In the last decade, the gig economy has seen explosive growth because of increasing digitization. Today, around 35% of the US labor force works outside the traditional employee-employer setting and contributes a notable percentage to the country’s economy. 

Despite such growth and contribution, gig workers’ financial plight isn’t as prioritized as it should be. As a result, freelancers and gig workers are financially stressed when their contractual work decreases or comes to a halt. 

But not all hope is lost yet since there are some helpful solutions for these independent workers too. In this ultimate gig worker cash advance guide, we’ll cover the options they can avail when money is short and expenses are unavoidable. 

If you’re also a freelancer or gig worker, keep reading to know which doors to knock when money is tight. 

How Does a Gig Worker Cash Advance Differ?

Gig work is not steady like a full-time job, which means your earnings also fluctuate depending on how much you work. Owing to such a fluctuating nature, it’s obvious that the financial history of a gig worker and a full-time employee are different. Therefore, when these two categories of people apply for loans or funding, their options are different. Here are a few differences one experiences when applying for a gig worker cash advance:

Irregular Income Flow

You might drive for rideshare apps, deliver groceries, or complete online tasks. Naturally, your income depends on the hours you put in and the demand for your services. Because of these fluctuations, many lenders scrutinize your deposit history more than they would for a full-time employee. They look at the frequency and size of payments to judge your reliability. If your incoming funds drop suddenly, you can face delays or reduced credit limits. This scenario differs from a typical payroll cycle, where lenders feel more confident about consistent deposits.

Limited Or No Employer-Backed Advances 

As a full-time employee, one can request an advance from the employer or get paid time-off cash-outs. But gig workers lack that safety net. You work with multiple platforms or clients, so there’s no entity offering direct advances on your checks, and you have to turn to online services or alternative lenders. 

More Stringent Eligibility Checks Due To Variable Earnings 

Variable earnings make lenders cautious because they want to see if you have a regular pattern of gigs or if you jump from one platform to another. Some funders require proof that you’ve been active for a certain number of months and that your average earnings meet a minimum threshold. They might also look at your credit history if you want a larger sum, so having consistent documentation can boost your odds of approval.

Gig Worker Cash Advance Options 

Now that we know why a gig worker cash advance stands apart, let’s get to the ways one can secure funding as an independent or gig worker. Here are the top trustable ways a gig worker can try for cash advance:

ATM Cash Advance

If you have a credit card, you can withdraw cash from an ATM using it. This method is called ATM cash advance, and it gives you quick access to money without signing new contracts. You can use it to handle urgent expenses when you don’t have enough funds in your checking account. 

Notably, most banks set a limit on how much you can withdraw in one day, so you must be aware of that when you plan your expenses. Because you’re tapping into your available credit, the bank charges a fee for each withdrawal and there could also be a daily interest charge that starts the moment you take out the cash. 

Before thinking of this gig worker cash advance option, you must check your bank’s policies to see how high these fees are. If the rates look too steep, you’re better off because meeting a small expense can make you pay significantly higher. 

Merchant Cash Advance

A merchant cash advance is often seen among small businesses, but many gig workers also qualify for this funding. You show your recent revenue or daily sales volume to the service provider. In exchange, they advance you a lump sum that you pay back through your future earnings or sales. 

This gig worker cash advance way is helpful if you have consistent transactions on a digital platform, like an online store that processes payments for you. Since this method does not rely on the typical terms used for traditional loans, you don’t face the same interest-based structure.

Fundo is a hands-on merchant cash advance platform for gig workers and freelancers in need of financial assistance. Instead of being finicky about your credit history, Fundo checks if you have been in business for at least three months and make a minimum of $1500 a month. If you check these two boxes, you can get a merchant cash advance of up to $10,000 from Fundo with not-so-crazy repayment terms. Since the gig economy has seen explosive growth in the last decade, Fundo aims to bridge the gap gig workers face when trying to secure funding.

Payday Loan

A payday loan is a short-term arrangement where you pay back the borrowed amount on your next payday. In the gig economy, your payday might not be at a fixed interval, but you can still look into this option if you have proof of upcoming gigs or pending payments. 

Since this cash advance normally carries higher fees, so should approach it with caution. You also need to provide documentation of your recent earning patterns. The provider then looks at your deposit history to see if you have enough incoming funds to cover repayment. If you rely on short bursts of gig revenue, you need to be certain you can settle the amount on the due date. If you miss the payment, you may face extra charges or extension fees. 

Invoice Factoring (for freelancers)

If you’re a freelancer, you likely send invoices to clients and wait for them to pay after 15 or 30 days. If a client pays late, you face a gap in your cash flow. Therefore, invoice factoring helps by letting you sell your pending invoices to a factoring company. The company pays you a big part of the invoice total upfront, and then you receive the rest (minus a fee) once the client settles the bill. 

If you often wait for payments on sizable projects, like writing assignments, design work, or consulting gigs, this cash advance option will work well for you. The factoring company checks your client’s reliability, so you’ll have to ensure your client has a good track record of paying. You don’t want to submit invoices that look risky because the factoring company might reject them or charge higher fees.

Credit Card Cash Advance

You might confuse this method with an ATM cash advance, but it’s different. The difference is that you can request a credit card cash advance directly from your bank or card provider without necessarily using an ATM. 

After you fill out a form or call customer service, you can get the funds transferred to your checking account. Like the ATM cash advance, you start paying fees from the day you receive the money, which can be high, and your credit limit might decrease if you use this option often. If you have good credit, the bank may extend a decent limit, but you still need to repay it to avoid extra charges.

Gig Worker Cash Advance is a Reliable Backup to Have 

A cash advance can be a lifeline for gig workers because it provides quick funds when income is unpredictable. Selecting a suitable cash advance option means you can maintain stability and reduce stress so financial hiccups don’t disrupt your workflow. Fundo makes it easier for gig workers to secure loans without the hassle of employment proof and credit history. If you’re also looking for apt and reliable funding, consult Fundo and consider it done. 

FAQs

What if my income varies each month?

If your income varies, you can still qualify for a cash advance and cash providers often look at your average earnings over a period to determine eligibility. It’s important to choose an option that offers repayment flexibility based on your income flow.

Do I need to pay any upfront fees for invoice factoring?

Typically, you don’t pay upfront fees for invoice factoring. The factoring company will deduct a percentage from the total invoice amount as their fee once your client pays the invoice.

Are merchant cash advances risky for new freelancers?

Merchant cash advances can be risky for new freelancers because they involve repaying a portion of your future sales. If you’re not yet steady in your earnings, this could strain your finances. 

Looking for a simple, no-credit-check funding solution? Fundo is tailored for gig workers and self-employed individuals seeking fast and reliable financial support. Don’t wait—click ‘Apply Now’ and take control of your finances today!