Cash Flow Loans: What They Are and Best Options
Cash flow loans can be fast and easy to qualify for, but they tend to have higher interest rates than other business loans.
A cash flow loan allows a business to borrow against its future revenue to pay for operational expenses. In other words, lenders primarily evaluate the historical and projected performance of the business to determine whether to approve an application — instead of relying more heavily on the business owner’s credit history or available collateral.
This underwriting process makes cash flow loans available to a wide variety of small businesses, including startups and those facing credit challenges. Interest rates on these products are often higher than on traditional small-business loans
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Max loan amount
$1,500,000
Min. credit score
570
Min. annual revenue
$240,000
See Your Loan Options with Fundera by NerdWallet
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Fora Financial - Online term loan
Best for borrowers with bad credit
Max loan amount
$1,500,000
Min. credit score
570
Min. annual revenue
$240,000
with Fundera by NerdWallet
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Max loan amount
$500,000
Min. credit score
660
Min. annual revenue
$50,000
with Fundera by NerdWallet
Pros
- Can be used to build business credit.
- Long repayment terms available.
- No prepayment penalty.
Cons
- Charges an origination fee.
- Requires a UCC lien.
- Not available in Hawaii, Massachusetts, Michigan, North Dakota, New Jersey, Nevada, New York, Ohio, Pennsylvania or Tennessee.
Fundation - Term loan
Best for long-term loans
Max loan amount
$500,000
Min. credit score
660
Min. annual revenue
$50,000
with Fundera by NerdWallet
Pros
- Can be used to build business credit.
- Long repayment terms available.
- No prepayment penalty.
Cons
- Charges an origination fee.
- Requires a UCC lien.
- Not available in Hawaii, Massachusetts, Michigan, North Dakota, New Jersey, Nevada, New York, Ohio, Pennsylvania or Tennessee.
Max loan amount
$10,000
Min. credit score
300
Min. annual revenue
$18,000
with Fundera by NerdWallet
Pros
- No minimum credit score requirement.
- Same-day funding available.
- Specifically designed for freelancers and self-employed individuals.
Cons
- Funding maxes out at $10,000 ($20,000 for repeat customers).
- Factor rate and fee information not available on website.
- Charges an origination fee.
Giggle Finance - Merchant cash advance
Best for small loans
Max loan amount
$10,000
Min. credit score
300
Min. annual revenue
$18,000
with Fundera by NerdWallet
Pros
- No minimum credit score requirement.
- Same-day funding available.
- Specifically designed for freelancers and self-employed individuals.
Cons
- Funding maxes out at $10,000 ($20,000 for repeat customers).
- Factor rate and fee information not available on website.
- Charges an origination fee.
Max loan amount
$250,000
Min. credit score
625
Min. annual revenue
$120,000
with Fundera by NerdWallet
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared with traditional lenders.
Bluevine - Line of credit
Best for fast lines of credit
Max loan amount
$250,000
Min. credit score
625
Min. annual revenue
$120,000
with Fundera by NerdWallet
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared with traditional lenders.
Max loan amount
$250,000
Min. credit score
625
Min. annual revenue
$100,000
with Fundera by NerdWallet
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Charges origination fee.
OnDeck - Online term loan
Best for fast term loans
Max loan amount
$250,000
Min. credit score
625
Min. annual revenue
$100,000
with Fundera by NerdWallet
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Charges origination fee.
Max loan amount
$250,000
Min. credit score
600
Min. annual revenue
$30,000
with Fundera by NerdWallet
Pros
- Financing available within two business days after approval.
- Simple application with minimal documentation required.
- Low minimum credit score, time in business and annual revenue requirements.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- Weekly repayments required over a short term (maximum of 24 weeks).
Fundbox - Line of credit
Best for startups
Max loan amount
$250,000
Min. credit score
600
Min. annual revenue
$30,000
with Fundera by NerdWallet
Pros
- Financing available within two business days after approval.
- Simple application with minimal documentation required.
- Low minimum credit score, time in business and annual revenue requirements.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- Weekly repayments required over a short term (maximum of 24 weeks).
What is a cash flow loan?
Technically, any type of small-business loan that is used to meet cash flow
Cash flow loans can be used for a variety of purposes, such as:
- Buying inventory.
- Hiring staff.
- Making payroll.
- Covering day-to-day expenses (e.g., rent, insurance).
