If you need an influx of cash to help you manage a disruption such as bumpy seasonal sales or if you want to take advantage of an inventory discount, you might need a short-term funding fix to get you through.
On the flip side, if you have a strong, steady flow of cash and want to borrow money to go after a business opportunity or open a second location, you may qualify for a business loan with a cheaper interest rate and longer term than short-term financing.
We’ve outlined some online loan options for filling a cash flow gap or finding financing based on your cash flow — and ways to figure out which type of cash flow loan is best for you and your business.
In this article
Cash flow loans: What to consider
Would a cash flow loan help you take advantage of inventory discounts? Imagine you have an opportunity to buy bulk inventory at a discount. A cash flow loan could help if you don’t have the money right now to make the purchase.
Would financing help you say yes to a job? Say you own a restaurant and are asked to cater a big event. To jump on the opportunity, you need to hire a few more servers, but you don’t have the cash. A line of credit or short-term loan could let you say yes.
Are you entering a slow period? Another example: You own an ice cream shop and winters are slow. Ideally, you’d budget for this by saving more in the summer, but a cash flow loan could get you through in a pinch.
Do you have a lot of outstanding invoices? Many small businesses experience uneven cash flow because their customers pay invoices weeks or months after receiving their product or service. If you’re in this situation, a short-term small-business loan could bridge the gap, but consider invoice financing instead.
Are you struggling to stay afloat? Using a small-business loan to keep the lights on or finance other basic business needs could cause you to spiral into debt. Instead, talk with a business consultant, like those available at your local Small Business Development Center, and get to the root of your business’s financial problems.
Short-term business loans for cash flow gaps
Even if your company is flourishing, a cash flow hiccup can have a big impact on your ability to run it effectively.
Online lenders offer an alternative to traditional bank loans, which are hard to qualify for if your business is fairly new or you have poor credit. But online lenders’ short-term cash flow loans — which typically have repayment terms between three and 36 months — have higher borrowing costs, so they’re best used to finance projects that help your business grow.
Another option is a business credit card, which can help you manage cash flow gaps while also gaining access to rewards, like cash back. Unlike qualifying for a business loan, you typically can qualify for a business credit card with strong personal credit and get competitive interest rates. However, you may need to sign a personal guarantee, which means you’ll be liable for the business’ debt if you miss payments.
If you need fast cash: Kabbage’s policy of looking beyond credit score in the underwriting process may help you secure financing, though your annual percentage rate may be close to triple digits.
OnDeck offers an easy application process for its term loans and lines of credit. You need a personal credit score of at least 500 to qualify for term loans and 600 for lines of credit. Most OnDeck borrowers have a score of 660 or higher.
- Loan amount: $2,000 to $250,000.
- APR: 24% to 99%.
- Loan term: 6 or 12 months.
- Funding time: A few minutes to several days.
- Read our Kabbage review.
- Loan amount: $5,000 to $500,000 for term loans; up to $100,000 for lines of credit.
- APR: 16.7% to 99.4% for term loans; 11% to 60.8% for lines of credit, as of Q1 2018
- Loan term: Term loans repaid daily or weekly for 3 to 36 months; lines of credit are repaid weekly up to 6 months.
- Funding time: Fast as 24 hours but typically a few days.
- Read our OnDeck review.
*APRs change quarterly
You can also access a six-month line of credit up to $150,000 with BlueVine if you have a credit score of at least 600. With APRs from 16% to 62%, rates are slightly more competitive than Kabbage or OnDeck. BlueVine also offers a 12-month line of credit for businesses with a credit score of at least 650 and $500,000 in revenue.
Line of Credit
- Loan amount: $5,000 to $250,000.
- APR: 15% to 78%.
- Loan term: Repaid over 6 or 12 months.
- Funding time: As fast as 24 hours.
- Read our BlueVine review.
Loans for businesses with strong cash flow
So you have strong cash flow (congrats!) but you’re still looking for a loan? Because many lenders view strong cash flow as an indicator of a strong business, you may qualify for loans with low rates.
For Small Business Administration loans: If your credit and cash flow are strong, turn to SmartBiz for access to loans with APRs of 8.53% to 9.83%, roughly on par with traditional banks and the lowest in the alternative lending space.
SBA 7(a) Loan
- Loan amount: $30,000 to $350,000
- APR: 8.53% to 9.83%
- Loan term: 10 years
- Funding time: As quickly as seven days but typically several weeks
- Read our SmartBiz review
For fast financing: SmartBiz loans can take weeks to fund, so if you need faster financing, check out StreetShares, which can get you funding in one to five days. However, financing is capped at 20% of your annual revenue.
- Loan amount: $2,000 to $250,000 for term loans; $5,000 to $250,000 for standard line of credit; Up to $2 million for invoice factoring and government contract financing
- APR: 9% to 40%; 1% to 5.5% for select products
- Loan term: 3 to 36 months
- Funding time: 1 to 5 days
- Read our StreetShares review
For faster financing and high loan amounts: Credibility Capital offers faster financing than SmartBiz, but a larger loan amount than StreetShares. Loans max out at $350,000, making it a better choice if you have strong cash flow and are looking to tackle a big project.
- Loan amount: $10,000 to $350,000
- APR: 10% to 25%
- Loan term: 1, 2 or 3 years
- Funding time: 7 days on average
- Read our Credibility Capital review
Cash flow loans: Compare all your options
Find and compare small-business loans
NerdWallet has come up with a comparison tool for the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and filtered them by categories that include your revenue and how long you’ve been in business.