Cash flow lending is a type of business finance where the loan is assessed and secured primarily against the business's revenue and cash flow — rather than physical assets like property or equipment. For asset-light businesses (service providers, consultants, retailers), it's often the most accessible form of funding.
How Cash Flow Lending Works
Instead of asking "what assets can you offer as security?", a cash flow lender asks "what does your bank account show?". They analyse:
- Average monthly revenue deposited into business accounts
- Consistency of deposits — irregular cash flow = higher risk
- Number of days the account runs at low balance
- Existing debt obligations
- Business operating expenses and margins
The maximum loan amount is typically set as a multiple of average monthly revenue — often 1–3x. A business turning over $80,000/month might qualify for $80,000–$240,000 in cash flow lending.
Types of Cash Flow Finance
| Product | How It Works | Repayment |
|---|---|---|
| Unsecured business loan | Lump sum based on revenue history | Fixed monthly repayments |
| Business line of credit | Draw up to a limit as needed | Interest on drawn amount |
| Merchant cash advance | Advance against future card sales | % of daily card revenue |
| Revenue-based finance | Advance repaid as % of monthly revenue | Variable — tied to revenue |
| Invoice finance | Advance against unpaid invoices | Repaid when invoice is paid |
Who Uses Cash Flow Lending?
Cash flow lending suits businesses that:
- Have strong consistent revenue but limited physical assets
- Need fast access to capital (within 24–72 hours)
- Are growing quickly and need working capital
- Have a seasonal business and need to manage cash gaps
- Are too new to meet traditional bank requirements
Common industries: hospitality, retail, professional services, trades, health and allied health, online businesses.
Cash Flow Lending vs Secured Business Loan
| Factor | Cash Flow Lending | Secured Business Loan |
|---|---|---|
| Security required | No asset security | Property or asset required |
| Approval time | 24–72 hours | 1–6 weeks |
| Interest rate | Higher (9–35%+) | Lower (5–10%) |
| Loan amount | Up to $500K typically | Unlimited (subject to security) |
| Documentation | Bank statements only (often) | Full financials required |
The cost matters: Cash flow lending is fast and accessible, but the effective annual rate can be very high. A $100,000 advance with a factor rate of 1.25 means you repay $125,000 — regardless of how quickly you repay it. Always calculate the true annualised cost before signing.
Main Lenders in Australia
Non-bank cash flow lenders include Prospa, Moula, OnDeck, Capify, Lumi, and Zip Business. Banks offer business lines of credit and overdrafts at lower rates but with stricter criteria and slower approval times.
When to Use a Broker for Cash Flow Finance
Cash flow lending is a market where rates and terms vary enormously between lenders. A broker who specialises in business lending can compare multiple options, negotiate terms, and match you to a product that suits your cash flow profile — rather than whatever the first lender you Google is offering.
Frequently Asked Questions
Typically 1–3x your average monthly revenue, up to around $500,000 for most lenders. Higher amounts are available from some lenders with longer operating history and strong financials.
Many cash flow lenders only require 6 months of business bank statements and basic business details (ABN, time in business, revenue). Some use open banking to access your statements directly, making the process very fast.
Some lenders will consider businesses with as little as 6 months of trading, provided the cash flow is consistent. Most prefer 12+ months. Very new businesses typically need to explore other options like personal loans, overdrafts, or credit cards initially.
A factor rate (e.g., 1.2) means you repay the advance multiplied by that number. A $50,000 advance at 1.2 costs $60,000 total — $10,000 in fees. To find the annualised rate, divide the total cost by the term in years. A 12-month loan with 1.2 factor rate = 20% p.a. effective.
Potentially yes. Business debt can affect your personal serviceability if you've provided a personal guarantee. Mortgage lenders may include the repayment as a liability. If you're planning both a home loan and business finance, talk to a broker about timing and structure.