Definition
Cash flow lending is business finance assessed mainly on the money flowing through a business's bank accounts, such as turnover, consistency of deposits and existing commitments, rather than on property or asset security. It is common for unsecured term loans and lines of credit, often with fast decisions using secure bank data. It usually costs more than secured lending.
Cash flow lending flips the traditional approach. Instead of asking what assets stand behind a loan, the lender asks how reliably money moves through the business.
How it is assessed
Expect the lender to look over recent months of account history, frequently pulled in via a read-only bank feed you approve. They look at average deposits, how steady they are, how often the account is overdrawn, dishonoured payments and repayments to other lenders. See how lenders assess bank statements for the patterns credit teams notice.
Who it suits
Trading businesses with steady deposits that need funds quickly, or that do not want to use property, often fit well. Businesses with lumpy income or several existing short-term loans may find limits smaller.
Cost and structure
Without security, pricing is usually higher and terms shorter. To see what your cash flow could support, make one enquiry.
Common questions
What loan sizes are typical?
It depends on turnover, consistency and existing debts. For trading businesses, unsecured amounts of this kind generally sit between $5,000 and $500,000.
Will the lender want full accounts?
Often not for smaller amounts. Many cash flow lenders rely on bank statements, with financials requested for larger loans.
Sources and further reading