Cash Flow Loans

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Get to know cash flow loans

Cash flow loan details

Cash Flow Loans Pros and Cons

Pros of cash flow loans

When it comes to business financing options, few will put cash in your bank account quite as quickly as cash flow loans of financing. And if you don’t have collateral or assets to pledge for a secured loan, you’ll appreciate the fact that aren’t likely needed for this type of small business financing.

While some cash flow lenders may look at your personal credit scores or business credit reports, generally credit is more flexible than with other loan options. With this type of financing, you mainly have to prove strong revenues that assure a lender that you can easily manage repayment. 

Cons of cash flow loans

On the other hand, these short-term business loans can be one of the more expensive types of lending options for businesses. It’s not alway easy to compare what you’ll pay in interest and fees, and you can end up paying the equivalent of 11-90% annual percentage rate (APR).

Small business owners may not like the fact that some cash flow loans for small business take payments directly out of their bank, merchant processing, or online seller account to pay back the financing. Those payments can affect future cash flow

Thinking of paying off your loan or financing early? You might not save money as you would if you paid other types of loans off faster. Be sure to check the fine print to see if that’s the case.

And finally, if you haven’t been in business six months or more, you might not qualify.

What Are the Types of Cash Flow Loans?

There are several types of cash flow loans; after all, any type of financing that is used for cash flow purposes can be considered a cash flow loan. This term describes the way funds will be used, rather than a specific type of financing. 

The most common types of small business cash flow loans or financing are:

• Merchant cash advances and business cash advances
• Business lines of credit
• Invoice factoring and invoice financing

With a merchant cash advance (MCA) or business cash advance (BCA), a financing company evaluates the previous sales of the company to determine how much to advance the business; typically 60—100% of the average monthly sales for the past three to six months.  

These companies may use business bank account statements to verify revenue, while others look at credit and debit card sales. The business gets an advance against expected future sales by giving the lender the rights to a predetermined amount of these receivables. 

With a business line of credit, the business is approved to borrow up to a specific credit limit. When funds are repaid the business can borrow again. 

With invoice financing and factoring, the factor (or company offering business funding) will offer immediate payment against outstanding invoices.

Short-Term Cash Flow Loans

Cash flow loans are short-term loans used primarily for working capital (day-to-day expenses like inventory or labor), or to take advantage of opportunities that require additional capital to launch. 

The borrower’s personal credit history and/or business credit scores may be checked, but may play less of a role than factors like revenues and how long the business has been doing business. 

As the name indicates, when it comes to underwriting, lenders are often most interested in business cash flow when evaluating applications. It is common for some lenders to have minimum annual revenue requirements, and to require business bank statements or other forms of documentation. 

Interest rates/costs may be higher than other forms of financing but can vary depending on business qualifications.

Still, even with higher interest rates, business owners may find cash flow loans beneficial, especially if they’re looking for fast funding and don’t qualify for better deals on a traditional bank loan.

How Does a Cash Flow Loan Work?

Business cash flow loans, frequently offered by online lenders, provide small business owners with access to working capital, often by analyzing past revenues to predict future cash flow.

The business owner usually applies online, and provides documentation including business bank account statements (or by linking to that account), as well as information about time in business, ownership, etc. 

Where asset-based lending requires business assets as collateral, here, the business owner may be required to pledge future accounts receivables, depending on the type of cash flow loan..

Funding is often quick, with turn around times ranging from same day to a few business days.

What Is Asset-Based Business Lending?

Loans and financing typically fall into one of two categories:

• Secured
• Unsecured

Secured loans, also known as asset-based loans, require collateral (asset) to secure the loan. That could be real estate or equipment, for example. The lender has the right to seize the asset if the loan is not repaid.

Typically secured loans are for people who don’t have great credit or who don’t otherwise qualify for unsecured loans. But they can also be used to obtain better rates and terms on a loan. 

Unsecured loans do not require collateral, though some may require a personal guarantee (PG) which allows the lender to attempt to collect from the borrower’s personal assets, not just the business, in event the loan is not repaid.

Fast Cash Flow Loans

Here’s the main thing you need to understand about this type of financing: there is a tradeoff between speed, ease of funding and cost. 

Business owners who can’t get a traditional bank loan may qualify for this type of financing, or who don’t have time for the longer bank loan application process, may find this type of financing fast and easy. 

However, when it comes to financing options for your business, cash flow loans generally aren’t the cheapest type of financing. 

You will likely pay a much higher cost for access to these funds, and the cost isn’t always stated as an interest rate or APR. In some cases, it may be better to wait until you build your credit and can qualify for a better rate elsewhere.

