Standard Process for Employee Paycheck Advances

Interest-Free Cash

An employee payroll advance is the means by which employees who need money quickly can obtain it. Unlike using a cash advance business, where interest rates can often amount to 15 to 25 percent of the initial loan amount, a payroll advance generally has no interest penalties attached and isn't tied to the employee's checking or savings account.

Employees obtain a payroll advance directly from their employer, and the employer then either deducts a percentage from the employee's following paychecks until the amount is repaid or they simply hold the next paycheck as repayment of the loan.

How it Works

The method for obtaining a payroll advance from an employer differs based upon the policies of each company. A few similarities generally apply. The employee must demonstrate a dire need or an emergency for which they need the money. This can be either in the form of a written bill showing a past due amount or even a physician's letter.

Employers differ in what they will consider as an emergency, and not all situations qualify. For larger companies, the employee will typically need to sit down with a Human Resources member, generally in the payroll department. The employee's work history and past payroll history will be reviewed, and the employee will be asked to fill out an application detailing the situation which requires the advance.

The HR rep will review the application and the employee's pay history to determine the amount they are able to pay back quickl and will then reject or approve the application.

In smaller companies the process is much easier. If the smaller company relies on a single decision-maker, the employee will often need to simply ask for the money, and the request can be granted with minimal hassle.

Of course, often smaller companies are less likely to have cash on hand or the ability to pay employees in advance, so the available amount may be lower.

With larger companies the employee will often be given two choices in how they can receive their payment. Payment can come from petty cash, in which case the employee will be required to sign for the money and a witness must be present to confirm the transaction.

When providing cash, companies generally limit the amount of the transaction. For employees who wish to receive a cashier's check for the money, they can receive whatever amount was needed and agreed upon by both parties.


Employers don't charge interest for payroll advances, and they don't involve bank transactions. Unlike with third-party cash advances, employees aren't required to write checks to cover the amount owed, and there is no risk of overdrawing a checking account. When obtaining a traditional cash advance, a person must write checks to cover the amount, which are post-dated to the due date.

If these checks are accidentally deposited too early, they can wreak havoc on a checking account, whereas a payroll advance directly from the employer offers no inherent risk.