- Managing a seasonal slowdown or cash flow gap.
» Learn more about the different types of business loans
Here's a more detailed breakdown of cash flow loans:
- Where to get them: Cash flow loans are usually available from online or other
alternative lenders - How they’re structured: Some cash flow loans are structured like a standard term loan or line of credit, while others work like a merchant cash advance (MCA). With the latter, you receive an upfront sum of capital and repay it using a percentage of your debit and credit card sales, plus a fee.
- How they differ from other loans: In general, cash flow loans have shorter terms and higher interest rates than more conventional small-business loans, like bank or SBA loans.
- How lenders decide which loans to approve: Instead of relying on your credit score or
- Documents you may need to apply: Lenders may ask to see your bank statements, financial statements and merchant accounts, among other documents to evaluate your business’s historical and projected performance.
Struggling to qualify due to credit?
Explore additional loan options for borrowers with bad credit:
Cash flow loan vs. traditional small-business loan
| Cash flow loan | Traditional small-business loan | |
|---|---|---|
| Qualifications | Based on historical and projected performance, or cash flow, of your business. | Based on time in business, business and personal credit histories, revenue, collateral and |
| Collateral | Personal guarantee or UCC lien. | May also require physical collateral like cash deposits, vehicles or property. |
| Terms | Typically short term loans – between one and two years. | Between two to 10 years, or up to 25 years for certain SBA loans or commercial real estate loans. |
| Interest rates | Between 20% to 99%. | Depending on lender and collateral, between 4% and 99%. |
Pros and cons of cash flow loans
Pros
✅ Quick to fund.
✅ Streamlined applications.
✅ Flexible requirements.
✅ No physical collateral required.
Cons
❌ Can be expensive.
❌ Frequent repayments.
❌ Personal guarantee/business lien required.
Types of cash flow loans
Term loan
Term loans are the most common type of small business loan, and online lenders may offer term loans
Business line of credit
Lines of credit are revolving business loans, where you can borrow up to a certain amount and only pay interest on the amount borrowed. Once you repay the original amount back, you can borrow more money, up to your limit. Business lines of credit
Invoice financing
Merchant cash advance
Not technically a business loan, a merchant cash advance
How to get a cash flow loan
To get a cash flow loan, you can follow these basic steps.
Understand your financing needs
Determine what you’re going to use your loan for, how much capital you need and how quickly you need it. Also, think about which type of cash flow loan is the best fit for your needs. For example, if you think a revolving source of funding would be beneficial, maybe a business line of credit is the best option.
» MORE: Business loan vs. line of credit
Evaluate your business credentials
You’ll want to look closely at your historical revenue, projected revenue, cash flow and other financial data. Although your credit score may not be a top priority for cash flow lenders, you should also check your credit history to help you get a sense of what type of loans you can qualify for, and what loan amount and rate you might expect.
Research and compare lenders
Explore several online lenders to find the right option for your business. When comparing different options, consider factors such as interest rates, repayment terms, funding speed, application process, customer service and lender reputation.
» Estimate rates and payments with our free business loan calculator
Submit your application
Cash flow lenders typically offer simple, online applications that can be completed in a matter of minutes. You shouldn’t need extensive documentation, but you may be asked to provide:
- Personal and business tax returns.
- Personal and business bank statements.
- Business financial statements (e.g., profit and loss statement or a balance sheet).
You’ll also likely be required to sign a personal guarantee.
Review your loan agreement
Thoroughly review your loan agreement before signing and make sure the interest rates and repayment terms are laid out clearly. Instead of using an APR, some cash flow lenders may give simple interest rates or factor rates
If you have any questions or concerns about your business loan agreement
» Want to dive deeper? Read NerdWallet’s article on how to apply for a small-business loan
Former NerdWalle t writer Jackie Zimmermann contributed to this article.
Frequently Asked Questions
Interest rates on cash flow loans range anywhere from 20% to 99%. APRs on merchant cash advances can even reach triple digits. The interest rate you receive, however, will vary based on your lender and business’s qualifications.
Some of the most common types of cash flow loans include business lines of credit, short-term loans, invoice financing and merchant cash advances.
Cash flow loans are typically considered unsecured because you don’t need to provide physical collateral, like equipment or real estate, to get approved. Most cash flow lenders, however, will require you to sign a personal guarantee and/or take out a lien on your business assets.
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans editorial guidelines