The business cash flow loan allows businesses to develop their activities. Financing your business cash flow through direct or online credit can take many forms, each adapted to your type of structure, your industry, and your needs.
Why apply for a business cash flow loan?
For an SME, financing its cash flow over a short period is one of the primary concerns at any given time. A cash flow loan allows to meet working capital needs and therefore to make up for delays or defaults in customer payments. These credit solutions also allow you to benefit from additional funds necessary for the launch of a project, for facing unforeseen events, or for specific periods of the year (payment of social security contributions, restarting a seasonal activity, etc.).
The cash flow loan is therefore a regularly used funding solution to finance a company. It helps to overcome difficult periods and to avoid the problem of the cash flow gap.
Remember that a company's cash flow refers to all its available liquid assets. It is calculated from the cash balance, bank accounts, and postal checks of an entity. This calculation does not include future expenses, future income or any unforeseen events.
An organization is considered to have a cash flow problem when its business slows down or when late payments from customers impact its balance sheet. A real cash flow problem appears when there is a significant gap between the inflow and outflow of money in the company's accounts. In this case, the company can finance its working capital with one or more loans, in order to gradually close the cash flow gap.
Cash flow loan: definition and typology
Professionals have access to various solutions to finance their cash flow.
The overdraft facility is a form of credit that allows a company to be in debt for approximately fifteen days while continuing its transactions. The objective of this cash flow financing is to compensate for the shortfall between its expenses and its income over a short time - usually to cover for the time period it takes for different local or international bank transfers to be executed in the banking system. The overdraft facility is not the subject of a contract - it is a flexible and adjustable verbal agreement between the company and its banking institution.
The company can also negotiate a larger and longer overdraft in order to wait for a future cash inflow and to take advantage of the currently disposable cash. This type of overdraft is authorized whenever necessary and it needs to be defined by a written contract (project concerns, duration, amount, repayment rate, etc.) with its bank. It is a cash flow financing solution that subjects the company to the payment of high-interest rates. The repayment of this arrangement, therefore, represents a cost for the company.
Some seasonal companies can obtain a campaign loan from their bank. This particular cash flow financing allows them to relaunch their seasonal activity. This type of credit has high repayment rates and requires a very stable financial liability and proof of scrupulous management of the company, as it represents a significant risk for the bank.
A company can also choose a form of financing for its cash flow which is called factoring. With this type of credit, a specialized entity called the factor buys the debts of a company by giving that company an advance. The company holds the responsibility to repay the full amount covered by this transfer over a specified period of time, and it also pays a fee for the cash advance.
How to obtain a cash flow loan?
The cash flow loan is not personal credit, but professional business financing for the company. It is granted by a banking institution or a specialized regulated entity, and can either be the subject of a contract or a verbal agreement. To obtain these loans, the company must demonstrate excellent management of its accounts and stable financial liabilities. Traditional loans cannot be obtained online, they are subject to direct contact between the professional establishment and the client.
Specialized companies, banks and their subsidiaries offer cash-flow financing solutions. Silvr is one of such providers that is able to secure long-term support to its customers who benefit from a short-term loan and can demonstrate good health of their business. Our loan simulators are available to professionals directly online. With our team, it is possible to obtain and use a cash flow loan while adjusting the amount of monthly repayments.
The response of our teams is fast and funds are available within 48 hours after the validation of the application, allowing for swift financing. Every application is subject to an analysis of the company's annual and monthly revenues, calculated using a software algorithm. In addition, it is possible to take out several loans in order to link credit to a specific project with a longer duration.
