March 16, 2023
min read
Written by: 
Nikolaus Hilgenfeldt

What Is Cash Flow Loan & How To Get It in 2023

Are you a small business owner looking for financing options to help grow your company?

If so, you may have heard of cash flow loans, a popular choice for businesses that need working capital to cover expenses, invest in new equipment, or expand their operations. 

Cash flow loans can help keep your business running while you focus on growth.

But what exactly are cash flow loans, and how can they benefit your business?

In this blog post, we'll take a closer look at: 

  • What is a cash flow loan?
  • What are the pros and cons of cash flow loans?
  • What is the difference between asset-based vs cash-flow lending?
  • Is a cash flow loan the right fit for you?

If you're considering a cash flow loan for your business, this post is a must-read.

Let's begin!

What Is A Cash Flow Loan?

A cash flow loan is a form of unsecured borrowing that small businesses use to cover their daily expenses.

You can use this loan to fund working capital, for example, payments for inventory, payroll, rent, etc, without requiring any business or personal assets as collateral.

Then, you repay it with the business's incoming cash flows.

Nowadays, there are numerous ways to get a cash flow loan, whether through crowdfunding or various online lenders

Also, these alternative financing providers have less strict requirements than traditional banks.

How Do Cash Flow Loans Work?

Unlike traditional asset-based loans, cash flow loans do not require any form of physical collateral. 

However, you may need to sign a personal guarantee on the loan.

What does it mean exactly?

Cash flow loans are an excellent option for small and new businesses that are temporarily short on capital but expect to receive funding shortly.

Suppose you don't qualify for a secured business loan due to a low credit score, a lack of revenue history, or a lack of collateral. 

In that case, this is a fantastic financing option to consider.

Interest rates and payments

You need to pay back most loans over one to two years, with payments made monthly or every three months.

Interest rates on cash flow loans are typically higher than those on traditional bank loans because they are unsecured and carry a higher risk for lenders. 

If your application gets approved, the lender will use its financial assessment to determine your interest rate and repayment conditions.

Some cash flow loans are organized similarly to a standard term loan or line of credit.

In contrast, others function similarly to a merchant cash advance. 

In this case, you are given a lump amount of money and must repay it with a portion of your debit and credit card sales plus a fee.

Cash flow loans, in general, have shorter periods and higher interest rates than more traditional small-business loans, such as bank or SBA loans.


Cash Flow Loan Example

A bakery that makes pastries and cookies is looking to raise $10,000 to buy fresh ingredients, paper packaging, and boxes for its products.

The asset base of the small business, which consists of only an oven and a few pieces of furniture and fixtures, is insufficient for the bank around the corner to grant it an asset-based loan. 

So instead, it applies for a cash flow loan through an internet lending platform to finance the raw material inventory.

The loan of $10,000 will be repaid, along with interest, throughout the following few weeks as the bakery turns its products into cash.

How Does a Cash Flow Loan Differ from a Traditional Bank Loan?

Cash flow loans are not conventional bank loans, which require a more comprehensive credit analysis of a company. 

Instead, when deciding the terms of a cash flow loan, a lender evaluates the borrower's ability to generate cash flow.

Lenders use computer algorithms that consider various data, including transaction frequency and volume, seasonal sales, expenses, returning customer income, etc.

On the positive side, if your company has enough sales to cover the loan, you may be able to get a cash flow loan even if your credit isn't perfect. 

The application procedure is straightforward, and you can complete it online. 

Then, you'll receive a decision within 24 to 72 hours. 

Depending on the lender, you can receive anywhere from $5,000 to $250,000.

Some loans require you to pay back a percentage of your sales until you pay off the loan.

Others require that you pay a fixed amount over a set time, so your payments will always be the same.

Who Can Benefit From Cash Flow Loans?

Cash flow loans are outstanding for businesses with a strong cash flow and revenue growth history.

They are also helpful for businesses that need a quick infusion of cash, as the application process is often faster than traditional bank loans.

Cash flow lending can also give the following types of businesses access to capital that they wouldn't have otherwise:

  • Your business hasn't been around long enough to have a strong credit history.
  • You don't have enough physical assets to get a loan.

Benefits and Drawbacks of Cash Flow Loans

Like any financing option, cash flow loans have both advantages and disadvantages.


Quick access to cash: Cash flow loans are often approved and funded more quickly than traditional bank loans, which can be helpful for businesses that need to act fast.

No collateral: Cash flow loans are unsecured, so businesses don't have to put up collateral to secure the loan.

Less emphasis on solid credit history: The primary factor in deciding whether or not to receive a loan is your company's ability to generate future cash flows.

Can fund growth initiatives: Cash flow loans can support growth initiatives, such as expanding into new markets or launching new products.


Higher interest rates: Cash flow loans typically have higher interest rates than traditional bank loans due to the higher risk for lenders.

