What Are Online Payday Loans?

Online payday loans offer fast cash and few requirements—but they also have extremely high interest rates that can keep you trapped in a debt cycle.

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There are plenty of reasons you might need access to quick cash as a small-business owner. Maybe your cash flow is limited and you need to pay your employees, or maybe you need to purchase inventory or pay a supplier to keep your business afloat. And if you have bad credit, you may be tempted to get an online payday loan to quickly solve the problem.

But while bad-credit loans seem like a quick fix, they’re also incredibly risky. Let’s explore the pros and cons of online payday loans, then consider the best alternatives for small-business owners in need of quick cash.

Table of contents

What is an online payday loan?

Online payday loans are short-term loans that consumers use to get quick cash at a flat interest rate. Most of these loans have a limit between $500 and $1,500 and must be repaid by the borrower’s next paycheck (usually within two weeks).

Most payday loans are marketed to consumers rather than business owners, but some small-business owners with bad credit may turn to a payday loan to get quick, short-term funding.

Pros and cons of online payday loans

On the surface, online payday loans can seem like a great way to solve your company’s temporary cash flow problems. However, most online payday loans simply aren’t worth the risk. Here are some pros and cons to consider before taking out an online payday loan.

Pros

  • Fast funding: Most payday loans give access to cash within 24 hours.
  • Few requirements: You usually only need an ID, proof of invoice, and an active bank account to apply for a payday loan.
  • No credit check: Even business owners with bad credit can get a payday loan, and there won’t be a hard credit check to bring down your credit score.

Cons

  • High interest rates: Most payday loan interest rates are much higher than credit card or small-business loan interest rates.
  • Often predatory: Many payday lenders have unfair or misleading terms that trap borrowers in a debt cycle.
  • Extremely expensive: Borrowers often need to roll over the loan several times, which drastically increases the overall cost of the loan.
  • Don’t help build credit: Unlike other types of loans, payday loans don’t report to credit bureaus—meaning they won’t help you build credit.

Best online payday loans

There are many lenders who make it easy to get an online payday loan—but if you decide to go this route, it’s important to do your research. Some payday lenders could end up taking money from your bank account if you don’t pay or even sue you for the money you owe.

Here are some of the most reputable payday lenders for small-business owners:

  • MoneyMutual: One of the best overall payday lenders, with a secure website and same-day transfer of funds.
  • BadCreditLoans: You can request up to $10,000, even with a bad credit history.
  • CashUSA: A safe, secure, free service that connects borrowers to lenders.
  • Personal Loans: Best for installment loans, Personal Loans allows you to request up to $35,000 and get easy repayment terms.

Alternatives to online payday loans

If you’re a business owner in need of fast cash, we strongly recommend looking for an alternative to an online payday loan. Fortunately, there are many other ways to get affordable, quick funding—without the risk of getting trapped in a debt cycle.

Here are some of the best alternatives to online payday loans.

  • Small business loans: Unlike an online payday loan, a small-business loan helps you build credit and can give you access to larger amounts of cash with a longer loan term.
  • Business credit card: If you have a good credit score, a business credit card is a great way to increase your cash flow as a small-business owner.
  • Invoice financing: When you need cash as quickly as possible, invoice financing may be the best option, allowing you to borrow against your outstanding invoices and get funds within one day.
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The takeaway

When you need fast access to cash for your small business, you may be tempted by an online payday loan. These loans make it easy to get small amounts of cash quickly—even if you have bad credit.

However, payday loans also have high interest rates that make it difficult to get out of debt. Many online payday loan reviews also tell of borrowers who faced predatory payday lenders.

Rather than running the risk of an extremely expensive payday loan, we urge you to instead consider a small-business loan or business credit card.

Would you like to learn more about small business financing? Check out The Ultimate Guide to Small-Business Loans on Business.org.

Related reading

Want more options? Fund your business with a personal loan.

Online payday loan FAQ

What is an online payday loan?

Also known as a short-term loan, fast cash loan, or bad credit loan, an online payday loan is a loan that gives you fast access to a small amount of cash. These loans usually have a two-week term and must be repaid by your next payday. If you don’t pay off the loan on time, you’ll be faced with high interest rates and a perpetual debt cycle.

What are the pros and cons of online payday loans?

Online payday loans are easy to obtain—even if you’re a small-business owner with bad credit. Most lenders say they’ll give you access to cash within 24 hours, and you can apply for the loan in just a few minutes. Payday loans are unsecured and have few requirements, but they also come with high interest rates (4–36%) and don’t help you build credit. Many payday lenders are considered predatory, and they often target low-income communities.

What is the easiest payday loan to get online?

There are many lenders that make it easy to get an online payday loan, including MoneyMutual, BadCreditLoans, CashUSA, and Personal Loans.

What’s the easiest payday loan to get?

CashUSA has one of the easiest loan approval processes of any online payday loan company. You can complete the application process in just a few minutes, and if your loan is approved, your lender can deposit funds in your account within the next business day.

Where can I borrow money immediately?

If you’re a small-business owner with bad credit, you can borrow money immediately by applying for an online payday loan. However, a payday loan should be your last resort, since it comes with an extremely high interest rate and can keep you trapped in a debt cycle.

Rather than applying for an online payday loan, consider applying for a small business loan—or even getting a credit card cash advance or borrowing money from a trusted friend, family member, or business partner.

Can you borrow money online instantly?

You can borrow money online (nearly) instantly by securing a payday loan, but keep in mind that it comes with some major downsides. Most payday lenders have a very brief application process and can deposit money to your bank account within one business day, but they have high interest rates and expect you to pay the money back within two weeks.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Brooke Kunz
Written by
Brooke Kunz
Brooke is a copywriter and artisan ice cream enthusiast dwelling in California's sunny Central Valley. She's happiest when hiking in the backcountry, baking an overly complex cake recipe, or reading an engrossing new memoir.
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