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Cash Flow Loans: What They Are and Best Options

By Randa Kriss, Olivia Chen
Last updated on March 15, 2024
Edited byChristine Aebischer
Fact checked and reviewed

⏰ Estimated read time: 8 minutes

Cash flow loans can be fast and easy to qualify for, but they tend to have higher interest rates than other business loans.

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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, however.

How much do you need?

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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 loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

American Express® Business Line of Credit

5.0/5

Best for Cash flow lines of credit

$250,000660

OnDeck - Online term loan

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5.0/5

Best for Short-term cash flow loans

$250,000625

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Fundbox - Line of credit

5.0/5

Best for Cash flow loans for startups

$150,000600

Fora Financial - Online term loan

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4.5/5

Best for Cash flow loans for bad credit

$1,500,000500

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Bluevine - Line of credit

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5.0/5

Best for Fast cash flow loans

$250,000625

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Here are 5 cash flow loans

Best for Cash flow lines of credit

American Express Business Blueprint™

Max Amount

$250,000

Min. Credit Score

660

Best for Short-term cash flow loans

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Cash flow loans for startups

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Cash flow loans for bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

500

Best for Fast cash flow loans

Bluevine

Max Amount

$250,000

Min. Credit Score

625

I'M INTERESTED IN:

Our pick for

Cash flow lines of credit

American Express offers business lines of credit from $2,000 to $250,000 that can be used for working capital needs.

American Express® Business Line of Credit

Max Loan Amount
$250,000
Min. credit score
660
The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Max loan

$250,000

Min. Credit score

660

The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Our pick for

Short-term cash flow loans

OnDeck’s term loan is available in amounts up to $250,000 with repayment terms up to 24 months. It can be a good option for specific investments in your business.

OnDeck - Online term loan

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
35.40-99.90%
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

35.40-99.90%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

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Our pick for

Cash flow loans for startups

Fundbox offers lines of credit up to $150,000. You may be able to qualify with just six months in business.

Fundbox - Line of credit

Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
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

36.00-99.00%

Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.

Our pick for

Cash flow loans for bad credit

Fora Financial’s term loan can be used for a wide variety of purposes. You may be able to qualify with a minimum personal credit score of 500.

Fora Financial - Online term loan

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Max Loan Amount
$1,500,000
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

$1,500,000

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.

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Our pick for

Fast cash flow loans

Bluevine’s revolving line of credit is available up to $250,000 with repayment terms of six or 12 months. You can receive approval and get funding in as fast as 24 hours.

Bluevine - Line of credit

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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%

Bluevine's line of credit provides fast working capital for short-term borrowing needs.

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How Much Do You Need?

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What is a cash flow loan?

Technically, any type of small-business loan that is used to meet cash flow needs could be considered a cash flow loan; however, the term “cash flow loan” may more specifically refer to an unsecured loan that is 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.

How do cash flow loans work?

Cash flow loans are usually available from online or other alternative 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. 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.
In general, cash flow loans have shorter terms and higher interest rates than more conventional small-business loans, like bank or SBA loans.

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 debt service coverage ratio (DSCR).
Collateral
Personal guarantee or UCC lien.
May also require physical collateral like cash deposits, vehicles or property.
Terms
Typically short term loans – between one year and 18 months.
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. 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 eligibility 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.

Cons

  • 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 — annual percentage rates can range anywhere from 20% to 99%. 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 took out 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 an existing one 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 Uniform Commercial Code lien on your business assets. This document allows a lender to use your business assets to recoup its losses in the case of default.

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.

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.

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, 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 business loan 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.
» Estimate rates and payments with our business loan calculator

Find the right business loan

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.
Former NerdWallet writer Jackie Zimmermann contributed to this article.
Last updated on March 15, 2024

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 and 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 and our editorial guidelines.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

Learn more

Frequently Asked Questions

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