{"id":20290,"date":"2021-08-16T10:10:52","date_gmt":"2021-08-16T17:10:52","guid":{"rendered":"https:\/\/financer.com\/?p=20290"},"modified":"2025-03-11T05:00:56","modified_gmt":"2025-03-11T12:00:56","slug":"cash-flow-loans","status":"publish","type":"post","link":"https:\/\/financer.com\/loans\/articles\/cash-flow-loans\/","title":{"rendered":"Top 5 Cash Flow Loans for Small Businesses"},"content":{"rendered":"\n<p>A cash flow loan is a <a href=\"https:\/\/financer.com\/loans\/business-loans\/\" data-type=\"page\" data-id=\"791\">small business loan<\/a> based on your company&#8217;s cash flow. Unlike traditional asset-based business loans, cash flow loans don&#8217;t require any business assets for collateral.<\/p>\n\n\n\n<p>A <a href=\"https:\/\/en.wikipedia.org\/wiki\/Cash_flow_loan\" data-type=\"link\" data-id=\"https:\/\/en.wikipedia.org\/wiki\/Cash_flow_loan\">cash flow loan<\/a> approval process is typically fast and can be completed in a matter of hours, especially if you apply with an online lender.<\/p>\n\n\n\n<p>The best five cash flow loans for small businesses are:<\/p>\n\n\n\n<ol>\n<li>Merchant cash advances<\/li>\n\n\n\n<li>Invoice financing<\/li>\n\n\n\n<li>Short-term loans<\/li>\n\n\n\n<li>Business lines of credit<\/li>\n\n\n\n<li>Equipment financing<\/li>\n<\/ol>\n\n\n\n<p><\/p>\n\n\n\n<p>For small business owners in need of swift funding without the burden of collateral, cash flow loans offer an excellent solution.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"How_Do_Cash_Flow_Loans_Work\">How Do Cash Flow Loans Work?<\/h2>\n\n\n\n<p>When lending to <a href=\"https:\/\/financer.com\/loans\/articles\/where-to-get-small-business-loans\/\">small businesses<\/a>, all lenders take risks into account.<\/p>\n\n\n\n<p>With business cash flow loans, the business\u2019s\u00a0projected future cash flow determines the risk for the lender. <\/p>\n\n\n\n<p>Essentially, this means that the business is borrowing money based on its anticipated revenue. Generally, however, lenders also take credit scores and financial histories into account.<\/p>\n\n\n\n<p>That said, based on how cash flow loans work, the process typically involves:<\/p>\n\n\n\n<ul>\n<li>A quick application process<\/li>\n\n\n\n<li>The ability to obtain the loan without collateral<\/li>\n\n\n\n<li>An assessment even with a less-than-perfect credit history<\/li>\n\n\n\n<li>A fast and convenient process<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"Cash_Flow_Loans_vs_Asset_Based_Business_Loans\">Cash Flow Loans vs. Asset-Based Business Loans<\/h2>\n\n\n\n<p>Cash flow loans are fundamentally different from asset-based lending, which requires collateral like property or equipment to secure the loan.<\/p>\n\n\n\n<p>Cash flow lending also focuses more on money owned and cash flow projections for the business, whereas asset-based lending focuses on the real assets a business owns.<\/p>\n\n\n\n<p>Cash flow lending allows applicants to borrow up to 100% of their asset&#8217;s value. In contrast, asset-based lending requires a collateral deposit and a percentage of the total loan amount.<\/p>\n\n\n\n<p>Some other differences between cash flow loans and asset-based loans are:<\/p>\n\n\n\n<ul>\n<li><strong>Cost<\/strong>: Cash flow loans typically attract higher interest rates.<\/li>\n\n\n\n<li><strong>Funding time<\/strong>: Cash flow loans are typically funded faster than asset-based business loans.<\/li>\n\n\n\n<li><strong>Repayment:<\/strong> Cash flow loans offer faster repayment schedules and shorter terms than many asset-based lending options.<\/li>\n<\/ul>\n\n\n\n\t\t<div id=\"genericloan_0_form\" class=\"fs-slider fs-slider--tooltip search-hero--bg1\"><h3>Compare loans from 48 lenders<\/h3><p>Find the cheapest rate with one click<\/p><div class=\"step amount\">    <div class=\"slider_cont step__value\">\n        <span class=\"fl_l_m_15 amount_display\"><\/span>\n    <\/div>\n    <div class=\"step__slider\">\n        <input type=\"range\" data-default-value=\"500\" data-name=\"param_amount\" \/>\n    <\/div>\n<\/div><div class=\"step stepSubmit\"><a id=\"submitSliders\" href=\"https:\/\/financer.com\/results?query=1&non_affiliate=true&param_amount=500&loan_broker_filter_active=true&param_period=360\" data-slider-url=\"https:\/\/financer.com\/results?query=1&non_affiliate=true&param_amount=500&loan_broker_filter_active=true&param_period=360\" data-required=\"results?query=1non_affiliate=true&param_amount=500&loan_broker_filter_active=true&param_period=360&\" class=\"get_results compare button is-primary is-medium