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, however.
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Cash Flow Loans: What They Are and Best Options From Our Partners

Loan NerdWallet rating Best For Max loan amount Min. credit score Next steps
Fora Financial - Online term loan

Fora Financial - Online term loan

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Best for borrowers with bad credit

$1,500,000

570

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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.
Fundation - Term loan

Fundation - Term loan

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Best for long-term loans

$500,000

660

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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.
Giggle Finance - Merchant cash advance

Giggle Finance - Merchant cash advance

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Best for small loans

$10,000

300

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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.
Bluevine - Line of credit

Bluevine - Line of credit

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Best for fast lines of credit

$250,000

625

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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.
OnDeck - Online term loan

OnDeck - Online term loan

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Best for fast term loans

$250,000

625

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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.
American Express® Business Line of Credit*

American Express® Business Line of Credit*

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Best for low-cost options

$250,000

660

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Pros

  • Streamlined application process with minimal paperwork.
  • Financing from $2,000 to $250,000 available.
  • Accepts borrowers with a minimum FICO score of at least 660 at the time of application.
  • Monthly repayment schedule (as opposed to daily or weekly).
  • No prepayment penalties, account maintenance fees or draw fees.

Cons

  • Must have online checking or PayPal account to verify cash flow.
  • Complex monthly fee structure makes it difficult to compare costs to other lenders.
Fundbox - Line of credit

Fundbox - Line of credit

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Best for startups

$150,000

600

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Pros

  • Financing available within one business day 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).
Loan NerdWallet rating Best For Max loan amount Min. credit score Next steps
Fora Financial - Online term loan

Fora Financial - Online term loan

with Fundera by NerdWallet

Best for borrowers with bad credit

$1,500,000

570

with Fundera by NerdWallet

Fundation - Term loan

Fundation - Term loan

with Fundera by NerdWallet

Best for long-term loans

$500,000

660

with Fundera by NerdWallet

Giggle Finance - Merchant cash advance

Giggle Finance - Merchant cash advance

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Best for small loans

$10,000

300

with Fundera by NerdWallet

Bluevine - Line of credit

Bluevine - Line of credit

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Best for fast lines of credit

$250,000

625

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OnDeck - Online term loan

OnDeck - Online term loan

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Best for fast term loans

$250,000

625

with Fundera by NerdWallet

American Express® Business Line of Credit*

American Express® Business Line of Credit*

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Best for low-cost options

$250,000

660

with Fundera by NerdWallet

Fundbox - Line of credit

Fundbox - Line of credit

with Fundera by NerdWallet

Best for startups

$150,000

600

with Fundera by NerdWallet

Cash Flow Loans: What They Are and Best Options From Our Partners

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

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

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

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

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

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

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

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

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

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

American Express® Business Line of Credit*

Best for low-cost options

Max loan amount
$250,000

Min. credit score
660

Min. annual revenue
$36,000

with Fundera by NerdWallet

American Express® Business Line of Credit*

Best for low-cost options

Max loan amount
$250,000

Min. credit score
660

Min. annual revenue
$36,000

with Fundera by NerdWallet

Fundbox - Line of credit

Best for startups

Max loan amount
$150,000

Min. credit score
600

Min. annual revenue
$30,000

with Fundera by NerdWallet

Fundbox - Line of credit

Best for startups

Max loan amount
$150,000

Min. credit score
600

Min. annual revenue
$30,000

with Fundera by NerdWallet

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 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 available collateral, lenders prioritize your business revenue when underwriting your loan application. 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.
  • 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 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 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

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.
Cash flow loans are usually issued by online lenders, which 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.
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.
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

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 MCAs.
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.
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.

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 based on future cash flow instead of more traditional loan requirements. Term loans — even those from online lenders — may have lower rates and fees than other types of alternative financing like invoice financing or MCAs.

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 can be expensive, but work well for businesses that have frequent gaps in cash flow due to customer payments or seasonality.

Invoice financing

Invoice financing is a type of business loan that functions similar to a cash advance — where you use unpaid customer invoices as collateral for a lump sum from a third-party invoice financing company. These cash flow loans work best for B2B businesses, especially those that operate seasonally.

Merchant cash advance

Not technically a business loan, a merchant cash advance is an alternative form of business financing that involves a company providing a cash advance by essentially purchasing your future sales. MCAs are one of the most expensive forms of business financing, and are generally best as a last resort.

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.
» 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, 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.
» 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.
Last updated on March 10, 2025