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Cashflow Lending

What is Cashflow Lending?

Cashflow lending is a short-term financing option designed to bridge temporary cash flow gaps. It provides businesses with a quick influx of funds based on their expected future sales or receivables.

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Types of Cashflow Loans:

  • Invoice financing: Receives an advance on outstanding invoices, minus a fee.

  • Debtor finance: Similar to invoice financing, but focuses on a broader range of receivables.

  • Merchant cash advances: Provides a lump sum advance based on projected future credit card sales.

How Does it Work?

  1. Apply for a cashflow loan: The lender assesses your business financials and expected future sales.

  2. Receive funding: If approved, you receive a loan amount based on your receivables.

  3. Repay the loan: Repayment typically occurs within a short timeframe (weeks or months), often with interest calculated on the outstanding loan amount.

Benefits of Cashflow Lending:

  • Fast access to funds: Quickly address short-term financial obligations and keep your business running smoothly.

  • Improved cash flow: Bridge the gap between expenses and incoming revenue, preventing disruptions.

  • No property security required: Unlike traditional loans, cashflow loans are often unsecured and based on business performance.

Important Considerations:

  • Higher interest rates: Cashflow loans typically carry higher interest rates compared to traditional business loans.

  • Debt burden: Careful management is crucial to avoid falling into a cycle of debt due to recurring loan needs.

  • Repayment pressure: Short repayment terms can strain your cash flow if not carefully planned for.

Signs You Need Cashflow Lending:

Here are some scenarios where cashflow lending can be helpful:

  • Seasonal fluctuations in sales: Bridge the gap between lower sales periods and maintain operational costs.

  • Unexpected expenses: Cover unforeseen costs like equipment repair or emergency supplies.

  • Inventory purchase or expansion: Finance new inventory purchases to meet increased demand.

How a Finance Broker Can Help?

A finance broker can be your partner in navigating cashflow lending:

  • Matching needs with solutions: Brokers assess your financial situation and recommend suitable cashflow lending options based on your specific needs.

  • Competitive rates: They leverage their relationships with lenders to secure favorable interest rates and terms.

  • Streamlined application: Brokers guide you through the application process, simplifying paperwork.

  • Negotiation: Brokers negotiate terms and fees on your behalf, ensuring you get the best deal possible.

  • Long-term planning: While addressing immediate needs, brokers can also discuss long-term financial strategies to improve cash flow management.

FAQs (Frequently Asked Questions)

  • How quickly can I access cash with a cashflow loan? The approval process is often faster than traditional loans, with funding potentially available within days.

  • What are the different repayment options for cashflow loans? Repayment options vary depending on the lender, but typically involve daily or weekly installments based on a percentage of your sales.

  • What alternatives are there to cashflow lending? Consider business lines of credit, invoice factoring, or extending payment terms with suppliers.

Disclaimer: This information is intended for general informational purposes only and does not constitute financial or legal advice. Please consult with our finance brokers and a lawyer specialising in SMSFs before making any investment decisions.

Don't feel overwhelmed by the loan market! We're here to make things easy. With our expertise, we'll guide you through the process step-by-step. Get personalized assistance and secure the perfect loan for your needs. Get your pre-approval today!

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