Payroll Financing Solutions for Small Business

Compare payroll financing options for business and find the best rates without impact on your credit.

Enter loan amount
Our Lending Partner Network
Payroll Financing

How to Apply for Payroll Financing

It doesn’t matter what your business is or what industry you are in, when you have employees, being able to pay them for their work is one of the most important parts of being a business owner. It’s simple, if you can’t afford to pay them, they will go and find someone who can.

Unfortunately, there are times in many businesses where funds are stretched thin, especially for a new business, and you may find you are unable to cover your payroll. With payroll financing, you can ensure that your employees are paid on time and in full so you can continue to grow your business.

Applying for a payroll financing loan is fast and easy:

Fill out a simple and fast online application in just minutes

Compare best business loan rates and choose your offer

Receive funds towards your business needs

Checking rates won't impact your credit score

How Pasha Funding Works

How it Works
Apply in minutes

Get pre-qualified in minutes and compare offers from top lenders.

Choose your offer

Compare and choose an offer that works best for you based on your timeline and budget needs.

Get funded

After your loan is approved with the lender of your choice, receive your funds.

Compare Payroll Financing Options

What is payroll financing for small business?

Payroll financing for small businesses is a short-term funding solution used to bridge temporary gaps in cash flow and ensure timely payment of employee salaries and benefits. This can be crucial for several reasons:

  • Unpredictable Income: Small businesses often experience fluctuating income, especially in their early stages. Payroll financing helps avoid delays or disruptions in employee compensation even when income hasn't yet caught up.
  • Seasonal Fluctuations: Some businesses face significant peaks and valleys in their seasonal workload. Payroll financing provides a buffer during slow periods to maintain employee morale and avoid layoffs.
  • Unexpected Expenses: Unforeseen costs like equipment repairs or sudden tax bills can disrupt even a healthy cash flow. Payroll financing ensures consistent employee payments amidst such emergencies.
  • Funding Growth: Small businesses aiming to expand might require additional resources for hiring new employees or acquiring equipment. Payroll financing can aid in these strategic investments without jeopardizing existing employee compensation.

How does payroll financing work?

How payroll financing works will depend on the type of financing you choose. With that being said, due to the quick funding, they are typically all applied for online and offered by alternative lenders.

As payroll financing is short-term funding, they will generally have terms of up to 12 months and higher interest rates than long-term funding methods, although these will vary.

You are also likely to find that payroll financing is required to be paid back on a daily or weekly basis as opposed to monthly installments.

Why do small businesses need payroll financing?

There are a number of reasons why a business may need payroll financing, including:

  • Rapid growth
  • Increased demand for staff during intense seasons
  • Demand fluctuations
  • Needing additional staff
  • You have a backlog of invoices that have not yet been paid
  • You had an unexpected expense that has eaten into the money you needed for payroll

Which industries can benefit from payroll financing?

Payroll financing can be utilized by almost all industries, such as:

  • Manufacturing
  • Security
  • Staffing
  • Healthcare
  • Oil and gas
  • Transportation
  • Consultants
  • Janitorial
  • Providers of business services
  • Small businesses and startups
  • Retail and wholesale

Types of Payroll Financing Solutions for Small Business

If you are looking to get money for payroll, there are several financing options for you to choose from:

Business loans

If you are looking to use a business loan to get money for payroll, you are likely to want a short-term loan as you are more likely to receive your financing within three days, often just one day.

Short-term business loans allow you to get funding from around $2,500 up to $250,000 with terms ranging from 3 to 18 months. Due to these short terms, interest rates are likely to start at 10%, although this will depend largely on your credit score, how long you have been in business for, and your annual revenue.

Business line of credit

If you think you will need to cover some of your payroll on and off for some time, a business line of credit may be the best choice for you. Most business lines of credit allow you to use the funds over and over, as you pay back in, until your credit line is closed, and you will only have to pay interest on what you spend rather than the total amount.

This type of financing typically provides credit from $10,000 up to $1 million with terms ranging from six months to five years. Interest rates for a business line of credit tend to start at around 7% and you can receive funding in just one day.

Asset-based loans

If you own a business that has particularly valuable assets, or you have valuable personal assets, you have the option of taking out an asset-based loan. This type of financing allows you to gain working capital providing your assets as collateral.

