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.
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.
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.