Q: Banks don’t lend money to small businesses. What is cash flow financing and how can it benefit my business? A: Simply put, cash flow is the life blood of every small business. Statistically, over 80% of small businesses will fail due to lack of cash flow, or cash flow mismanagement. So, how does a small business grow, develop revenue streams, and continue to manage their obligations like payroll, order inventory and pay bills? Cash flow financing is a form of financing in which a loan made to a company is backed by a company’s expected cash flows. A company’s cash flow is the amount of cash that flows in and out of a business in a specific period. Cash flow financing, or a cash flow loan, uses the generated cash flow as a means to pay back the loan. Cash flow financing is helpful to companies that generate significant amounts of cash from their sales but don’t have a lot of physical assets, such as equipment or real estate, that would typically be used as collateral for a bank loan. Keep in mind, banks decline roughly 82% of all small business loan applications for one reason or another; therefore cash flow financing may very well be the next best option. Cash flow financing can be used by companies seeking to fund their operations, such as payroll, inventory, equipment purchases, marketing expenses, and overhead costs. Companies are essentially borrowing from a portion of their future cash flows that they expect to generate. With a cash flow loan, business owners can invest in their operation, their people, and their own future success. Want to learn more? Call (855) 998-LVRG or click below to apply for funding.
July 12, 2021