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Cash Flow Loans

Got cash flow issues? Or maybe you have the opportunity to grow your business but you need cash to do it, and you don’t qualify for most financing options. Consider a cash flow loan or cash flow financing.
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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.

Are you looking for a term loan with monthly payments, or are you willing to allow payments to be taken out of your revenues each day or week? Do you want a lump sum, or would you rather have a line of credit that lets you take out funds only when you need them?

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

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?

And finally, what kind of business cash flow loan do you qualify for? Businesses that are younger than two years will have limited options. 


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 1-2 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 asap 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 are often quite flexible.

Personal and business credit checks may be used to rule out disqualifiers such as an open bankruptcy, undisclosed debt, or other problems such as tax liens or judgments. 

Check your personal and business credit before you apply. You can check both for free at Nav.com.

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 or Social Security Number if you operate as a sole proprietorship)
  • Business bank statements for past several months (or access to bank account)
  • Government-issued photo identification
  • Details about your business, including address, industry, and revenues

Typically cash flow loans are approved quickly — sometimes instantly — and you may get the funds deposited into your bank account the same day if you qualify. 

Best Uses for Cash Flow Loans

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 rises and falls with seasons. You might be flush during the winter holidays, but come summer, business may be slow. A cash flow loan can ensure you have the money to make it through to your busy season.

Also if you send clients invoices (and wait until they finally pay you) or 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 got 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.

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.

If that avenue isn’t an option, consider invoice factoring or even a business credit card

Both may help you quickly get the funds you need.

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.

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