Business cash flow loans are financing decided mainly on the money moving through your business, your deposits and your earnings, instead of on property or equipment you pledge. Through our network, two products work this way from the start: revenue-based financing from $5,000 to $2,000,000, which is a merchant cash advance sized on your usual deposits and repaid with a set daily or weekly payment, and lines of credit up to $2,000,000 that you draw on as bills come due. SBA-equivalent and bank loans read cash flow too, but they measure it from tax returns with a debt service coverage ratio and take weeks. Which one fits depends on whether you are paying for something once or covering a gap that comes back with every invoice.
What cash flow loans are
Every lender wants to know how it gets repaid. A cash flow lender answers that from the business's own income, so it studies deposits, earnings and the payments already going out. An asset-based lender answers it from collateral. The Office of the Comptroller of the Currency's handbook on asset-based lending describes those loans as based on the assets pledged, with the main source of repayment being the conversion of that collateral to cash, and it sets them apart from what it calls operating cash flow lending.
For a business that rents its space, owns little equipment and has steady sales, cash flow lending is often the faster route because nobody has to appraise anything. In the Federal Reserve Banks' 2025 Report on Employer Firms, 42% of firms that applied for financing at online lenders said the lack of a collateral requirement influenced where they applied, compared with 20% of applicants at large banks and 9% at small banks. The same report notes that firms which held back from applying because they expected lenders to turn them down also cited irregular cash flow or a lack of assets suitable for collateral.
Collateral-led financing still has a place. Equipment financing is secured by the machine it buys, and a commercial equity loan draws on property you own. Our guide to working capital loans covers the main ways to pay for day-to-day costs, from short-term loans to SBA working capital programs.
Two ways lenders read your cash flow
Cash flow financing is decided in one of two ways, each from its own set of documents. Revenue-based funders and many line of credit providers work from your recent deposits. Banks and long-term lenders work from your earnings over years.
| Deposit-based | Earnings-based | |
|---|---|---|
| Products | Revenue-based financing, most lines of credit | SBA-equivalent and bank loans |
| Main documents | Four months of business bank statements and a short application | Two to three years of tax returns, financial statements, a personal financial statement and a debt schedule |
| What is measured | Monthly deposits, how steady they are, the balance on a normal day, and payments already coming out | Operating cash flow against all yearly debt payments, the debt service coverage ratio |
| How fast | Typically one to two business days | Weeks |
| How it is repaid | A set daily or weekly payment, or weekly or monthly payments on what you draw | Monthly payments over years |
Revenue-based financing, an advance sized on your deposits
Revenue-based financing is a merchant cash advance. A funder buys a portion of your future sales at a discount and pays you the purchase price up front. The amount is sized on what the business usually deposits, and you repay it with a set daily or weekly payment until the agreed total is paid. Through our network it runs from $5,000 to $2,000,000, the decision rests mainly on four months of business bank statements, and most applicants are funded within one to two business days of choosing an offer. Credit counts as one factor among several, so a low score narrows the options without ruling them out.
The cost is a fixed dollar amount set by the factor rate. On an example $20,000 advance at a factor rate of 1.20, the business repays $24,000, so the money costs $4,000, collected as 12 set weekly payments of $2,000. What decides the size of an offer is covered in how much you can get from a merchant cash advance.
A line of credit for gaps that come back
A business line of credit gives you a limit, up to $2,000,000 through our network, and you draw only what a given week needs. You repay weekly or monthly on what you have drawn, and the room opens up again as you pay it down, so the same line can cover the next gap without a new application. Offers typically come back in one to two business days. Funders look at revenue first, with more weight on credit than for an advance, and some programs discount a draw that is paid off early.
Because a line costs money only on the balance that is out, it suits a business whose gap opens and closes on a cycle. If you are weighing a line against a lump sum on a fixed schedule, line of credit vs term loan compares the two.
