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Cash Flow Loans for Small Business: 4 Smart Ways to Get Funded

As business owners ourselves, we understand the unsettling feeling of not having enough working capital on hand to pay for essentials like payroll, equipment, or materials. This shortage isn’t just a numbers game – it’s a stressful problem that can halt growth opportunities and place a serious strain on day-to-day operations. You may feel trapped when traditional banks turn you away, leaving you in a financial lurch. But did you know that one asset small businesses can leverage is their cash flow? Cash flow loans for small businesses can be a vital lifeline. You might be wondering what type of cash flow loan is right for you, or which partner to choose. In this guide, we’ll explain these options and provide you with the information needed to make an informed decision, helping you find the right solution to bridge those daunting cash flow gaps in your business.

What, exactly, is a business cash flow loan?

A business cash flow loan is a specific type of financing where a company borrows against its future cash flow as collateral. This allows businesses to obtain funds that can be used for various purposes such as purchasing inventory, making payroll, or investing in growth opportunities. Cash flow loans can also refer to acquiring a loan with the specific intent of improving a company’s cash flow. This unique financial tool gives you flexibility and quick access to capital, allowing businesses to maneuver through short-term challenges and take advantage of new opportunities.

Cash flow loans for small business: how do they work?

Cash flow loans for small businesses work by allowing a business to borrow against anticipated future cash flow. To determine eligibility and the loan amount, the lender assesses the business’s revenue streams, cash flow history, financial projections, and sometimes even the personal credit score of the business owner. Usually, businesses with a stable and positive cash flow pattern, coupled with a solid business credit history, will qualify.

The funds from this type of loan can be used for various reasons, including bridging gaps in cash flow during slow periods due to outstanding invoices, financing new projects, or making essential purchases. Repayment terms often align with the business’s expected cash flow, providing monthly payments that fit with the company’s unique financial rhythm.

What sets cash flow loans apart, and makes them especially attractive to small businesses, is the relative ease of qualification compared to traditional bank loans. They often require less stringent credit checks, focusing instead on the robustness of the company’s cash flow rather than solely on personal or business credit scores. This offers a more accessible and flexible financing option for growing businesses, tailored to their specific needs and financial situation

Cash Flow Lending vs Asset-Based Lending: What’s the Difference?

Cash Flow Lending and Asset-Based Lending are two common financing options, particularly for small businesses, but they work quite differently.

Cash Flow Lending:

Cash Flow Lending relies primarily on the business’s cash flow as a determinant for loan approval and terms. This type of financing often comes in the form of short-term loans and is commonly offered by online lenders. Essentially, cash flow lenders assess a company’s revenue streams, current cash flow, and financial projections to determine eligibility. Personal guarantees might be required as an added assurance that the loan will be repaid. The focus on cash flow rather than hard assets can make this option more flexible and accessible but may come with higher interest rates.

Asset-Based Lending:

On the other hand, Asset-Based Lending uses physical assets as collateral for the loan. This could include machinery, real estate, inventory, or accounts receivable. Because the loan is secured with tangible assets, it might offer more favorable interest rates. However, it typically requires a more thorough evaluation of the business’s assets and might entail a more complicated and prolonged application process. Unlike cash flow loans, Asset-Based Lending doesn’t depend on future revenue projections but rather on the current value of the collateral.

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Cash Flow Loans for Small Business: The Different Types

When exploring financing options, it’s important to note that there are multiple ways to secure funding, though loans are among the most common. (While Merchant Cash Advances (MCAs) are frequently suggested as a cash flow loan option, they may not be suitable for most B2B businesses that don’t primarily process payments through credit cards.) When it comes to cash flow loans, various types are tailored to different business needs and structures, focusing on the unique attributes and requirements of small to medium-sized B2B companies. Let’s delve into these specific options, so you can better understand the ones most likely to work for you based on your business model and financial strategy.

1. Invoice Factoring

Invoice factoring for small business is a strategic funding option that isn’t a traditional loan, but rather leverages money you’ve already earned through outstanding invoices, turning future cash flow into an immediate asset. Instead of waiting 30, 60, 90, or even 120 days for customers to pay, factoring companies advance the total of your invoice (less fees) way ahead of the payment terms – usually in days. Your customer pays the invoice directly to the factoring company. (See how we work with your customers.) The result is increased cash flow for essential needs such as making payroll, paying suppliers, and taking on large projects. This seamless process enables your business to access working capital now for invoices that will be paid later, providing a vital, flexible tool for managing cash flow challenges and seizing growth opportunities without the burden of debt.

Who should consider invoice factoring?

Companies that are growing quickly, new startups, or businesses that have reached their limits with other types of financing such as short-term loans or cash flow lenders might find invoice factoring to be a perfect solution. Invoice factoring is easier to qualify for, as it often prioritizes your customer’s creditworthiness over your own personal credit score or business credit history. Unlike traditional financing options where time in business, cash flow projections, and outstanding invoices might be significant factors, invoice factoring offers a more flexible and accessible financial strategy, particularly for businesses seeking a quick and seamless funding experience without the stringent requirements of other financial products. Find out if you qualify for FundThrough in two minutes.

How does invoice factoring work?

It’s worth noting that invoice factoring processes may differ from one company to another, so we’ll outline how it works specifically at FundThrough.

1. Create or Connect Your Account in Minutes: Whether creating a free account or connecting your existing QuickBooks or OpenInvoice account, the process is quick and easy. 

2. Select Invoices to Fund: You can upload your invoices manually or connect to QuickBooks or OpenInvoice to sync them automatically. FundThrough’s accounting software integrations make the process even more streamlined, optimizing the speed of getting funded.

3. Get Paid: FundThrough works with your customer to redirect payment and verify your invoices. After approval, you receive next-day payment to your linked bank account.