The amount of funding you will be able to secure depends on the monetary value of your assets and the lender that you choose. Just be aware that, should you be unable to pay back your loan, these assets will be seized and liquidated so that the lender can recoup their money.

Invoice factoring and invoice financing

Possibly the most popular form of payroll financing is invoice factoring. This is where you essentially sell your outstanding invoices to an invoice factoring company (IFC) so that you can get an advance on what is owed to you by your customer.

You will be able to get an advance of 80% to 95% of the invoice balance, which is typically sent within one working day so that you can use that money to cover your payroll costs.

Once your customer has paid the outstanding invoice to the invoice factoring company, you will receive the remaining percentage, minus the IFC fees.

Depending on the invoice factoring company you choose to work with, you will be able to qualify for invoice factoring if your outstanding invoices total somewhere between $500 to $5 million.

Rather than an interest rate, this type of funding uses a factor rate of around 3% per week or month, which can increase steadily until the invoice has been paid by your customer.

Another option is invoice financing, which is where you borrow the total of the invoice from a lender and pay it back once your client pays you. The fees for this are usually about the same as invoice factoring fees, but be aware that you will be subject to a credit check. This is a good option, however, if you want to continue working with a client in the future as you retain control over the customer experience they have with you.


If you do not want to take the risk of borrowing money, your only option is likely to be crowdfunding. This is a good option if you are a new business owner, but be aware that you’re unlikely to get funding fast enough for payroll. You may need to turn to friends and family instead.

Need help finding the right loan?

No worries, we've got you covered! Compare personalized loan options in just minutes without impact on your credit score.

How Much Does Payroll Financing Cost?

The cost of payroll financing will depend on which funding method you choose and how long it takes for you to repay the loan. Payroll financing will be more affordable if you have a good credit score and have been in business for at least 2 years.

That being said, if you have a poor credit score, you will probably still be able to take advantage of invoice factoring as these companies focus more on the creditworthiness of your customers. The longer your customers take to pay their invoice, the more expensive it will be for you.

Pros & cons of payroll financing solutions


  • keep your employees happy and on your side
  • opportunity to hire new employees to grow your business more quickly
  • no cash flow problems
  • possibility of same-day financing
  • no hidden fees with invoice factoring
  • easier to qualify for than traditional financing
  • can be debt-free financing
  • invoice factoring allows clients longer to pay, although at cost
  • flexible financing - doesn’t have to be used for payroll only


  • not always the cheapest option
  • fewer options available if you have a poor credit score
  • not entirely transparent to your employees
  • you may start a cycle of keeping on employees you should let go
  • if you get into financial difficulty, you may kill your business in your efforts not to let employees go

What are the requirements to qualify for payroll financing?

The requirements to qualify for payroll financing will vary depending on the funding option you choose. Each lender will also have its own set of requirements, so it is important to weigh up all of your options carefully.

To get the best rates and terms, however, you should aim to have a personal credit score of at least 600, have been in business for at least 2 years, and have annual revenue of at least $100,000.

Should I use payroll financing?

If you want to use payroll financing, you need to go into it with your eyes open. If you are waiting for clients to pay your invoices, using payroll financing is likely a good option for you, especially if you can see ahead and know you’ll have no trouble covering payroll next month.

However, if you’re going to struggle, consider using payroll financing to cover their costs this time and make the hard decision to let some employees go. It’s every business owner’s worst nightmare, but you’re much better off letting people go to make your business sustainable again than to keep on employees you can’t afford.

How to apply for payroll financing

To apply for payroll financing it is important to compare all your options carefully. Start by deciding which type of payroll financing is going to be the best for you and your business and then compare rates to find the option that will be most affordable for you. When you’re ready, start the application process, provide any required documentation, and secure your funding.

Popular Business Funding Options

Get Fast Funding For Your Business

Compare business loans from top lenders without negative impact on your credit score.

Business Loans By Credit

Business Loans for Fair Credit
Business Loans for Good Credit
Business Loans for Excellent Credit

*Disclaimer: does not function as a lender. The offers provided on this website are provided solely by third parties, who compensate for their inclusion. We would like to emphasize that will not contact you regarding any loan application resulting from the aforementioned offers, and we will never request financial information or any sensitive personal data via phone, email, or any other means.

REMEMBER, it is essential to exercise caution and never share any financial information or sensitive personal data over the phone or via email without independently verifying the identity of the company initiating the communication first!