4 Best Small Business Cash Flow Loans in 2022

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4 Best Small Business Cash Flow Loans in 2022

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9 min read. September 19, 2022 by Phil Fernandes

If you’re looking to secure small business cash flow loans in 2022, you’re in the right place. National Business Capital leverages a 75+ lender marketplace to connect entrepreneurs with the capital they need to grow and outpace their competition.

We do the heavy lifting for you, take the time to learn about your needs, and establish a relationship that you can rely on for future financing needs. Can it get better than that?

Every small business is different, but there’s one challenge that almost every entrepreneur faces over the lifetime of their business—cash flow management.

Whether outside factors are diminishing your cash flow, like economic pressure restricting your prices, or you’re in an industry that deals with cyclical sales, extended periods of negative cash flow can be the reason you close your doors for good.

Cash flow challenges come out of nowhere, too, forcing you to think quickly and outside the box to find a solution that doesn’t bring your operation to a screeching halt.

Some entrepreneurs choose to cut their budgets in order to free up cash, or they’ll run a new initiative that sacrifices the total cost of a product or service in exchange for quick cash in the short term.

Small Business Cash Flow Loans

Both of these options can help you free up funds for your expenses, but you can only go down this route so many times until you’re jeopardizing the integrity of your operation.

Rather than repurpose the capital invested in your business, you can look for small business cash flow loans to help you manage your cash flow and improve for the future.

These financing options are designed to give entrepreneurs an influx of cash when they need it, and they’re relatively easy to qualify for because of the lack of emphasis on credit score and collateral.

Small business cash flow loans are an avenue toward continued and sustainable growth, but only if the terms you’ve signed on for meet the capabilities of your organization.

If you’re looking to secure a small business cash flow loan in 2022, our comprehensive guide will make you an expert in the topic, allowing you to outpace your competition with ease.

Small Business Cash Flow Loans

1. What are small business cash flow loans?

Small business cash flow loans are a type of unsecured loans used for daily business operations, which are paid back with incoming cash flows. Also known as working capital loans, they are financing instruments designed to give entrepreneurs an influx of cash to help them tackle challenges and take advantage of new opportunities.

With traditional financing options, lenders will rely on your credit score, time in business, and other financial information to determine whether you qualify for the financing, but the eligibility requirements are different with small business cash flow loans.

This financing option places your cash flow statements at the forefront of the review process. The lender will evaluate your previous cash flow, your projected future cash flow, and other factors to assess the riskiness of allowing your organization to borrow. They also use various algorithms and equations to come to this answer.

The less restrictive eligibility criteria do come with a price tag—higher interest rates. Small business cash flow loans have some of the highest interest rates on the market because the lender doesn’t rely on your credit score or collateral offered to secure the loan.

Instead, small business cash flow loans are backed by your future cash flow, which offers significantly less security compared to a tangible asset and, in turn, translates into higher interest rates for the borrower.

2. How do small business cash flow loans work?

Small business cash flow loans work by granting businesses a borrowing based on a past and forecasted cash flow. Lenders will plug your cash flow projections, seasonal income, percentage of returning customers, expenses, and your incoming and outgoing transaction history into a formula to determine your maximum borrowing amount.

That maximum amount serves as the utmost risk the lender is willing to take on by financing your business. You can borrow below that amount, but you can’t exceed it.

Small business cash flow loans don’t take your credit score or your ability to offer collateral into account. Instead, they focus almost exclusively on your cash flow, which can be both positive and negative.

A business without stellar credit and an abridged time in business will find it much easier to qualify for a small business cash flow loan because of the looser requirements, but they’ll have to pay higher interest rates as a result.

The lack of extra security makes it riskier for the lender to finance your business, so they’ll enforce higher interest rates as a method of ensuring they aren’t losing everything in the event that you default. 

Cash flow loans are fast, too. You can potentially have the borrowed funds in your account within days of submitting your application, allowing you to start investing them in your business promptly.

Entrepreneurs with lower credit scores and newer businesses commonly leverage small business cash flow loans to support their early growth while they work to strengthen their business’s financials, but you can secure this type of financing at any point over the lifetime of your business.

3. What are the types of cash flow loans for small businesses?

There are multiple types of small business cash flow loans available to entrepreneurs, but the most common ones include business line of credit, merchant cash advance, accounts receivable financing, and short-term cash flow loans.

3.1. Business Line of Credit

Business lines of credit are one of the most flexible financing options you can leverage for your business. This financing is a revolving credit line that you can draw on whenever you need  capital for your business expenses.

