Cash Flow


Cash Flow Lending

Cash flow-based lending allows businesses to borrow money based on the projected future cash flows of a company with historical sales data as a guide. Within the secured loan category, businesses may identify cash flow or asset-based loans as a potential option.

Our Cash flow-based lending allows your company to borrow from us based on the projected future cash flows of your business, that is backed by your business’ past and future cash flows without having to put up any upfront tangible collateral. This means a company borrows money from expected revenues they anticipate they will receive in the future, subect to creditworthiness.

These loans do not require any type of physical collateral upfront like property or assets but some or all of the cash flows used in the underwriting process are usually secured.

Financing is usually faster for companies with up to date statutory filings (RGD, GRA, SSNIT, etc), as appraisal of a physical collateral is not required. Our cash-flow based lending is strictly for limited liability registered companies only and not for sole proprietor businesses.

Target Borrowers

Cash flow loans are better suited to companies that maintain high margins or lack sufficient hard assets to offer as collateral. Companies that meet these qualities include service companies, marketing firms, and manufacturers of low-margin products.

Interest rates for these loans are typically higher than the alternative due to the lack of physical collateral that can be obtained by us in the event of default. So you're a startup with no physical collateral to provide upfront, keeping good books can be helpful, if not common sensical.

How it works

To underwrite cash flow loans, we would examine expected future company incomes, its credit profile, and its enterprise value. Typically underwrite cash flow-based loans using EBITDA (a company’s earnings before interest, taxes, depreciation, and amortization) along with a credit multiplier (up to 8X of your most recent annual turnover).

Credit (risk) multiplier will reduce with declining EBITDA, usually in economic downturns which can reduce the available credit capacity for the borrowing company or increase interest rates if provisions are included to be dependent on these criteria.

Related Pages

Asset-Based Lending

No Collateral vs Collateral

Equity vs Debt Capital