Cash Flow Loan

A cash flow refers to the rhythmic flow of cash moving in and out of a company. Money comes in (from sales), money goes out (for expenses). A cash flow loan feeds into that ebb and flow but on a short-term, temporary basis. Think about it like one of those dams on a river, where they can store water and let it flow more or less based on how much water is needed. The cash flow loan is like that reservoir, letting companies smooth over dry times.

These kinds of loans are normally given to startups or smaller companies that are unable to secure larger, more substantial asset-based loans. This loan funds important needs like payroll, supplies, and materials but typically charges a higher interest rate.

For example, let's say you just opened a sandwich shop and borrowed $15,000. With this new loan, you'll be able to pay for immediate needs like employee compensation, napkins, chips, kosher pickles, provolone, prosciutto, and toilet paper and soap (those last two are just for the bathroom, not for a specialty sandwich). And the hope is that your able to quickly repay this small loan with your new rushing cash flow.