There are, however, some instances where they make sense; for example, if your credit is less than perfect, or you need a fast cash flow finance option.

Which Cash Flow Loan Is Right For My Business?

There’s no one-size-fits-all solution when it comes to cash flow loans. The one you choose needs to be right for your business needs. Consider the following:

Repayment terms: Are you looking for a term loan with monthly payments, or are you willing to allow payments to be taken out of your account each day or week? Do you want a lump sum, or would you rather have a credit line that lets you borrow funds only when you need them? Repayment periods can vary significantly depending on the type and source of funding. 

Cost: How much will it cost to repay the financing? Are there origination fees or other costs charged upfront, or is interest charged only when you borrow? Is there a prepayment penalty if you want to pay back the financing faster? 

Loan amount: How much money do you need? It can help to analyze your cash flow to understand your regular expenses, as well as to budget for anything unusual coming up, such as hiring more staff or expanding office space.

Speed: How quickly do you need financing? Are you willing to pay a premium to get the money faster, or can you afford to wait a few weeks or months, opening you up to lower interest rates?

Qualifications: And finally, what kind of business cash flow loan do you qualify for? New businesses or businesses with declining revenues will have fewer options.

The Best Lenders for Cash Flow Loans in 2025

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Short-Term Loan by Kapitus

Kapitus offers short term loans up to $5,000,000 in as little as 24 hours. The process is quick and easy with limited documentation and offers the best prepayment discounts in the industry.

Pros

• Repayment options ranging 6-18 months with fixed rates options
• Competitive discounts for those who payoff early
• Extremely competitive product for higher revenue businesses - retains a higher average funding amount
• Your offers can improve as repayment history continues

Cons

• Longer industry restriction list
• Comes with a wide range of rates and terms.

Funding Amount

$5,000 - $5,000,000

Cost

1%-1.25% per month

Repayment Terms

Daily or weekly payments for 6 to 18 months

Funding Speed

1- 2 days ($200,000 or less can be wired same day)

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Flex Line by Revenued

Revenued utilizes revenue-based financing to provide working capital to businesses based on their revenue, not traditional factors like an owner’s personal credit score. Since launching, they’ve provided over $1 billion in funding to 30,000 + small businesses. Expand your access to working capital while only paying for what you use with the Revenued Flex Line. Bonus: When you click 'Apply now," we'll securely pass over your info, making applying with Revenued a breeze. Only answer a few additional questions on their end and you're good to go.

Pros

• No minimum credit score to apply. Approvals up to $500,000. 24/7 access to funds online and only pay for what you use. No application fee, no draw fee, no annual fee.

Cons

• At least $20k in monthly deposits is required for best offer. Not available for Sole Proprietorships.

Funding Amount

$5,000 - $500,000

Cost

Factor Rates: 1.07 - 1.49

Repayment Terms

6-12 months

Funding Speed

Within 24 hours

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Line of Credit by Fundbox

Nav recommends this product as a great solution for newer small businesses looking for a fast application process and access to a flexible LOC product. Bonus: When you click 'Apply now," we'll securely pass over your info, making applying with Fundbox a breeze. Only answer a few additional questions on their end and you're good to go.

Pros

• 625 minimum personal credit score
• No impact to credit score to apply (soft pull only)
• No draw fees
• Fast approval and funding, with funds available as soon as the next business day
• Use as much as you need, only pay interest on what you use
• Fundbox reports payment activity to all the major commercial credit bureaus via the Small Business Financial Exchange (SBFE), which can help strengthen a business's credit profile.

Cons

• Must have a business checking account with a minimum balance of $500
• May require large weekly payments (0.4% - 0.7% of the original draw amount per week) due to the short repayment duration.

Funding Amount

$1,000 - $150,000

Cost

As low as 4.99%*

Repayment Terms

12 or 24 weeks

Funding Speed

If approved, funds arrive as soon as the next business day.

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Short-Term Loan by Credibly

As quickly as 4 hours

Pros

• Set payments
• Pre-qualification, which means you can pre-qualify without hurting your credit
• With strong cashflow health, low personal credit scores still have great options here

Cons

• Must have at least $15,000 a month in deposits
• Repayment terms maybe shorter for some users

Funding Amount

$5,000 - $600,000

Cost

As low as a 1.11 FR

Repayment Terms

Daily & Weekly automatic debits; 6 to 15 month repayment terms

Funding Speed

As quickly as 4 hours

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Business Cash Advance by Rapid Finance

A viable option for businesses looking for growth capital up to $600,000. Costs will vary based on your risk profile. This is a good product to get your foot in the door with a lender, with growth opportunities with Rapid Finance’s other products

Pros

• Application is quick and easy
• Receive funds within hours of approval
• No business lien placed
• No application fee
• Can get approved for both a line of credit and term loan and accept both at the same time
• Flexible repayment options.

