Business Cash Flow Loans: Are they right for you?

Posted by Capify on 26th August 2021 -

A cash flow loan could be the perfect way to inject some cash into your business and help move forward

Your frequently asked questions

Small business owners will, without doubt, be used to dealing with unexpected costs, operational failures or even essential income being delayed. For all these reasons and many more, cash flow is paramount.

A healthy level of cash flow allows small businesses to ensure operations are maintained efficiently with no interruptions. Ultimately, cash flow harmonises the relationship between income and expenditure, allowing a middle ground of smooth operations where the cash flow achieved from income can cover the required working capital to keep things moving.

This is exactly why Cash Flow Loans can be so important. Here we answer some frequently asked questions about these types of business loans and look at some of the ways in which a cash flow loan can add value to your company.

What is a Business Cash Flow Loan?

Put simply, a Cash Flow Loan is a short-term unsecured loan approved in a short period of time, typically within 24 hours. A short-term business loan like this is used predominantly to get through slightly tougher months. It could be because of seasonal peaks in the business or lots of other different external factors.

According to research from Quickbooks, business owners can on average lose up to £26,000 due to insufficient cash flow and having to turn down work. A Cash Flow Loan allows business owners with the comfort and ease of mind to be able to continue operations, pay suppliers or employees in times of emergencies.

How quickly can I be approved?

Typically, Cash Flow Loans are provided with very short notice and are designed to be approved quickly. For certain lenders such as us at Capify, completing a very quick and easy form can lead to an approval decision within only a few minutes, there is minimum paperwork and businesses don’t need to provide a business plan or attend an interview before being approved.

Why Cash Flow Loans for small businesses?

Essentially, a Cash Flow Loan is a short-term cash injection to help you push your small business forward. There are a variety of reasons Cash Flow Loans should be considered for small business owners.

They can allow much-needed working capital in an extremely short period of time, granting businesses greater flexibility and reassurance that when they truly need it, cash will be available at short notice.

In certain industries such as construction, wholesale, and care homes, it’s important to consider the importance of a healthy cash net. Taking construction as an example, cash flow can procure material, pay salaries, and fund new projects. A lack of cash flow could cause a missed opportunity to build your company’s growth and when you own or manage a small business, you don’t want to be turning away work or contracts that could boost your profits.

Who can get a Cash Flow Loan?

Cash Flow Loans are primarily for small business owners who require a cash injection by the end of the month. However, any business that is eligible can apply for, and receive a Cash Flow Loan. The cash injection can then be used to pay suppliers, workers, owners or even sustain day-to-day operations to ensure the business is able to maintain itself for the future.

Who is eligible for a cash flow loan?

The minimum requirements for a Cash Flow Loan can differ for each finance provider. Some will require a security to be placed by the business owner to ensure eligibility, however this can cause complications and increases the risk for small business owners.

At Capify, you can find a good guide for how much cash you can raise. You should also consider that many lenders will look at approximately 25% of your average monthly turnover, whereas Capify can consider up to 75%.

Can I get a Business Cash Flow Loan with poor credit? 

There are a variety of reasons small business owners will encounter the obstacle of bad credit when looking for a loan. When starting out your business, you are faced with countless pressures and financial obligations with short deadlines. This can lead to late payments or a higher dependency on credit, both of which can damage your credit history.

An important factor in getting a loan with bad credit can be the issue of securitisation; small business owners can sometimes feel pressured into risking their valuable goods in order to transfer the risk of the loan from the lender onto the owner. Thankfully, this isn’t necessarily the case for all lenders. Moreover, there are a variety of alternative methods that can be considered with modern-day lenders such as personal liability, a guarantor, and higher rates of lending.

Find out more on whether you are eligible for a cash flow loan with poor credit here.

What do I need to qualify for a Cash Flow Loan?

To be eligible for a Capify Cash Flow Loan, you’ll need to:

• Run a registered UK-based business as a limited company.
• Have at least 12 months’ worth of trading history.
• Process more than £10,000 a month through your business bank account.

What is the difference between a traditional and alternative business loans?

What is an alternative business loan?

Alternative finance means the finance you borrow does not come from a mainstream provider like a high street bank. The market for alternative finance providers opened up due to the strict and sometimes unjustified criteria which high street banks hold small businesses to. Hence, alternative finance allows many SMEs to gather the capital they require more quickly and is typically more accessible too.

What are the alternatives to cash flow finance?

On top of Cash Flow Loans, there are also a variety of alternative business loans available. Alternative business loans are just as they sound, like a traditional bank loan, you would apply to an agreed amount and pay it back over an agreed amount of time with interest. The different financing options allow businesses to choose the right financing method for them, given their situation.

Are Cash Flow Loans right for you?

Cash Flow Loans provide the liquidity many business owners dream of. This cash injection keeps operations moving, which can otherwise be a nightmare for small and growing businesses. A lack of working capital can lead to serious problems at the end of the month.

With Capify, you can secure between £5,000 – £250,000 in alternative finance. Capify offers innovative loans and funding methods that are sure to be right whether you are looking for short term finance like a Cash Flow Loan, or longer-term business funding.