Business Cash Flow Loans: How it Works and Best Options
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Business cash flow loans can help businesses cover all kinds of expenses, from buying inventory to fulfilling payroll. Whether needed for outstanding invoices or a temporary dip in revenue, this type of short-term funding can help plug the gap when a lack of capital would disrupt regular business operations. We’ll learn more about how this works below.
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Best business cash flow loans
Below are our picks for the best business cash flow loans:
| Lender | Best for | Maximum amount | Minimum credit score | Time to funding |
|---|---|---|---|---|
 | Lines of credit | $250,000 | 625 | 1 to 3 business days |
 | Term loans | $250,000 | 625 | Up to 3 business days |
 | Low-revenue businesses | $250,000 | 660 | 1 to 3 business days |
 | Startups | $1,500,000 | 500 | 24 to 72 hours |
 | Bad credit | $1,000,000 | 500 | 24 hours |
Learn more about how we chose our picks.
Bluevine: Best for lines of credit
| Term length | 6 or 12 months |
| Max. loan amount | $250,000 |
| Starting interest | Simple interest rates starting at 6.20% for a 26-week repayment term |
| Min. credit score | 625 |
| Min. time in business | 24 months |
Provides funds on an as-needed basis
Only charges interest on the amount borrowed
Requires $40,000 in monthly revenue
Charges a $15 fee for same-day funding
OnDeck: Best for term loans
| Term length | Up to 24 months |
| Max. loan amount | $250,000 |
| Starting interest | 35.40% APR |
| Min. credit score | 625 |
| Min. time in business | 1 year |
Repayment terms that range anywhere from 18 to 24 months
Can borrow anywhere from $5,000 to $250,000
Requires $100,000 in annual business revenue
Steep starting APR
American Express Business Line of Credit: Best for low-revenue businesses
| Term length | 6, 12 or 24 months |
| Max. loan amount | $250,000 |
| Starting interest | Loan fees are as follows:
|
| Min. credit score | 660 |
| Min. time in business | 12 months |
Low minimum revenue requirements
No prepayment penalties
Requires a higher credit score than other business cash flow loans
The longer the term, the higher the loan fees
Fora Financial: Best for startups
| Term length | Up to 15 months |
| Max. loan amount | $1,500,000 |
| Starting interest | Factor rates from 1.10 to 1.40 |
| Min. credit score | 500 |
| Min. time in business | 6 months |
Provides funding to relatively new businesses
Low credit score requirements
High monthly revenue requirements
Shorter repayment terms might be difficult for businesses with higher loan balances
Uplyft Capital: Best for bad credit
| Term length | Up to 12 months |
| Max. loan amount | $1,000,000 |
| Starting interest | 10.00% |
| Min. credit score | 500 |
| Min. time in business | 6 months |
High borrowing limits
Available to borrowers with less-than-perfect credit
Requires at least $12,000 in monthly deposits
Must provide last three months of bank statements or receivables
What is a cash flow loan?
Cash flow loans for business provide access to working capital. They can be a quick source of cash to help businesses cover all kinds of short-term financial needs. That can include expenses such as:
- Meeting payroll obligations
- Getting through seasonal lulls in revenue
- Purchasing discounted inventory
- Buying essential machinery or equipment
- Covering everyday operating expenses
These types of small business loans are ideal for businesses that don’t have the cash on hand to pay for upcoming expenses. That may be due to outstanding invoices that have yet to be paid or some other temporary revenue clog. In any case, business cash flow loans are meant to help businesses bridge the gap.
How do cash flow loans work
Lenders that provide business cash flow loans typically look at revenue to assess the business’ ability to repay the loan. Every lender’s small business loan requirements are different, so minimum revenue requirements vary. The borrower’s personal credit score will likely come into play as well.
Cash flow loans for business are designed to meet short-term financial needs, especially for businesses that are experiencing temporary interruptions in revenue. That may be the result of seasonal slowdowns, having money tied up in outstanding invoices or anything else that prevents expected revenue from coming in.
How to apply for cash flow loans
If a cash flow loan sounds right for your business, the next step is finding a lender and applying.
1. Determine your funding needs
Begin by evaluating why you need funding in the first place. Is it due to something you expect to pass relatively quickly, like a slow sales season? The idea is to determine if this is a short-term financial hiccup or a larger, long-term cash flow problem. If you do decide to move forward with a cash flow loan, determine how much funding you need.
2. Evaluate your borrowing eligibility
Once you’re clear on how much capital your business needs, look at whether or not you meet the general requirements for a cash flow loan. Eligibility requirements vary from lender to lender, but you’ll likely need to demonstrate steady monthly revenue. Time in business requirements and minimum credit scores also vary. With that said, business owners who have strong credit and have been operating for a while may have an advantage.
