Cash Flow Loans.


Cash Flow Loans.

Cash Flow Loans


Cash flow loans are typically used by companies to fund growth either organically or through acquisition. Cash flow loans differ from asset based lending in that they are based more on the borrowers ability to repay the loan through its cash flow versus the underlying value of the assets. Cash flow loans are generally based on the company's EBITDA and will have several loan covenants including debt service coverage ratio (DSCR). These types of business lines of credit are typically in the form of a term loan or line of credit and do not require the submission of a borrowing base certificate.

Like asset based lending, cash flow loans or business lines of credit are senior secured. This means that the lender takes a priority security interest in the assets of the company. Even though the funding is not based directly on the assets of the company, the lender still takes the security interest in order to protect itself in the event of default. In some cases, a cash flow loan can be a mezzanine loan or subordinated debt facility. In this instance the lender has a second charge on the assets and has an inter-creditor agreement in place with the senior secured lender which dictates the terms of the collateral and the mechanics in the event of default.

Cash flow loans are priced very inexpensively, however, are much harder to qualify for. Qualified borrowers will need to be prepared that closing can take some time, even months. These types of businesses lines of credit require that the business has been profitable for at least three years, has enough cash on hand to cover debt payments for over a year and has owners with good personal credit. Lenders may also include other loan covenants which would preclude the owners of the business taking any distributions without the consent of the bank.

While the parameters for working capital loans are more stringent, the cash is made available without onerous reporting or paperwork after the facility is established. Cash flow loans are great for companies that have a history of positive profits and cash flow as well as owners with good personal credit history.


Call us now at 855-424-2958 and get on the road to success! Or fax us at (855) 450-0885‚Äč.

Customized Financing Options


Asset Based Lending

Revolving lines of credit up to $20,000,000


Accounts Receivable Factoring

No minimums, up to $20,000,000


PO Financing

Secondary lines of credit for ABL or Factoring


Term Loans

Equipment & inventory facilities


Payroll Funding

Great for staffing & temp agencies

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