What is cash flow finance ?

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Manage Your Finances

The UK currently has around 5.6 million businesses within it. Each business will at some point require an injection of cash and most commonly that will come in the form of a loan. Whilst there are other means to gain capital such as getting investment or selling shares to raise funds, the most straightforward way is to get a loan from the banks.

Whilst getting a loan is a relatively simple process, that doesn’t mean it’s guaranteed to be approved. The latest data available revealed that 20% of credit applications are rejected in the UK.

For businesses that are relatively new or have yet to make any significant profit, loans may not be a viable option as the banks may not feel confident in your business. Fortunately, if your future revenue projections seem healthy then you now stand a chance of securing a loan. This is known as cash flow finance.

Read on to find out more about cash flow finance and how it is used.

What is cash flow finance?

Cash flow financing is when a loan made to a company is backed by its expected cash flow. This is the amount of money that comes in and out of the business during a specific period.

This form of financing is particularly useful for those businesses that currently have little capital but are expecting to make a decent return down the line. Banks will feel confident that whilst the business wouldn’t be able to pay back a loan at this moment in time, they will be able to as the business progresses.

What can cash flow finance be used for?

Cash injected into your business can be used for anything your business needs to grow and succeed. Currently enjoying growth? You may need to use the money for larger premises to fit your new recruits. You may also have been hit with unexpected bills, as many people are doing at the minute. In this case, you may need to take out a loan to pay your bills to keep operating.

Check if you qualify for a cash flow loan and apply for one today. Loans are a part of any business and are relied upon from time to time. Take advantage of this to ensure your business gets the capital it needs to perform at its best.

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