gig worker payday loans if you have a rocky credit history. A payday loan is a sort of short-term funding for employed individuals who are looking for quick cash until their next paycheck. Unfortunately, payday loans may sometime have outrageously high-interest rates. So, payday loans are a rather risky option unless you can pay off the loan within two to three weeks.

Personal loans

A personal loan is an installment loan that allows people with all kinds of credit access to money. In addition, personal loans offer the benefit of having a simple application process, flexible repayment schedule, and reasonable interest rates. As a result, they are a rather popular option among gig workers.

How can gig workers benefit from a cash advance?

Gig workers can qualify for two types of cash advances; business cash advance and credit card cash advance. If gig workers have business-related expenses to take care of, a business cash advance helps them cover all the business bills. However, if the expenses are a mix of both personal and business-related, a credit card cash advance may be a better option for gig workers.

Pros and Cons of Gig Worker Loans

One of the many benefits of gig worker loans is that some of them won't care about your credit score and history. You can still qualify for a personal loan if you have an average score and less-than-perfect history. You also have multiple short-term loan options to help you get the quick cash you need.
On the flip side, gig worker loans sometimes have a higher interest rate than usual. They also have some rigid repayment methods that might not suit everyone.

Does the Cash Advance Affect My Credit Score?

As with any loan, a cash advance can affect your credit score if you aren’t careful. Here are some ways your credit score can get affected if you take a cash advance:

  • Simply getting a cash advance won’t affect your credit score.
  • You will be charged with interest from the moment you take that cash advance. There’s no grace period of 21 days.
  • If your credit utilization ratio goes higher than 30%, then your score will get heavily affected.

types of loans for gig workers

Who Qualifies for a Gig Worker Payday Loan?

The following are the basic criteria a gig worker must qualify for to get approved for the loan:

  • Must be 18 years or older.
  • Must have US citizenship.
  • Have an active bank account.
  • Must have steady monthly income and papers to prove the same.

How to Qualify for an Instant Cash Advance for Gig Workers?

  • You should have a decent credit score & history.
  • Must be of legal age and have permanent residency in the US.
  • You must have an active bank account and a good income-to-debt ratio.

What’s the Application Process for Gig Worker Cash Advance?

There are two ways a gig worker can get a cash advance:

  • You can visit your bank and request a cash advance. They will let you know if you qualify for it or not. They will ask you to submit the required paperwork if you qualify.
  • If you already have a credit card with a convenience check, you can write yourself a check that you can cash or deposit into your credit account.

 

Conclusion

The gig economy has undergone many upheavals after the pandemic. And even before the pandemic, it had its perks and loopholes. As a result, many gig workers have struggled to make ends meet. Also, many gig workers have been forced to look for loans amid all the struggle but are worried if they will get approved or not. There are many financing options for gig workers, with standard application processes. Look into the options we have listed and analyze if any loan terms fit your situation.

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