Cons

• Loan amounts are based on monthly revenue.

Funding Amount

$5,000-$600,000

Cost

1.20 Average Factor Rate

Repayment Terms

4 - 12 months

Funding Speed

1-3 days

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What Are the Requirements to Qualify for a Business Cash Flow Loan?

When it comes to working capital loans for cash flow, each company has different requirements. 

Most require at least one to two years in business though a few will provide financing to younger businesses with strong revenues.

Many will require a business bank account to qualify. If you are using a personal bank account, open a business bank account right away and use it going forward. 

If there is a personal credit check it may be a “soft inquiry,” which doesn’t impact your credit scores. Minimum credit score requirements may be flexible, and some companies don’t require minimum credit scores.

Personal and business credit checks may be used to rule out financing to those with certain types of negative information, such as an open bankruptcy, undisclosed debt, or other problems such as tax liens or judgments. 

Can You Get A Cash Flow Loan With Bad Credit?

One of the biggest benefits of cash flow loans is that you may qualify if you have creditworthiness issues, including bad credit.

Maybe you have credit card debt, or maybe your business is too new to have much credit history. Whatever the reason, you don’t want your credit situation to limit you from being able to access the capital you need to grow your business.

In this case, a cash flow loan may be a way to get the funds you need.

How To Apply for a Cash Flow Loan

While each cash flow lender may have a slightly different process for applying for a loan, you generally can expect to be asked for the following information:

• Your business tax ID / employer identification number, if available
• Social Security Number to verify the applicant’s identity and/or run a credit check
• Government-issued photo identification
• Details about your business, including address, industry, and revenues

When Is a Cash Flow Loan Useful?

If you’re wondering how you might use cash flow lending options to grow your company, you can do far more than just pay your business expenses with the funds. You can use your loan for:

• Covering a cash flow gap
• Taking advantage of opportunities for increasing revenues
• Purchasing highly-discounted inventory

Covering a cash flow gap

For many companies, cash flow management is a constant challenge. Cash flow rises and falls with seasons, or as clients purchase more or less of the businesses’ products or services. You might be flush during the winter holidays, but come summer, business may be slow. A cash flow loan is often used to help ensure the business has the money it needs to make it through to the busy season.

If you invoice clients and wait 30—60 days or longer for payment, or if you tie up cash in inventory, you may not have the capital you need for your day-to-day expenses. Borrowing money can ensure that you can pay your employees and bills without worrying about a cash crunch.

Opportunities for revenue

What would you do if the opportunity to buy deeply discounted equipment came up? Or a big job that requires an initial outlay of cash before you get paid? 

Having access to capital allows you to take advantage of opportunities like this. Otherwise, you might miss out on a lucrative deal.

Highly-discounted inventory

Typically, vendors are willing to discount your per-item cost for inventory if you place larger orders. But larger orders require more money. A cash flow loan allows you to save on bulk orders, which ultimately will increase profit margins for businesses like yours.

Cash Flow Loans for Startups

It will be hard for brand new businesses to get this type of financing because the business doesn’t have revenues to qualify. Instead, a new business may want to consider other types of startup loans and funding such as: 

• Business credit cards (including 0% APR offers)
• Crowdfunding
• SBA loans
• Friends and family

Alternative Options to Cash Flow Loans

Cash flow loans aren’t your only option when it comes to finding financing. If you have decent credit, look at small business loans, including SBA loans offered by banks and other lenders. You can often get a great rate and favorable terms if you qualify.

A business credit card with a 0% intro APR may also help provide the short-term financing your business needs.

Nav’s Verdict: Cash Flow Loans

If you’re in need of short-term financing and your credit isn’t great, the cash flow lending route could make sense. It’s tough to fully endorse short-term business financing like merchant cash advances because of their high interest rates — but every type of financing plays an essential role for some businesses. 

Before jumping into this option, you should have a clear idea of how you plan on using the funds, and confidence that your future sales will cover the loan payments. Payments are typically directly withdrawn from your bank account, which means you must monitor balances to make sure you don’t overdraft.

As a financing tool, cash flow loans used correctly can provide much-needed working capital to create positive cash flow and invest in the future of your business.

Related Resources

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• Cash Flow Loans
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• Retail Business Loans
• Restaurant Loans & Financing Options
• SBA 7(a) Loans
• SBA Express Loans
• Business Credit Cards
• Equity Crowdfunding
• Reward-Based Crowdfunding
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• Invoice Financing
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• Commercial Real Estate Loans
• SBA Microloans
• SBA 504 Loans
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