is-rounded\">Compare Offers<\/a><\/div>\t\t<\/div><h2 class=\"wp-block-heading\" id=\"Top_5_Cash_Flow_Loans\">Top 5 Cash Flow Loans<\/h2>\n\n\n\n<p>There are different types of cash flow loan options available for small businesses. Each offers different terms, rates, and maximums &#8211; all of which you need to factor in when applying for a business cash flow loan. <\/p>\n\n\n\n<p>Let&#8217;s look at the top five cash flow lending options for businesses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"i1_Merchant_Cash_Advances\">1. Merchant Cash Advances<\/h3>\n\n\n\n<p>If your business makes a lot of sales using <a href=\"https:\/\/financer.com\/credit-cards\/\">credit cards<\/a> as a payment method, a <a href=\"https:\/\/en.wikipedia.org\/wiki\/Merchant_cash_advance\" data-type=\"link\" data-id=\"https:\/\/en.wikipedia.org\/wiki\/Merchant_cash_advance\">merchant cash advance (MCA)<\/a> may be a perfect fit.<\/p>\n\n\n\n<p>With an MCA, a set amount of money is advanced upfront to a business by the merchant cash advance company. In return, the company repays the total advance, plus interest, with a percentage of their daily debit and <a href=\"https:\/\/financer.com\/credit-cards\/secured-credit-cards\/\">credit card<\/a> sales.<\/p>\n\n\n<div class=\"fn_block block_fn_msg_box info\"><div class=\"fn_block__icon\"><\/div> <strong data-rich-text-format-boundary=\"u0022trueu0022\">Note<\/strong>: Since payments on a merchant cash advance will be deducted daily, remember that it will reduce your daily cash flow.<\/div>\n\n\n<p>Some lenders only collaborate with certain merchant account providers, so you may need to change your merchant account provider to streamline the process.<\/p>\n\n\n\n<p><strong>How to Qualify<\/strong><\/p>\n\n\n\n<p>Qualifying for an MCA is fairly simple &#8211; the merchant cash advance company will see if your business has been operating for at least a year, has annual revenue of at least $50,000, and has a business credit score of at least 500.<\/p>\n\n\n\n<p>Remember that MCAs are among the most expensive business lending options so carefully consider other options before setting for an MCA.<\/p>\n\n\n<h3 id=\"Best_Merchant_Cash_Advance_Providers\">Best Merchant Cash Advance Providers<\/h3>\n<ul>\n<li>Reliant Funding<\/li>\n<li>Rapid Finance<\/li>\n<\/ul>\n\n\n<h3 class=\"wp-block-heading\" id=\"i2_Invoice_Financing\">2. Invoice Financing<\/h3>\n\n\n\n<p><a href=\"https:\/\/financer.com\/loans\/articles\/invoice-financing\/\" data-type=\"wiki\" data-id=\"18242\">Invoice financing<\/a> is ideal for businesses that want to get fast access to funds without having to wait until clients pay their invoices.<\/p>\n\n\n\n<p>A good example is if you&#8217;ve received a large order from a client, but realized that you need more inventory than what you have on hand.<\/p>\n\n\n\n<p>Invoice financing can give you the cash flow you need right away, without having to wait for invoices that have long payment terms.<\/p>\n\n\n\n<p>An invoice financing company will evaluate your invoices and your business&#8217;s <a href=\"https:\/\/financer.com\/loans\/glossary\/creditworthiness\/\" data-type=\"link\" data-id=\"https:\/\/financer.com\/loans\/glossary\/creditworthiness\/\">creditworthiness<\/a>. Once approved, they will then advance you a percentage of your outstanding invoices &#8211; usually around 85%.<\/p>\n\n\n\n<p>When customers pay you, you repay the lender and they pay the remaining 15% over to you, minus their loan fees.<\/p>\n\n\n\n<p>Invoice financing companies usually have a standard fee of around 2-3% and can also charge a &#8216;factor fee&#8217; which is based on the duration your clients have to pay their online invoices.<\/p>\n\n\n<div class=\"fn_block block_fn_msg_box info\"><div class=\"fn_block__icon\"><\/div> <strong data-rich-text-format-boundary=\"u0022trueu0022\">Note<\/strong>: Some people don&#8217;t consider invoice financing a cash flow loan as it is technically secured by the customer invoice. But invoice financing doesn&#8217;t require outside collateral so many consider it a cash flow loan.<\/div>\n\n\n<p><strong>How to Qualify<\/strong><\/p>\n\n\n\n<p>To qualify for invoice financing, your business doesn&#8217;t need to have very high credentials as it is essentially self-securing.<\/p>\n\n\n\n<p>Generally, lenders want to see a minimum annual revenue of $100,000, one year in business, and a <a href=\"https:\/\/financer.com\/personal-finance\/articles\/what-is-a-good-credit-score\/\">credit score<\/a> of at least 600.