Individuals seeking alternative short term lending
options as a substitute to large financial institutions can use short term loans to their advantage. These loans involve an individual writing a check to a lender coinciding with the period of the individual's next paycheck in exchange for cash that day. This exchange is readily available in many American states and allows individuals immediate access to cash, particularly in situations where unexpected expenses have accrued, such as illness or auto repairs and as such lenders are able to provide temporary relief of short term financial needs. Financial institutions large and small have used this method of lending, providing immediate cash to those who need it. These options are particularly important for people who do not have a savings account, as this method of short term lending is instantaneous. However, the practices of some lenders are coming under scrutiny from several government agencies as larger institutions are adapting practices from storefront loan services. It is crucial, however, that individuals engaged in this enterprise be familiar with federal and state laws regarding short term loans and that all employees are properly trained to follow these procedures. As of January 1, 2012 in Washington State for instance, loans may not exceed $700 with and interest rates must be 15 percent or less. There are also regulations regarding database documentation.