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Get Quick Cash for Your Small Business from a Check-Cashing Store

You're a small business owner who needs money. What's the first place that comes to mind? Probably a place with a name like First National or Federal Trust. Probably not a place with a name like Speedy Cash or Pay-O-Matic. But that's where a lot of small business owners are going when they need money fast: to a check-cashing store.

Now, we know what you're thinking. A check-cashing store? Like that place in the strip mall with the blinking neon sign that charges 5 percent to people who have nowhere else to cash their paychecks?

Well, yes. Like that place. But also ... not like that place. Check cashers do indeed handle a lot of transactions for the "underbanked" and the "unbanked" (widely used euphemisms for low-income earners, the poor, etc.), but they're now busy cleaning up their act to appeal to a much wider segment of consumers -- including small business owners who need money quick to cover unexpected costs.

Branching Out
You've probably never set foot in a check-cashing store. Most Americans haven't. But a lot of them do. That's why there are more check-cashing outlets in the United States than McDonald's or Starbucks -- combined. That's why Walmart got into the business several years ago with its Walmart Money Centers and is now the largest check casher in the United States.

What advantages do these places offer to the small business owner? Speed and convenience. If you've been in business for any length of time, you know banks have a lot of rules for cashing checks. They place holds. They may limit the amount of cash they hand out per day. They may open after you do and close before you do.

Here, check cashers have advantages over banks. They usually open early and stay open late. Many don't close at all. They hand over your money right away. You bring in a check made payable to your business and you walk out with the cash you need to cover whatever urgent expenses you have -- supplies, payroll, payables, etc.

You do give a check casher a higher percentage of your check than you would give your bank -- usually 2 percent to 4 percent of the check amount. But if you need money fast, that will likely seem a small price to pay. For example, in New York a check-cashing store charges $18.60 for a $1,000 check and $93 for a $5,000 check. At Walmart you can cash a $1,000 check for just $3 and a $5,000 check for $6.

A Convenience Store for Cash
Check cashers are widely portrayed as rapacious gougers of the poor. And it's true that they charge more -- but so does every convenience store. Need milk at midnight? You'll pay a little extra at 7-Eleven. Need cash immediately to cover an expense? Same deal.

The high fees normally mentioned in media critiques of check cashers are for payday loans, for which a check casher will usually charge 15 percent. But those loans are a small portion of the total business check cashers do -- cashing payroll checks for businesses composes 80 percent to 90 percent of a typical check casher's business.

The reasons most underbanked customers go to a check casher rather than a bank is that banks have done their best to rid themselves of these customers. Since the recession, many banks have taken the same tone with small business owners: "Need a loan? Not interested."

Now, predictably, these business owners are doing what a lot of other consumers do. They're taking their business to a place that wants it.