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"i3_Short_term_Loans\">3. Short-term Loans<\/h3>\n\n\n\n<p>Similar to traditional small <a href=\"https:\/\/financer.com\/loans\/articles\/get-a-business-loan\/\">business loans<\/a> from banks, short-term loans have a shorter repayment period. they typically come with repayment terms of three to 18 months with daily or weekly payments.<\/p>\n\n\n\n<p>It allows businesses to have cash in hand very fast and in some cases short-term business loans are a better option than longer-term financing options. <\/p>\n\n\n\n<p>If your business needs to invest heavily in stock or supplies for an upcoming season, for example, a short-term loan is ideal.<\/p>\n\n\n\n<p>Short-term loans are also ideal if you want to fund an expansion, especially if you know that a cash injection can create a significant increase in sales in the near future.<\/p>\n\n\n\n<p>A short-term business loan is an effective cash flow funding option. It offers advantages such as fast funding times, consistent repayment terms, and an easy application process.<\/p>\n\n\n\n<p><strong>How to Qualify<\/strong><\/p>\n\n\n\n<p>Qualifying for short-term financing is quite straightforward. Short-term business loan lenders typically require you to be in business for at least a year, have a minimum of $50,000 in annual revenue, and have a personal credit score of at least 500. New businesses may find it a bit more difficult to qualify.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"i4_Business_Lines_of_Credit\">4. Business Lines of Credit<\/h3>\n\n\n\n<p>Business lines of credit work quite similar to a term loan or a credit card.<\/p>\n\n\n\n<p>Through this type of cash flow loan, the lender establishes a maximum <a href=\"https:\/\/financer.com\/loans\/glossary\/credit-line\/\">line of credit<\/a> from which you can draw at any time.<\/p>\n\n\n\n<p>Once the funds are repaid in full, the original amount becomes available again. This is a type of &#8216;revolving&#8217; fund that can be used for just about any business purpose.<\/p>\n\n\n\n<p>One of the big benefits of a business line of credit is the flexibility it offers. You will have access to funds whenever you need them and repay some or all of the funds.<\/p>\n\n\n<div class=\"fn_block block_fn_msg_box key-takeaways\"><div class=\"fn_block__icon\"><\/div><p><strong data-rich-text-format-boundary=\"u0022trueu0022\">Tip<\/strong>: With a business line of credit, you only pay interest on the amount you borrow, unlike a traditional business loan.<\/p><\/div>\n\n\n<p>Business lines of credit can be unsecured or secured; however, if you want to apply for a cash flow loan, opt for an unsecured line of credit. <\/p>\n\n\n\n<p>In many cases, your line of credit for your business could be available as fast as the same day you apply.<\/p>\n\n\n\n<p><strong>How To Qualify<\/strong><\/p>\n\n\n\n<p>To qualify for a business line of credit from a bank, your business typically needs to be profitable with an established history, and you need to have a personal credit score of at least 700.<\/p>\n\n\n\n<p>An alternative online lender, on the other hand, may require a business to have at least one year of trading behind it and a personal credit score of around 600-630.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"i5_Equipment_Financing\">5. Equipment Financing<\/h3>\n\n\n\n<p>Equipment financing is a loan that is used to purchase equipment for the business. The equipment serves as collateral for the loan.<\/p>\n\n\n\n<p>This type of loan is especially useful for businesses that rely heavily on equipment to operate, such as manufacturing or construction businesses.<\/p>\n\n\n\n<p>In equipment financing, the equipment itself acts as collateral for the loan. This means that if the borrower <a href=\"https:\/\/financer.com\/loans\/articles\/what-is-a-loan-default\/\" data-type=\"link\" data-id=\"https:\/\/financer.com\/loans\/articles\/what-is-a-loan-default\/\">defaults<\/a> on the loan, the lender has the right to repossess the equipment to recover their losses.<\/p>\n\n\n\n<p>Equipment financing can be structured in several ways, including:<\/p>\n\n\n\n<ul>\n<li><strong>Traditional Term Loan<\/strong>: This is a loan that is repaid over a set period, typically three to five years. The interest rate and monthly payments are fixed, making it easier for the borrower to budget and plan for repayment.<\/li>\n\n\n\n<li><strong>Sale and Leaseback<\/strong>: In this arrangement, the borrower sells their equipment to the lender and then leases it back over a set time. This can provide the borrower with a lump sum of cash while allowing them to continue using the equipment.