Petty Cash Loans: Its Definition and Advantages
Petty cash loans – these are loans that involve a small amount of cash availed of by a member of an organization contributing to communal petty cash funding. It’s a loan product that provides financial assistance for emergency needs that is often easy to apply for. The specific loan requirements depend on the organization.
Usually these are documents proving that you have a source of income and are capable of paying the loan. The maximum loanable amount depends on the income reflected on these documents. Often this kind of loan is fast and easy to process and incurs just a small amount of interest since this just involves small amount of money, thus just bringing forth a small extent of risk.
The Notion behind the Petty Cash Loan
Before we further define petty cash loans, let us tackle petty cash first. Petty cash is a small amount of discretionary funds in easily accessible form. It is a fund that is built up—often by an organization of people—for a certain purpose or expense for a certain season. People contribute small amounts of cash for a span of time to arrive at a pre-computed amount.
Any financial organization offering this kind of loan usually opens itself up to contributing members. All members are eligible to apply for this loan and even have discounts off the interest. There are also cases where people outside of the organization can take this loan but that usually features a higher interest rate.
Most cooperatives specialize in this area; they offer pretty good interest rates for their members and shareholders. Cooperatives usually set limits for their petty cash loans according to the number of shares each member has. They then designate a custodian for the money that will be responsible for the custody and maintenance of the cash, or they sometimes deposit it in a bank.
Over a period of time, that money will grow which will be spent on a certain activity, or can even be split among the members.
The Advantages of a Petty Cash Loan
Petty cash loans are easily accessible. For instance, you can apply for it online and get an relatively quick response. An immediate need for cash would lead someone to apply for this. It could really be helpful for those employees who oftentimes lack sufficient budget for their expenses at work like money for fare and their meals. It is also helpful for working mothers who often run out of money for groceries and other essentials.
This type of loan would be great for them because petty cash loans require no collateral. Just fill out an application form and usually no other supporting documents are needed. In many cases, the application process takes little as 2 minutes, and many cooperatives allow for you to do it via your mobile phone. This one of a kind system will assess your application, and you will receive an instant answer.
Petty cash loans feature manageable interest rates and represent one of the most accessible loans available today. Just to be smart, however, make sure that before you apply for any loan, be it “petty” or not, you have to have a steady income source so you can easily work out your payment plans.
Kash Martinez, understands the intrinsic attributes of making excellent content that suits the needs of every business especially when it comes to online financing. She conceptualizes and implements marketing plans, explores profitable B2B opportunities, and then absorbs LoanSolutions.PH services.