How bank and SBA-equivalent loans use the debt service coverage ratio
Long-term lenders read cash flow from your financial statements and ask one main question, which is whether a normal year's earnings cover all of the business's debt payments with room to spare. The measure is the debt service coverage ratio, or DSCR. The SBA's lending rulebook, SOP 50 10, defines it for 7(a) loans as operating cash flow, meaning earnings before interest, taxes, depreciation and amortization, divided by the required principal and interest payments on all business debt, including the new loan. Under SOP 50 10 8, effective June 1, 2025, that ratio has to be at least 1.15, and the October 2026 update kept the same figure for standard 7(a) loans.
In a worked example with made-up numbers, a commercial cleaning company has operating cash flow of $120,000 a year. It already pays $30,000 a year on two van loans, and it wants a long-term loan with payments of $4,000 a month, or $48,000 a year.
- Total yearly debt payments with the new loan come to $30,000 plus $48,000, which is $78,000.
- The ratio is $120,000 divided by $78,000, which is about 1.54.
- At the SBA's 1.15 floor, $120,000 of cash flow supports up to about $104,350 a year of total debt payments, so this company has room for about $74,350 a year in new payments, a little under $6,200 a month.
The SBA figures are information about the real program. Today Capital Group does not place SBA loans. Through our partners we offer SBA-equivalent loans outside the program, with long terms and monthly payments, and the partner sets the rate, term and collateral. These take weeks because of the tax returns and debt schedule, and our guide to business term loans shows how they are priced.
Cash flow financing for a one-time cost or a recurring gap
A one-time cost has a single amount and an end, such as a repair, a bulk order at a supplier discount or the start-up costs of a new contract. Revenue-based financing fits that well because the money typically arrives in one to two business days, the cost is fixed in dollars at signing, and the set payment runs until the total is paid and then stops.
A recurring gap opens every time money goes out before a customer pays: payroll ahead of net-45 invoices, stock bought weeks before it sells, or crews hired before a busy season. A line of credit fits that pattern because you draw when the gap opens, repay when the customer pays, and draw again on the next cycle. Our posts on payroll loans for small business and seasonal business loans cover two common versions of this.
Some owners use both. A line handles the cycle, and an advance pays for a single cost the line was never sized for. Lines put more weight on credit, so an owner whose file does not yet suit a line may see an advance offered first.
A worked example of a 45-day receivables gap
The figures below are an example only, not a quote or the terms of any funder. The cleaning company from the DSCR example starts with $30,000 in the bank. In a normal week, about $35,000 comes in and $33,000 goes out. It wins a contract for 12 office buildings worth $45,000 every four weeks, billed at the end of each four-week period on net-45 terms. The extra crew and supplies cost $9,000 a week from the first week, so the contract earns $9,000 per cycle once it is running. The first invoice goes out at the end of week 4 and, 45 days later, is paid in week 11.
| Week | Money in | Money out | Balance at the end of the week |
|---|---|---|---|
| 1 | $35,000 | $42,000 | $23,000 |
| 4 | $35,000 | $42,000 | $2,000 (first invoice sent) |
| 5 | $35,000 | $42,000 | Minus $5,000 |
| 10 | $35,000 | $42,000 | Minus $40,000 (lowest) |
| 11 | $80,000 | $42,000 | Minus $2,000 (first $45,000 paid) |
| 13 | $35,000 | $42,000 | Minus $16,000 |
Without financing, the account would sit $40,000 short at the end of week 10. If the owner wants at least $10,000 in the bank at all times, the need at the low week is $50,000. The second invoice is paid in week 15, and after that the account climbs because each cycle adds the contract's $9,000 margin on top of the normal $2,000 a week. As long as the contract runs, though, there is always finished work that has not been paid for yet, so a smaller dip comes back with every invoice cycle.