<\/li>\n\n\n\n<li><strong>Equipment Rental:<\/strong> Some lenders offer equipment rental agreements, which can be a good option for businesses that only need equipment for a short period.<\/li>\n<\/ul>\n\n\n<div class=\"fn_block block_fn_msg_box boxed\"><div class=\"fn_block__icon\"><\/div> Equipment financing can be a good option for small businesses that need expensive equipment but don&#8217;t have the cash on hand to make the purchase outright. However, it&#8217;s important to carefully consider the interest rates, fees, and repayment terms of any equipment financing offer before accepting it.<\/div>\n\n\n<p><strong>How to Qualify<\/strong><\/p>\n\n\n\n<p>To qualify for equipment financing, businesses typically need good credit and a timely payment history. Some lenders will require a down payment.<\/p>\n\n\n\n<p>Some lenders may also consider the length of time the business has been in operation. A well-established business with a proven track record may be more likely to qualify for equipment financing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"Pros_and_Cons_of_Cash_Flow_Loans\">Pros and Cons of Cash Flow Loans<\/h2>\n\n\n\n<p>As with any type of business funding, there are pros and cons of business cash flow loans:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Pros_\">Pros: <\/h3>\n\n\n\n<ul>\n<li><strong>Quick Application:<\/strong> Fast and easy application process<\/li>\n\n\n\n<li><strong>No Collateral: <\/strong>No collateral of any kind needed to qualify<\/li>\n\n\n\n<li><strong>Save on Inventory: <\/strong>Cash flow loans can help you benefit from inventory discounts<\/li>\n\n\n\n<li><strong>Cover Slow Periods: <\/strong>Cash flow loans can provide relief for temporary slow periods<\/li>\n\n\n\n<li><strong>Emergency Funds: <\/strong>Emergency financial relief to speed up cash flow problems<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Cons\">Cons:<\/h3>\n\n\n\n<ul>\n<li><strong>High Interest Rates: <\/strong>Typically comes with higher interest rates<\/li>\n\n\n\n<li><strong>Risk of Debt: <\/strong>If not paid in time it can lead to high-interest debt<\/li>\n\n\n\n<li><strong>Frequent Payments: <\/strong>Shorter repayment periods and frequent payments<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p><br>Before committing to any cash flow loan for your business you should know exactly how you plan on using the funds and how you will pay it back.<\/p>\n<\/div><\/div>\n<\/div><\/div>\n\n\n\n<p>Especially for small businesses, there is no &#8216;one-size-fits-all approach and there may be room for more than one funding option. <\/p>\n\n\n\n<p>With proper research and professional advice, you can easily narrow down your best choices and find the perfect funding source for your business.<\/p>\n\n\n\n<p>Need capital to keep your business running smoothly? Compare and apply for the best cash flow loans instantly with <a href=\"https:\/\/financer.com\/results\/\" data-type=\"link\" data-id=\"https:\/\/financer.com\/results\/\">LoanFinder\u2122\ufe0f<\/a> to secure funding for your small business today! <\/p>\n","protected":false},"excerpt":{"rendered":"<p>A cash flow loan is a small business loan based on your company&#8217;s cash flow. Unlike traditional asset-based business loans,\u2026 <\/p>\n","protected":false},"author":11463,"featured_media":84232,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"disable_branded_featured_image":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ep_exclude_from_search":false,"footnotes":""},"categories":[1076],"tags":[],"_links":{"self":[{"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/posts\/20290"}],"collection":[{"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/users\/11463"}],"replies":[{"embeddable":true,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/comments?post=20290"}],"version-history":[{"count":49,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/posts\/20290\/revisions"}],"predecessor-version":[{"id":86880,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/posts\/20290\/revisions\/86880"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/media\/84232"}],"wp:attachment":[{"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/media?parent=20290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/categories?post=20290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financer.com\/wp-json\/wp\/v2\/tags?post=20290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}