How Does a Cash Flow Loan Work?

How Does a Cash Flow Loan Work?

Cash Flow Financing

Cash flow is the total money coming into and out of a business (or the flow of money in the form of revenue and liabilities that happen during the course of a month). A company Cash flow is distinctively different than net revenue, as net revenue relates to total revenues minus liabilities. But there are other ways a company ple would be loan proceeds). Cash-flow may vary for some companies based on seasonal factors, or other factors in the business cycle do to a variety of reasons. In this article we will look at the financing options available to both help companies with cash flow, but also use their company’s past and expected cash flow to obtain financing.

What is a Cash Flow Loan?

A cash-flow loan is a way for a small or mid-sized company to use their expected future revenue and past cash-flow as a way to get a business loan. A cash flow lender will examine a company’s bank statements and/or credit card processing transactions for the total cash-flow coming into the company. title loans with installment payments in Illinois If a company has decent cash flow (but maybe not profitability) a lender may lend up to 200% of the company’s total deposits into their bank accounts and credit card processing statements. Since the cash flow lender is mostly focused on total cash flow, they are less concerned about credit of the business and business owner, and may not care about collateral at all. In fact, almost all cash-flow loans are unsecured (in the sense they don’t require commercial real estate or other specific types of collateral) but there are hybrid lenders that can offer cash-flow loans that are enhanced with the use of commercial and personal property.

Cash-flow loans work differently depending upon the type of cash flow lender you apply with. All lenders will begin by requiring a credit application so they can run credit. As mentioned earlier, having good credit isn’t a requirement for most cash flow lenders, as they focus more on revenue that credit history.