4. Get Back to Business: Once your customer pays the invoice to FundThrough based on the net terms, there’s no more commitment on your end. You can focus entirely on your business and utilize the platform for a quick, easy invoice payment any time you need more funding.

Ready to fund an invoice?

Note: This is different from invoice financing, where a factoring company still gives a business owner cash for their invoice, but the business owner pays back the invoice amount themselves, plus a fee. Read our blog post on the difference between invoice factoring and invoice financing for more info.)

Invoice factoring pros and cons


  • Fast Turnaround: Get funded in just a matter of days, making it a quick solution for urgent financial needs.
  • Debt-Free Funding: Since it’s not a loan, you enjoy the benefits of receiving cash without adding to your debt.
  • Non-Dilutive Capital: Your ownership isn’t affected; you retain full control over your business.
  • Unlimited Access to Capital: Specific to FundThrough, you can have continuous access to capital as needed.
  • Save Time: No more chasing accounts receivable, freeing up valuable time.
  • Flexibility: Choose the invoices you want to factor, providing you with greater control over your cash flow.
  • Easy Application: With streamlined processes through AI and automation, the application is hassle-free.
  • Seamless Funding Experience: Enjoy a smooth funding process with minimal disruptions to your regular business operations.
  • No Long-Term Commitments: Specific to FundThrough, once the invoice is paid, there’s no more commitment, allowing for greater flexibility in your financial planning.


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2. Unsecured Business Loans

Unsecured business loans are a form of short-term cash flow financing that doesn’t require personal or business assets, like accounts receivable or a business credit card, as collateral. They are particularly appealing to small businesses faced with late payments or immediate cash flow needs. By not requiring significant collateral, these loans provide quick access to funds, making them a viable solution for boosting cash flow.

How It Works & Qualification Process

To qualify for an unsecured business loan, a company must showcase a robust financial history and positive future cash flow. These loans are designed with small businesses in mind, offering a flexible pathway to immediate funding. Generally, lenders look at factors such as the business’s credit score, monthly payments history, and overall financial stability.

Pros & Cons


  • Accessibility: Easier to qualify for from lenders geared toward small businesses, especially if the business lacks significant assets.
  • Speed: Faster application and approval process compared to traditional loans.
  • Flexibility: Suitable for various needs, from bridging cash flow gaps to financing growth projects.



  • Higher Interest Rates: Reflecting the lender’s increased risk due to the lack of collateral.
  • Potential Impact on Credit Score: Failure to meet repayment terms may affect the business’s credit rating.


Some companies to consider for your next unsecured business loan:

When seeking unsecured business loans, several leading companies stand out. OnDeck is highly regarded by Forbes Advisor and is known for its swift funding and accommodating credit score requirements. BlueVine offers a diverse range of lending options, with a focus on flexibility in its credit lines. Lastly, National Funding distinguishes itself with early payoff discounts and diverse capital options. Each of these companies caters to different business needs, providing entrepreneurs with a variety of trustworthy financial solutions.

3. Business-to-Business (B2B) Lending

B2B lending, or business-to-business lending, refers to one business lending funds to another, often facilitated by online lenders. Unlike traditional banking options, B2B lending allows for a more flexible and accessible pathway to funding, especially beneficial for small businesses needing cash flow financing.

How It Works & Qualification

In B2B lending, online lenders facilitate transactions between small businesses and their lenders rather than making the loans themselves. The application and approval process are usually more streamlined, with fewer business days needed to close. Qualification may require high credit scores, an established business history, and particular annual revenue levels, although these are often not as stringent as traditional bank requirements.

Pros & Cons


  • Quick Process: Usually takes fewer business days.
  • Flexible Repayment Terms: Offers various repayment terms and monthly payments.



  • Specific Requirements: High credit score, a particular level of cash flow, and certain revenue levels may be necessary.
  • Less Structured: May lack the traditional structure and security of bank loans.


There are many reputable companies in North America that offer B2B lending include Flywire and Brex. When looking into B2B lending solutions, look for lenders with a track record of credibility, trustworthiness, transparent repayment terms, and responsive customer service. Evaluate their online application process to ensure it’s user-friendly and efficient, and review their approval process to understand how it aligns with your business needs and timelines.

4. Equipment Loans

Equipment loans are specialized financing options explicitly designed for purchasing machinery, tools, vehicles, or other vital equipment required for daily business operations. These loans offer a convenient way to acquire essential equipment without paying the full cost upfront. This type of cash flow financing enables the company to invest in other growth areas or expansion, making it a viable option for cash flow management.

How It Works & How to Qualify

Equipment loans work by providing funds specifically for buying equipment, with the purchased equipment typically serving as collateral. This collateral often leads to more favorable interest rates compared to unsecured loans, and the reliance on collateral might ease the approval process. Monthly payments are usually structured, reflecting the equipment’s lifespan and depreciation rate, with varied terms, rates, and repayment terms. Qualification may involve assessments of cash flow and the business’ financials, credit score, time in business, and there may be specific stipulations regarding late payments.

Pros & Cons


  • Tailored Financing: Specific to equipment needs, freeing up funds for cash flow financing.
  • Favorable Interest Rates: Often offers better rates compared to unsecured loans.
  • Structured Payments: Reflects the equipment’s value and depreciation.



  • Risk of Losing Equipment: Defaulting may result in loss of the equipment.
  • Potential Stipulations: May include specific requirements for late payments or other condition


There are numerous North American option for working capital loans, including BlueVine and Fundbox. When exploring working capital loan solutions, evaluate factors like the company’s reputation for integrity, clarity in outlining monthly payments and other repayment terms, availability of customer support, and the flexibility in their approval process. Assessing these aspects will help you in selecting a lender aligned with your unique business finance needs and ensuring a successful lending experience.

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