What a cash flow loan is
A cash flow or working capital loan helps a business cover day-to-day costs, such as wages, stock or bills, while waiting for customers to pay. They're usually short-term and lenders often base them on the business's turnover and trading history.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Worked example
Borrowing £20,000 at 12% over 12 months costs £1,776.98 a month, £21,323.71 in total.
Alternatives
Other options include an overdraft, a revolving credit facility, or invoice finance, which advances money against unpaid invoices. Compare the total cost, including fees, of each.
Inputs for the cash flow loan calculator
Amount to borrow
The amount the business needs.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
The length of the loan in months. Cash flow loans are often short-term.
CALCULATOR QUESTIONS
Cash flow loan calculator questions
What is a cash flow loan?
Short-term business borrowing to cover day-to-day costs while you wait for income to come in.
How long do cash flow loans last?
Often from a few months to a couple of years, depending on the lender.
Are short loans cheaper?
Over a shorter term you pay interest for fewer months, but rates on short-term business loans can be higher. Compare the total repayable.
Does this include fees?
No. Some cash flow lenders charge arrangement fees, so add these when comparing.