Cash Flow Loans

by Gerri Detweiler

For this type of business financing, lenders provide you funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. Your credit scores will usually be checked, but they play less of a role. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is fast, but be aware: interest rates are higher than other forms of financing.

24/7 business and personal credit alerts

24/7 business and personal credit alerts

Nav is the ONLY source for both personal and business credit scores. Get alerts, advice and monitoring today.

Sign up for free

What You Need to Know About Cash Flow Loans

Pros: Cons:
Fast access to money (usually within a week) High interest rates (25% – 90%)
Poor credit scores may be OK Lender has direct access to bank account
Less effort and documentation needed May have pre-payment penalty
No physical collateral required Typically, must have 2 years in business
Can improve your credit scores


Best Uses for Cash Flow Loans:

  • Working capital
  • High ROI short-term opportunities
  • Purchasing highly-discounted inventory

Related: Best Business Loans — Expert Review

Nav’s verdict:

If you’re in need of short-term financing and your credit isn’t great, this route could make sense. It’s tough to fully endorse cash flow loans because of their high interest rates—but at least they’re typically less expensive than merchant cash advances. 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 payments. Your loan payments are directly withdrawn from your bank account, which means you must monitor balances to make sure you don’t overdraft.

Cash Flow Loan Offers


Intermediate-Term Loan by OnDeck

OnDeck offers business term loans up to $500,000 and business lines of credit up to $100,000 to Learn More

Line of Credit by Kabbage

Kabbage provides working capital to small businesses. They link to your bank or merchant accounts Learn More
View More Offers
You’re 3X more likely to get approved for a business credit card with MatchFactor.

You’re 3X more likely to get approved for a business credit card with MatchFactor.

Instantly see your top options for business loans and credit cards based on your business needs using Nav's MatchFactor.

Get matched

Rate This Article

This article currently has 8 ratings with an average of 5 stars.

About Author

Gerri Detweiler

Gerri Detweiler

Credit expert Gerri Detweiler is education director for Nav. She has more than three decades of experience in consumer credit education, has been interviewed in more than 3500 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.