Cash flow loans for small business

Cash flow problems are one of the most common challenges faced by small businesses. When customers don’t pay invoices on time, it can put a real strain on a company’s finances.

A cash flow loan can provide the funds necessary to cover short-term expenses and keep the business afloat until customers pay their bills. The loan is typically repaid within a few months, making it an ideal solution for businesses that are experiencing temporary cash flow issues.

Best of all, cash flow loans are available from a number of lenders, so it’s easy to find one that suits your needs. Whether you’re struggling to make ends meet or simply need some extra working capital, a cash flow loan could be the solution you’re looking for.

Either way, you need money to ensure you can meet your payment obligations. here we look at ways in which as a business owner you can over come cash -flow issues as well as have a strong command of cashflow management.

What is a cash flow loan?

A cash flow loan is a type of short-term financing that is used to help businesses maintain a positive cash flow. The loan is typically repaid within a few months, and the funds can be used for any number of purposes, including inventory costs, payroll expenses, and unexpected repairs. Cash flow loans can be an important tool for businesses that experience seasonal fluctuations or sporadic expenses, as they provide a source of funding that can be used when needed.

One of the benefits of cash flow loans is that they can help businesses avoid taking on debt that may have higher interest rates or longer repayment terms. However, it is important to carefully consider the terms of a cash flow loan before taking one out, as the repayment schedule can be challenging for some businesses to manage. Cash flow loans are just one of the many financing options available to small businesses.

How do cash flow loans work?

A cash flow loan is a type of financing that works by allowing a business to borrow money based on its expected future cash flow. This can be an attractive option for businesses that have strong prospects but may not have the collateral or credit history required to qualify for a traditional bank loan. Cash flow loans are typically paid back through a percentage of the borrower’s future sales, which means that they can be easier to repay than other types of loans.

However, they can also be more expensive, as the lender will typically charge a higher interest rate to compensate for the increased risk. Before taking out a cash flow loan, it is important to understand how they work and what the potential risks and costs may be.

Cash flow lending example:

Chasing late payments can be a huge drain on your time and energy, especially if you’re a small business owner. If you’ve invoiced a customer but they’re slow to pay, it can put a real strain on your cash flow. A cash flow loan for small businesses can help you tide over until payments come in.

t’s a short-term solution to a temporary problem, and it can help you stay afloat until your customers pay up. With a cash flow loan, you can keep your business running smoothly, without the worry of late payments causing financial hardship.

What can I use a cash flow loan for?

Business cash flow loans help to finance working capital, which is the money that is used to pay for daily operations. This type of loan can be used to pay bills, rent, employee wages, and other expenses associated with running a business. For businesses that experience seasonal fluctuations in revenue, cash flow finance can help to maintain a consistent cash flow throughout the year.

This type of financing can be particularly helpful for businesses that experience a lull in activity during certain months of the year. By ensuring that there is always enough money available to cover operational costs, business cash flow loans help businesses to avoid financial difficulties and keep their operations running smoothly.

A cash flow loan can be used for:

• business renovation or expansion
• stock
• business equipment
• recruitment
• marketing your business (e.g. building a website)
• paying rent and bills

What are the advantages and disadvantages of cash flow loans?

As with any type of business funding, there are always pros and cons and a cash flow loan is no different. Its worth research different suitable financing option before you sign on the dotted line.

The advantages of cash flow loans

The loan is unsecured – it’s quicker to access this kind of finance, as there is no requirement to put your property or assets as collateral.

It’s short-term – so you know its a quick repayment term.

Smooths Irregular Cash Flows – it helps you get through the seasonal dips in trading.

The disadvantages of cash flow loans

Slightly Higher Interest – due to the fact the loan is unsecured, this means a higher interest rate is paid.

Automatic Payments – cash flow lenders require automatic payments. This means that if your revenue should change, the monthly repayments will change.

Personal Guarantee – a personal guarantee maybe required. with this in mind, should your business fails to make a payment, you could be left out of pocket from personally paying off the debt.

What are the different types of cash flow finance?

There are currently four types of cash flow finance available to UK Businesses.

A quick guide and a little about each product can be found below:

Merchant Cash Advance

A merchant cash advance is a type of funding used by businesses to gain quick access to cash. Unlike a traditional loan, a merchant cash advance is not based on the creditworthiness of the borrower. Instead, it is based on the sales volume of the business. This means that businesses with high sales volumes are more likely to qualify for a merchant cash advance.

Merchants can use the funds from a merchant cash advance to purchase inventory, pay off debts, or finance other expenses. However, because merchant cash advances are typically more expensive than traditional loans, they should be used sparingly and only when absolutely necessary. When used wisely, a merchant cash advance can be a helpful tool for businesses in need of quick access to cash.

Unsecured Business Loans

Unsecured business loans are a type of financing that does not require collateral. This can be a great option for businesses that do not have the assets to put up as collateral, or for those who simply don’t want to put their personal assets at risk. Unsecured business loans can come from a variety of sources, including banks, credit unions, and online lenders.

