Why cash flow loan is important for small business?
Cash flow finance is a form of funding where the loan is secured against the company’s expected cash flows.
This is different from traditional loans, which are backed by an asset, and projected repayments schedules are based on the enterprise’s future cash flows. This form of finance is most suitable for businesses that sell products and services on credit where capital is not realised right at the time of the transaction.
Cash flow loans, therefore, bridge the gap between a firm and their expected future income by providing them with the funds today in exchange for an appropriate portion of their future cash flows.
This allows your business to continue with its daily operation or investment projects without being restricted by the low cash on hand.