Short repayment terms: Cash flow loans are typically repaid over one to two years, which may not be enough time for some businesses to repay the loan.

Strict repayment schedule: Repayments in fixed amounts must be made on time.

Limited loan amounts: Cash flow loans are typically smaller than traditional bank loans, which may not provide enough funding for more significant  initiatives.

Asset-based Lending vs Cash Flow Lending

There are a few essential distinctions between asset-based loans and cash-flow loans.

First of all, the collateral is not the same. 

Among other things, real estate, stock, or equipment serve as the security for asset-based lending. 

On the other hand, cash flow lending is based on how much money a business thinks it will make in the future.

Even though cash flows are taken into account by the lender when making an asset-based loan, they are not as important as the value of the company's assets on its balance sheet.

When deciding between asset-based lending and cash-flow lending, it's also important to consider whether the loan is a good fit.

💡 Asset-based loans work best for businesses with large balance sheets. 

Still, they are also a good idea for companies in industries that don't have a lot of cash flow potential.

💡 On the other hand, cash flow lending works well for businesses with high margins on their balance sheets or that don't have the hard assets needed to back up an asset-based loan.

Do You Need A Cash Flow Loan?

To better understand whether a cash loan suits your business, ask yourself the following questions:

❓ Do you require quick funding, possess a time-sensitive opportunity, or plan to implement any of those above?

❓ Do you have an opportunity that will allow you to repay the loan and make a profit?

❓ Can't get a traditional business loan because you don't have enough collateral?

 If you answered yes to each query, then a cash flow loan might be the best option for your company.

Cash Flow Loan for Business - How to Get It 

Businesses can apply for a cash flow loan in a variety of ways.

For example, you can apply for a loan with the same bank where you have your business accounts.

Or with another lender, such as a crowdlending platform or an online lending company.

There are few requirements before applying for a loan:

1. Every lender will want to see an income summary from the last three fiscal years to assess the company's finances. Thus, precise financial records and projections of future income and expenses are crucial.

2. A loan depends on the expected cash flow. The income must be sufficiently high to repay the loan installments without any problems.

Additionally, the processing time for the loan application is very short, especially with online platforms. 

Some providers will review a financing offer within 24 hours, which can significantly benefit businesses in urgent need of funds.


Cash flow loans can be a good way for small and medium-sized businesses to get the money they need for short-term expenses or to help them grow. 

They are unsecured, flexible, and can provide quick access to cash. 

However, they also come with higher interest rates and shorter repayment terms than traditional bank loans.

A strict payment schedule is also a big problem, especially if you have months with a low income.

Thankfully, there are other options available, such as Myos financing.

How Can Myos Cash Flow Loan Help You?

Myos offers Stock financing – Use your current inventory to get new growth capital quickly!

Here are the few benefits this type of financing offers:

  • Easy processing – Without excess paperwork and credit checks.
  • Goods as collateral – No risk or personal guarantees, just a portion of your inventory as security.
  • Flexible repayment – Repay as your turnover allows, without fixed rates and extra costs.
  • Free usage – Use the capital as you wish. For example, for new inventory or marketing expenses.

Myos Stock Financing Example


You sell eyewear (sunglasses for adults and kids) and need money to launch sunglasses accessories as another product.


First, we evaluate your stock and figure out how much financing we can offer for it.

Your products will stay with your storage service provider, and Myos will use a portion of them as collateral. Then you will receive your financing. 

With the extra cash, you can launch your new product, and engage in marketing activities to increase the visibility of your accessories.


With Myos, there are no hidden costs. 

You only have to pay a monthly fee on the outstanding capital. 

Also, if you repay earlier, you will pay less.

To get funding from Myos, you need to meet the following requirements:

  • Your company has a registered office in Germany, Austria, Estonia, Cyprus, or the United Kingdom (UK).
  • Your company has been in business for at least 6 months.
  • Your company has been selling goods for at least 50 days.

Say goodbye to worrying about cash flow problems. 

Instead, sign up with Myos and get the money you need to make your business successful!


Is a Cash Flow Loan an Example of a Business Loan?

Cash flow lending is a type of unsecured loan that businesses use to run their daily business. In general, the loan is used to fund working capital, such as payroll, rent, inventory, and so on, and is repaid with your company's incoming cash flows.

What Are Interest Rates For Cash Flow Loans?

Interest rates vary based on the lender and your company's overall financial standing, but they can range from 8% to well over 35%.

Do Cash Loans Affect My Credit?

Cash advances, like any other loan, can have an effect on credit scores. While they do not affect your credit score directly, they can contribute to future credit problems. 

Your credit score can go down if you use too much of your available credit or pay back your cash advance late.

Keep learning

How to Finance Ecommerce Business - The Ultimate Guide

6 Best Ecommerce Loans To Consider for Your Business

6 Best Digital Banks for Ecommerce Business in 2023

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