With a line of credit, the owner draws $1,000 in week 3 and $7,000 a week from week 4 through week 10, so the balance on the line peaks at $50,000. When the first $45,000 arrives in week 11, $38,000 goes back to the line, and the owner draws $7,000 a week again until the week 15 payment clears it. At an example charge of about $92 a week for every $20,000 outstanding, that adds up to about $1,350 by the time the line is back to zero.
An advance could carry the first cycle as well, but it has to be sized for the low week plus the set payments that come out before the first invoice is paid, and those payments continue after week 11, while the crew costs keep coming. That makes the advance the closer fit for the contract's one-time start-up costs, such as hiring and training the new crew, and the line the closer fit for the 45-day cycle itself.
Read your own cash flow before you apply
A 13-week view shows roughly what a funder will see in your statements, and which product fits, before you ask for anything. The New Hampshire Small Business Development Center publishes a free 13-week cash flow template laid out week by week, starting from beginning cash, adding sales and other income, subtracting cost of goods and each expense line, and ending with the cash left at the end of each week.
- Start with the cash in your business account today.
- Enter the money you expect each week, using the date each customer actually tends to pay, not the invoice date.
- Enter every payment going out: payroll and payroll taxes, rent, suppliers, insurance, and any loan or advance payments.
- Find the lowest week and the cushion you want to keep. The gap between them is the amount that matters.
- Count how many weeks the account stays below the cushion. A few weeks that end when a known invoice is paid suit a line of credit, and a single cost with no repeat suits an advance.
- Test the new payment. Add an example weekly payment to the out column and check that the account still clears the cushion in your slowest weeks.
If a long-term loan is part of the plan, run the DSCR math from the example above on last year's numbers too. And because deposit-based funders read the same months you are planning, keep sales deposits in one business account and keep transfers from savings separate, so the statements show what the business really brings in. Our working capital guide walks through the bank statement items underwriters read.
How to apply for a cash flow loan through us
The application is a short form plus four months of business bank statements, uploaded as PDFs or sent to us by email. Getting matched does not need a hard credit pull, since most funders prequalify from bank statements and a soft pull, and you will know before any funder runs a hard pull in final underwriting. Your file goes to the funders in our network, and the offers that come back, advances and lines of credit alike, are laid out side by side so you can compare the payment, the total payback and the term before you sign. There is nothing to pay to apply or to see offers. The funders we work with generally look for about a year in business and about $20,000 a month in deposits. If you are not there yet, apply anyway, because some funders work with newer or smaller businesses and we will tell you what is realistic. To talk through your 13-week view first, call (818) 351-0225.
Frequently asked questions
What is a cash flow loan?
A cash flow loan is business financing decided mainly on the money the business brings in, read from bank deposits or financial statements, instead of on collateral it pledges, and through our network it includes revenue-based financing from $5,000 to $2,000,000 and lines of credit up to $2,000,000.
What is cash flow financing?
Cash flow financing is any funding where the lender or funder expects to be repaid from the business's ongoing income, so it sizes the offer on deposits or earnings, which covers merchant cash advances, most business lines of credit and bank loans underwritten on a debt service coverage ratio.
Do business cash flow loans need collateral?
Revenue-based financing and many lines of credit are decided on deposits and usually do not ask for specific collateral, while SBA-equivalent and bank loans weigh collateral along with tax returns and credit, and asset-based financing such as equipment financing is secured by what it buys.
What debt service coverage ratio do lenders look for?
The SBA's SOP 50 10 requires standard 7(a) loans to show operating cash flow of at least 1.15 times all yearly business debt payments including the new loan, and other long-term lenders run a similar test with their own minimums, so a business with $120,000 of operating cash flow supports about $104,350 a year of total debt payments at that floor.
How fast can I get a business cash flow loan?
Revenue-based financing is typically funded within one to two business days of choosing an offer, line of credit offers typically come back in one to two business days, and SBA-equivalent and bank loans usually take weeks because of tax returns, financial statements and the debt schedule.
