![]() your top customers are taking a bit longer to pay their invoices.you need to buy inventory to meet a sudden spike in demand.you want to take advantage of supplier volume discounts without straining cash flow.you’re growing rapidly or developing a new product, but it’ll take time for sales growth to recoup the cost of investments in marketing, new hires or R&D.your business has a history of positive cash flow but now you’re near the limit of your credit line. ![]() It’s a common pitfall for many entrepreneurs.” “This can lead to major cash flow problems that can be avoided if the business uses financing instead. “You shouldn’t bury your cash in capital assets or other major investments, when you don’t have a buffer to fall back on,” Vanderzwan says. When is it usefulīusiness owners often make the mistake of paying for growth initiatives with working capital, only to wind up with a cash flow crunch. Repayment terms can vary, but may include an initial principal postponement, payments tied to cash flow and other flexible terms. “It’s a good business strategy and helps you understand how money moves through your business.” “I always tell businesses to closely map the inflows and outflows of the company’s revenues and expenses,” Vanderzwan says. Instead, bankers usually grant the loan based primarily on past and forecasted cash flow.Ĭash flow loans are usually amortized for a relatively short duration, ranging from four to eight years.Ī good rule of thumb is to match financing duration with the lifespan of the project or asset. How cash flow loans are differentĪ cash flow loan is a term loan that doesn’t require any business or personal assets to be given as collateral. Vanderzwan explains what entrepreneurs need to know about cash flow loans and how they can help your business. Growth & Transition Capital financing solutions Kauffman Fellows Program Partial Scholarship Venture Capital Catalyst Initiative (VCCI) Industrial, Clean and Energy Technology (ICE) Venture Fund
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