3. Compare lenders
The next step is to see which lenders can meet your needs — and then compare their business cash flow loans. Here are some things to consider:
- Interest rates
- Loan fees (e.g., origination fees, prepayment penalties, late payment fees)
- Repayment terms
- Monthly payments
- Funding times
- Credit score requirements
- Time in business requirements
- Minimum monthly revenue requirements
4. Apply
You can move forward with whichever lender best suits your needs. You can expect them to take a close look at your business revenue and expected performance. To that end, they may request bank statements, proof of receivables or other documentation.
Types of cash flow loans
Business cash flow loans come in all shapes and sizes, such as:
Term loans
Short-term business loans, which are largely provided by online lenders, can help business owners get through all sorts of cash flow issues — from weathering an emergency business expense to managing regular operational costs. Repayment periods typically last anywhere from three to 24 months, with payments made daily or weekly. Once approved, businesses can expect funding within a few days.
Lines of credit
Business lines of credit work a little differently than loans. Instead of receiving a lump sum of cash upfront, a credit line allows the business to withdraw funds on an as-needed basis. Businesses can use those funds for all kinds of expenses, including those related to short-term cash flow issues. The business owner can borrow up to their credit limit, and will only owe interest on the amount owed.
Invoice factoring
If your business has cash-flow issues because of unpaid invoices, invoice factoring could be a good way to access capital. Invoice factoring involves selling a batch of outstanding invoices to a factoring company in exchange for a cash advance. This amount is generally equal to 70% to 90% of the value of the invoices. Just keep in mind that your customers will be notified of the arrangement, which might suggest that your business is having money problems. Similarly, some customers may not be keen on making payments to a third party.
Merchant cash advance
A merchant cash advance enables a business to borrow against its future debit or credit card sales. The lender receives a percentage of those daily or weekly transactions in exchange for a lump sum of cash. They’ll continue taking their cut until the cash advance is repaid. That usually translates to 10% to 20% of daily credit card sales. This fee can be taken directly from sales or withdrawn from the business’s bank account. Additional rates and fees may apply.
Business bridge loans
Commercial bridge loans are a form of short-term funding commonly used to close on commercial real estate transactions, but also can be used to buy inventory or complete a business acquisition. Repayment terms are usually short, and interest rates may be higher when compared to other business loans. This type of cash flow loan typically requires collateral, usually in the form of real estate.
Pros and cons of cash flow loans
Here’s a quick overview of the pros and cons of cash flow loans:
| Pros | Cons |
|---|---|
Quick funding Available to relatively new businesses Borrowers with poor credit aren’t excluded | Typically requires a steady stream of monthly revenue Interest rates and fee structures can vary from lender to lender If the business doesn’t get to the source of its cash flow problems, these loans could create a repeating debt cycle |
Alternatives to cash flow loans
Business cash flow loans are a great option for short-term needs, but if you’re looking for more long-term funding to help your business scale or expand, consider these options:
SBA loans
Guaranteed by the U.S. Small Business Administration, SBA loans are known for their low interest rates and generous repayment terms. However, the eligibility requirements and application process are both more rigorous when compared to term loans from online lenders. It isn’t uncommon for it to take two months or longer. As such, SBA loans aren’t ideal for short-term capital needs. Established businesses with long-term needs are generally better suited.
Long-term loans
As the name implies, long-term business loans have long repayment terms; usually to the tune of 10 years or more. They also tend to offer higher loan amounts. That makes them especially appealing to small businesses that are looking to grow and expand. Eligibility requirements are typically more rigorous when compared to short-term cash flow loans.
Equipment loans
These loans are designed to help businesses purchase, replace or upgrade vital equipment. That can include everything from vehicles to technology to commercial-grade office equipment and more. The equipment that’s being financed serves as collateral, though some lenders may require a down payment. Repayment terms are fixed and generally last about five years. Every lender is different, but interest rates can be upwards of 28%. Equipment loans can make sense for businesses that need to purchase essential machinery.
Commercial real estate loans
Businesses that are looking to purchase land or a physical storefront might consider a commercial real estate loan. They can be used to finance new property, which includes new construction, or renovate existing property. It’s a commercial mortgage that’s ideal for creditworthy businesses that want a long repayment term. Traditional commercial real estate loans usually have interest rates that can start at 5% to 7%.
How we chose our picks
In order to appear on our list of best cash flow loans, lenders had to meet the following criteria:
- Minimum credit score of 640 or below
- Loan amounts of $150,000 or greater
- Funding timelines in 3 business days or less
- Transparent starting interest rates