Once you pay off the amount you’ve borrowed, you can draw on the same funds again, allowing you to stay proactive against any challenge you encounter. You can use the funds for almost any business purpose, too, which can help you pay off expenses, hire new employees, or launch a marketing initiative with ease.

If you’re finding it difficult to qualify for a business line of credit, you can also consider a business credit card. The two options work similarly, but you can’t draw physical cash with a business credit card.

Although it’s a little more restrictive, both credit options can allow you to streamline your growth and outpace your competition, with a little strategy and proactive planning, of course.

3.2. Merchant Advance

Merchant advances, otherwise known as merchant cash advances, leverage your future revenue for cash in the short term. Lenders will evaluate your cash flow statements and any financial information you have concerning your profitability and offer you funding based on the capabilities of your business.

Any business that deals with cyclical or seasonal business activity will benefit from a merchant advance, as this financing option can help you bridge your slow seasons and set yourself up for your busy time of year.

Rather than worry about how you’ll afford the necessary preparation for your busy season, you can start off on strong footing with the help of a merchant advance.

merchant cash advance - best small business cash flow loans

3.3. Accounts Receivable Financing

Business owners who commonly deal with late customer payments and invoices can secure accounts receivable financing to help them manage their cash flow instead of treading water while they wait for the money to land in their accounts.

As we know, a late customer invoice from a costly job can bring your operation to a screeching halt, preventing you from taking on new jobs, paying your expenses, and managing your cash flow effectively.

Some entrepreneurs can afford to wait until their customers pay them, but other, more savvy business owners will find a lender offering competitive accounts receivable financing to speed up the process and continue growing.

However, you should note that you won’t receive the full value of your invoices through accounts receivable financing. The lender takes a percentage of your total incoming invoices as payment for the service, which lowers the amount you’ll receive slightly.

Take a look at your business’s financial information before making any final decision, especially if you’re looking to secure financing on a significant invoice for your organization.

3.4. Short-Term Cash Flow Loans

Short-term cash flow loans are the easiest of the bunch to secure for your business. This type of financing is designed for businesses that haven’t operated very long and have limited financial history/information.

Instead of relying on the traditional eligibility criteria, lenders will thoroughly evaluate your cash flow documentation to determine your ability to repay the borrowed funds. The looser requirements allow a wider range of entrepreneurs to qualify and secure the funds they need to grow, but there is one catch—higher interest rates.

The lack of financial information in the review process significantly increases the risk for the lender, so they’ll charge you higher interest rates as a method of protecting themselves if you default on your payments.

While this may deter you from seeking out this type of financing, you should remember that short-term cash flow loans are, of course, designed with short repayment periods.

small business cash flow loans

Paying off your loan quickly can only help decrease the amount you’ll pay in interest, and some lenders will allow you to pay before the final date of your repayment to ease the burden on themselves and your business. But, this isn’t the case with every lender, so make sure to carefully review your contract before signing.


All of the above options are considered cash flow loans because they don’t require a collateral offering to reach approval. While you may be able to offer collateral to increase your odds of approval, it’s not a necessity, and you can still secure favorable rates and terms even without offering an asset as collateral to your lender.

4. How can you use small business cash flow loans?

Entrepreneurs use small business cash flow loans to help them manage their cash flow and pay off lingering debts that are causing issues in their daily operations, but they can also use them to afford growth opportunities.

Some savvy entrepreneurs leverage small business cash flow loans to manage their working capital as they pay for a more sizeable expense, like a new building acquisition or a massive renovation. The possibilities are endless, but here are some of the most common uses of small business cash flow loans:

  • Working capital management
  • Technological updates
  • Launch of a new marketing initiative
  • Office renovations
  • Equipment repairs/updates
  • Hiring new employees
  • Bridging payment gaps
  • Prepare for upcoming busy seasons
  • Any other business expense!

Cash flow loans are an avenue toward sustainable growth, but only if you’re working with a lender that offers favorable rates and terms.

If your business’s financial information is less than stellar, you will have fewer options at your disposal, but that doesn’t mean you need to accept the first best offer you receive.

For the best results? You’ll need to research thoroughly, or you can team up with a FinTech marketplace, like National, to streamline your search for competitive financing

5. What’s the difference between cash flow and asset-based lending?

The difference between cash flow loans and asset-based lending is collateral. When applying for cash flow loans, you won’t be required to offer an asset as collateral, you will be evaluated based on your cash flow information instead. When applying for asset-based lending, however, you will be required a collateral in order to get approved.

