What is Cash Flow Financing?

Cash flow financing is when a loan is made to a company and backed by the company’s existing and expected cash flows. This type of financing is different from an asset-backed loan, where the collateral for the loan is based on the business’s assets.

✓ What is invoice financing?

Invoice financing, also known as receivables financing, is a short-term ( usually 90 day) loan which is borrowed against outstanding invoices. A business receives a next day cash advance for receivables (invoices) that clients are due to pay. Many small businesses have a hard time covering expensive materials or unexpected costs that pop up while waiting for the money to come in, and that’s where invoice financing companies like FundThrough come in.

✓ Lendified.

Lendified is bigger than Lending Loop. It’s institutional money that may be able to fund your next step with up to $150,000. Their financing is straightforward, and can help Canadian small businesses that can’t get the funding they need from a bank or an alternative lender. Interest starts at 8%, most loans are in 10%-12% range. If that seems high, think again. With Lendified, your company could save up to 40% compared to a merchant advance.

✓ Lending Loop.

Lending Loop is Canada’s first fully regulated peer-to-peer lending platform focused on small businesses. Since it can be a struggle for small businesses to afford financing because of all the costs and overhead of banks, Lending Loop has developed a platform to connect all types of investors with small businesses in Canada looking for financing to grow more profitable.

✓ Merchant Advance.

Merchant Advance Capital is a Canadian alternative financier, offering short term loans to small businesses that would most likely not be able to receive from established Canadian banks. Typical reasons for a merchant advance include inventory purchases, taking advantage of an unexpected opportunity, renovations, equipment purchases, and advertising.

Their Flex financing can give you $5,000 to $500,000 to grow your business. They provide the capital as an advance against future credit and debit card sales. It’s best for seasonal small businesses that need temporary extra cash for staffing, inventory deals, ramping up for the busy season, or paying off some higher interest debt they’ve accrued during slow times. To qualify, your Canadian-based business must be at least 6 months old with at least $5,000 in average monthly sales.

Their Fixed Solution is a traditional small business loan for $5,000 to $500,000, which is geared towards businesses that don’t have debit/credit sales or prefer a fixed repayment schedule and maturity date. As with the Flex Solution, your Canadian-based business must be at least 6 months old with at least $5,000 in average monthly sales.

✓ Velocity by FundThrough.

Velocity Invoice Financing is Canada’s fastest-growing working capital solution, as it allows small business owners to access funds tied in outstanding receivables. It gives you control over when you get paid. Velocity receives payment directly from your client when they pay your invoice. You can control which clients invoices you want paid immediately from within your account. It’s quite easy to apply and be approved. You get the full value of your invoice deposited into your business bank account the next day, and the fees are pretty low at 2.5%.

✓ Which financing cash flow program fits?

your business’s needs, may that be through Velocity by FundThrough, Lending Loop, Lendified, or an alternative financier like Merchant Advance. It is also important to have a continuous attention to the process of cash flow improvement to help you achieve the desired results over time.