Best Business Cash Flow Loans for 2022

Explore some of the most popular cash flow loans to find one that meets your business’ short-term or long-term cash flow needs.

short term loan

as before small business loans, the lender pays a short-term business loan as a lump sum that the borrower repays over time. As the name suggests, the repayment period is short, typically just 3 to 18 months. Payments can be weekly or daily, making it difficult for businesses to repay.

Interest rates range from about 3% to over 50% and loan amounts can be $1 million or more. short term loan Ideal for businesses that need bulk cash to quickly address cash flow issues and make revenue-driving purchases or investments.

Business Line of Credit

a Business Line of Credit A revolving line of credit that allows a business owner to borrow cash as needed. Businesses can use the funds for various purposes and interest is only accrued on the balance. The line of credit is rotating so the borrower can reuse the funds in paying off the balance.

Borrowing limits are typically up to $250,000 with interest rates ranging from 10% to 99%, depending on the lender. Unlike some cash flow loans, the lender considers the borrower’s creditworthiness when evaluating the application. A borrower must have a personal credit score of 700 or above in order to qualify.

invoice financing

Invoice finance is a type of short-term loan that allows a business owner to borrow against unpaid invoices. In this type of cash flow loan, the lender prepays a portion of the outstanding bills (usually up to 90%). This is a good option for businesses with customers who need immediate cash and have long payment terms (30, 60, 90 days, etc.).

After the customer pays the bill, the lender transfers the remaining balance, minus fees, to the business owner. The interest rate is typically 0.5% to 5% per month, plus an additional factor fee based on how long it takes the customer to pay the bill. The amount of the loan depends on the value of the business’s outstanding bills.

Because invoice financing relies on the customer paying the invoice, the eligibility determination is based on the customer’s payment history rather than the creditworthiness of the business. As such, invoice finance may be a good option for companies with limited credit history but reliable customers.

Merchant Cash Advance

a Merchant Cash Advance (MCA) gives business owners access to a cash lump sum that is reimbursed directly from the business’ future debit and credit card sales, typically between 5% and 20% of each transaction. Loan amounts are flexible and he can extend to over $500,000 depending on the lender.

That said, the repayment period can be short, so this type of loan is best suited for businesses with high turnover. Interest rates are also much higher than other business cash flow loans and can be extended up to 350%. Additionally, additional fees may be added to the overall cost of borrowing.

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