5.1. Cash flow lending

Cash flow lending is essentially the opposite of asset-based lending. With cash-flow financing, lenders evaluate your eligibility based on your cash flow information, meaning they’ll carefully review your incoming and outgoing transactions to determine your capability of repaying a loan.

You won’t be required to offer an asset as collateral, and your credit score weighs less, which makes this option significantly beneficial for newer businesses and those that are working to improve their credit scores.

5.2. Asset-based lending

On the other hand, asset-based lending requires a collateral offering to reach approval. Lenders will still review your financial information and consider it for approval, but it’s weighed less because you’ve secured the financing through your collateral offering.

Interest rates on asset-based lending are lower than cash flow loans due to the layer of security the collateral provides to the lender, but it’s very important to stay on top of your payments regardless of the interest rate, especially in asset-based lending situations.

If your default on your payments, the lender can seize your collateralized asset to recoup the funds you aren’t able to repay, leaving you to figure out a way around having that important asset on your balance sheet.

6. Compare small business cash flow loan options with National Business Capital

It’s not about just getting any approval for your business; It’s about getting the RIGHT approval that will let you grow your business without restraint.

You’ll need to extensively research various lenders and their respective programs to find one with rates and terms that fit your circumstances, which requires you to take time out of your busy schedule.

Many entrepreneurs don’t have spare time or the ability to step away from their business for an extended period of time, forcing them to settle on the first best lender and restricting their ability to grow.

National Business Capital, the leading FinTech marketplace, can help you streamline your search for competitive financing options.

Our team of experienced Business Finance Advisors takes the time to learn about you, your business, and the challenges you face to connect you with multiple financing options through our 75+ lender marketplace.

With 1,800+ 5-star reviews on Trustpilot and a commitment to “Driving Growth for All,” you can trust that National will be there for you before, during, and after your deal is funded.

We’ve saved entrepreneurs countless hours and secured $2 billion on their behalf since our inception in 2007. National’s team is uniquely capable of helping YOU access the capital you need to grow, scale, and reach your fullest potential. 

Ready to get started? Complete our digital application today, and our team will be in touch!

FAQs

How Does Cash Flow Lending Work?

Cash flow lending involves term loans that are granted based on an organization’s past and projected cash flow. Other financing options tend to emphasize your credit score, assets, and other financial information more heavily, but with cash flow lending, your incoming and outgoing transactions are most important.

You don’t need to offer collateral to secure your cash flow loan, too, which makes it easier for newer entrepreneurs to qualify and reach approval.

What Is the Easiest Loan to Get to Start a Business?

Of all the financing options available to entrepreneurs, SBA microloans are some of the easiest to qualify for. SBA microloans feature a borrowing limit of $50,000 and some of the lowest interest rates on the market, not to mention the partial guarantee of funds, which makes them a more attractive endeavor for lenders to take on.

You don’t have to be a new business to secure a microloan, but if you are, this financing option can give you the opportunity you need to grow and scale.

Can I Get a Loan Based on My Assets?

Asset-based lending allows you to leverage the assets on your balance sheet as collateral to secure a loan. Offering an asset as collateral gives your lender an extra layer of assurance that you’ll repay the loan within the terms, and if you don’t, they’re legally allowed to seize the asset to recoup their losses.

Some entrepreneurs try to avoid offering collateral at all costs because they don’t want to risk losing something vital to their operations. But, if you are actively involved in your repayment, you likely won’t have a problem, and you can grow your business without restraint.

Last Updated on September 13, 2022

National Business Capital helps entrepreneurs secure quick and fair financing to save time and cultivate sustainable growth.

Our stress-free online platform is designed for simplicity and speed, helping business owners go from application to approval in a matter of hours. And while we remain a leader in the Fintech industry, our clients agree it’s our personalized service and award-winning team that sets us apart.

From SBA loans to lines of credit, to equipment financing, and more, business owners can access all the different financing programs available to them in one place. Through our streamlined process, we have helped clients secure $2 billion in financing since 2007, and, more importantly, we’ve helped entrepreneurs save a tremendous amount of time and grow faster.

About the Author, Phil Fernandes

Phil serves as VP of Financing for National Business Capital. He boasts 15 years of sales experience, 10 years of managerial experience, and has been with National for over 6 years. His role at National focuses on managing and directing National’s team of Business Finance Advisors and overseeing project development. Phil is also responsible for Financial Reporting, where he prioritizes results and revenue growth. Phil is passionate about sharing his expertise and insight with small business owners, and regularly contributes articles on National’s blog. 

https://www.linkedin.com/in/phil-fernandes-6659a267/


Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions, or mistakes.