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Online Cash Flow Lender

Online cash flow lenders offer short-term, high-interest loans typically used for working capital such as purchasing inventory, bridging receivables gaps, expansion or managing unexpected expenses and cash flow. These lenders require access to your business bank account or merchant accounts in order to make a decision by evaluating cash flow rather than by credit score. Because they have a real-time window into a company’s sales, they can lend to businesses that other lenders might turn away. Loan payments are made by deductions of a fixed amount or percent of sales on a daily basis, rather than citing an interest rate. That can make it difficult to tally up the true cost of the loan. This option is often less expensive than a MCA—but often not by much. Entrepreneurs should beware of high interest rates and often-opaque terms, including origination fees and potential pre-payment penalties.

Pros

  • Instant decision, fast access to cash (as little as 10 minutes)
  • Flexible underwriting as long as you have cash flow
  • No collateral required (personal guarantee in most cases)
  • These lenders are facing pressure to become more transparent
  • Expensive

Cons

  • Opaque pricing makes true cost of loans hard to determine (often 50%+)
  • Most online lenders require access to your bank account or payment systems
  • Borrowers can get locked into cycle of short-term, high-interest loans
  • Short-term loans (3-9 months), not sustainable for long term growth
  • Your account will be turned over to collections if you default