A cash flow loan allows you to borrow against your future revenue. In other words, lenders primarily evaluate the historical and projected performance of your business to determine whether to approve your application — instead of relying more heavily on your credit history or available collateral.
This underwriting process makes cash flow loans available to a wide variety of small businesses, including startups and those with bad credit. Interest rates on these products are often higher than on traditional small-business loans, however.
Below, learn more about how cash flow loans work and compare some of the best options from online lenders.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 5 cash flow loan options
Lender | NerdWallet Rating | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
American Express Business Blueprint™ - Line of credit on American Express Business Blueprint™'s website | 4.5/5 Best for Cash flow lines of credit | $250,000 | 640 | on American Express Business Blueprint™'s website |
OnDeck - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Short-term cash flow loans | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Cash flow loans for startups | $150,000 | 600 | with Fundera by NerdWallet |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Cash flow loans for bad credit | $1,400,000 | 500 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Fast cash flow loans | $250,000 | 625 | with Fundera by NerdWallet |
Here are 5 cash flow loan options
Best for Cash flow lines of credit
Best for Short-term cash flow loans
Best for Cash flow loans for startups
Best for Cash flow loans for bad credit
Best for Fast cash flow loans
Our pick for
Cash flow lines of credit
American Express Business Blueprint™ - Line of credit
Max Loan Amount
$250,000
Min. credit score
640
American Express Business Blueprint™ loans are a good option for business owners with fair credit who want access to working capital.
Max loan
$250,000
Min. Credit score
640
Our pick for
Short-term cash flow loans
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
29.90-97.30%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
29.90-97.30%
Our pick for
Cash flow loans for startups
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Max loan
$150,000
Min. Credit score
600
Apr range
10.10-79.80%
Our pick for
Cash flow loans for bad credit
Fora Financial - Online term loan
Max Loan Amount
$1,400,000
Min. credit score
500
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Max loan
$1,400,000
Min. Credit score
500
Our pick for
Fast cash flow loans
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
20.00-50.00%
How Much Do You Need?
Any type of small-business loan that is used to meet cash flow needs could be considered a “cash flow loan.” Typically, however, the term cash flow loan refers to unsecured loans that are issued based on the projected revenue of your business.
Cash flow loans can finance a variety of purposes, such as:
- Purchasing inventory.
- Hiring staff.
- Making payroll.
- Covering day-to-day expenses (e.g., rent, insurance).
- Managing a seasonal slowdown or cash flow gap.
Cash flow loans are usually available from online lenders. Instead of relying on your credit score or available collateral, these lenders prioritize your business revenue when underwriting your loan application.
Cash flow lenders may ask to see your bank statements, financial statements and merchant accounts, among other documentation to evaluate your business’s historical and projected performance. Although the lender may check your credit history and ask how long you’ve been in business, these factors tend to weigh less heavily on the decision-making process.
If you’re approved, the lender will also use its evaluation of your finances to set your interest rate and repayment terms.
Some cash flow loans will be structured like a standard term loan or line of credit, while others will work like a merchant cash advance. In this case, you receive an upfront sum of capital and repay it using a percentage of your debit and credit card sales, plus a fee.
In general, cash flow loans have shorter terms and higher interest rates than more conventional small-business loans, like bank or SBA loans.
- Quick to fund. If you need a fast business loan, some cash flow lenders can approve and fund applications in just 24 hours. And while bank and SBA lenders may take weeks or even months to issue financing, most cash flow loans are available within a few business days.
- Streamlined applications. Cash flow loans are usually issued by online lenders, who typically offer a streamlined application process. You can often complete and submit a simple application with minimal documentation required. Plus, cash flow lenders may leverage technology to underwrite your application — asking you to connect your financial accounts to their online platform — instead of having you submit documents for them to review manually.
- Flexible requirements. Cash flow lenders prioritize your historical and projected revenue when evaluating your application — meaning they’re generally more flexible when it comes to traditional business loan requirements. Although requirements vary by lender, startups and/or businesses with bad credit may be able to qualify.
- No physical collateral required. You don’t need to put up physical collateral, like equipment or real estate, to secure a cash flow loan. Asset-based lenders, on the other hand, will require collateral to back your financing.
- Can be expensive. Because of their unique underwriting process and lack of collateral, cash flow loans are considered riskier than traditional business loans. To offset this risk, lenders typically charge higher interest rates and fees — ranging anywhere from 10% to 99% APR. Interest rates can even reach triple digits with products like merchant cash advances.
- Frequent repayments. Cash flow loans tend to have short terms and frequent repayments, daily or weekly, instead of monthly. This payment schedule can impact your cash flow and be difficult to manage, particularly if you’re a seasonal business or otherwise took the loan to fill a cash flow gap. The frequent payments combined with high interest rates can trap you into a cycle of debt that’s hard to break out of, especially if you need to take another loan or refinance to repay.
- Personal guarantee/business lien required. Although you won’t need to secure your cash flow loan with physical collateral, most lenders will require you to sign a personal guarantee. This agreement states that you’ll pay back your loan with your personal assets if your business defaults. Some lenders may also take out a lien on your business assets. This document allows a lender to use your business assets to recoup its losses in the case of default.
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.
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.
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.
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 annual percentage rate, some cash flow lenders may give simple interest rates or factor rates, so you’ll want to try and calculate these rates into an APR to get a better understanding of how much your loan costs.
If you have any questions or concerns about your agreement, reach out to your lender for clarification. If a lender won’t provide rates and terms upfront or seems hesitant to provide straightforward answers to your questions, these could be red flags of a predatory company. In this case, you might consider looking for a loan elsewhere.
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on September 26, 2022