The terms and conditions of unsecured business loans will vary depending on the lender, but they typically have higher interest rates than secured loans. As with any loan, it’s important to do your research and compare offers before choosing a lender.

Revolving Credit Facility

A revolving credit facility is a type of loan that allows borrowers to access a line of credit up to a certain limit. This limit can be used and reused as needed, making it a flexible financing option for businesses or individuals with variable cash flow needs. Revolving credit facilities typically have lower interest rates than other types of loans, making them an attractive option for borrowers who need to finance short-term projects or expenses.

Additionally, the interest on a revolving credit facility is often tax-deductible, making it even more affordable. Given these advantages, it’s no wonder that many businesses rely on revolving credit facilities to help them manage their cash flow and finance their operations.

Invoice Finance

Invoice finance is a type of short-term financing that allows businesses to receive funding based on the value of their outstanding invoices. This can be an attractive option for businesses that have a large number of invoices that are due in the near future but lack the liquidity to cover their expenses. Invoice finance can provide businesses with the working capital they need to bridge the gap between paying their suppliers and receivings payment from their customers.

While invoice finance can be a helpful tool for businesses, it is important to note that it can also be expensive. The fees charged by invoice finance companies can add up, so it is important to carefully consider whether this type of financing is right for your business.

Can I get a cash flow loan if I or my business has bad credit?

Many business owners shy away from applying for loans because they have bad credit. However, cash flow lending is one type of loan where bad credit is not as big of a factor. Lenders who focus on cash flow are more interested in the current and future health of your business than your credit history.

As long as you can demonstrate that your business has strong cash flow and the ability to repay the loan, you may be able to qualify for financing. So, don’t let bad credit hold you back from exploring all of your financing options.

Your business credit score is important. It’s a reflection of your company’s financial health and it can impact your ability to get loans, lines of credit and other types of financing. repayment history is one of the biggest factors that goes into your business credit score so it’s important to make sure you’re repaying any cash flow loans in a timely manner.

This will show lenders that you’re a responsible borrower and it could help you get better terms on future financing. There are other things you can do to improve your business credit score such as checking your report monthly for errors, limiting the number of credit applications you make and communicating with suppliers. By taking these steps, you can help ensure that your business has a strong credit score.

What type of security do I need to get cash flow finance?

Lenders typically require a personal guarantee from the business owner when extending an unsecured loan. This is because unsecured loans don’t have collateral, like a property, to back them up. So if the borrower defaults on the loan, the lender has no asset to sell to recoup their losses.

A personal guarantee essentially says that the business owner will be personally responsible for repaying the loan if the business can’t do it. This provides some peace of mind to the lender and helps mitigate their risk. It’s important to note that a personal guarantee is a big responsibility and should not be taken lightly. If you’re considering providing one, be sure to read up on all the implications first.

Are cash flow lenders regulated by the FCA?

Short term cash flow loans are not regulated by the Financial Conduct Authority (FCA). This type of lending is not considered to be a consumer credit agreement and is therefore not subject to FCA regulation. Cash flow lenders are however required to follow certain guidelines set out by the Financial Ombudsman Service (FOS).

These guidelines state that cash flow lenders must treat their customers fairly and must not engage in unfair or misleading practices. As long as cash flow lenders adhere to these guidelines, they are free to operate without FCA regulation. This can be beneficial for borrowers, as it allows them to access funding more quickly and easily than if they were dealing with a regulated lender.

However, it is important to remember that cash flow lenders are not subject to the same level of scrutiny as regulated lenders, and so borrowers should be sure to do their research before taking out a loan.

How can I apply for a cash flow loan?

To apply for a cash flow loan is simple, we will first ask you some basic details to verify your business with our “Get a Quick Quote” needed to apply for business cashflow funding.

• The amount you want to borrow
• Average monthly card sales
• Annual turnover
• Trading name of your business
• Company number if registered in England and Wales
• Number of years trading

We will also need the following information.

• Title, first name and surname
• Email and phone number

Once completed just click our terms and conditions. Your application will be processed and reviewed by one of our account managers, you are welcome to call us to track the progress.

Once the application has been reviewed by a direct cashflow finance provider, one of our dedicated account managers will be in touch to discuss the terms of your loan agreement within 24 hours with a decision on the same day.

At this point you are welcome to ask the lender any questions or have concerns about the loan, these questions could including repayment plans, to make sure there are no nasty surprises along the way and are comfortable with repayments for the loan amount.

After you have carefully read through all the terms of the agreement, you will need to sign all of the relevant documentation and return it to the lender. You will then be able to access the money from your account once the lender has received your completed agreement

F.A.Q’s

What are cash flow loans?

Cash flow loans are an alternative type of business finance that steps in when the business is having issues funding things like suppliers and wages.

Is cashflow loan for small business easily accessible?

Cashflow loans for small business is becoming more popular as a way to finance and short fall in a businesses cash flow. It is accessible to any business that is registered in the UK, as well as partnerships and sole traders.

How do we apply for a cashflow finance solutions

You can apply for cashflow finance solutions if you meet the criteria for this type of borrowing. Simply go to our website and make an application online.