With cash flow financing, loans are made to a company backed by that company’s expected cash flow.
Cash flow is the amount of money that flows through a business in a particular period. Cash flow financing is also known as a cash flow loan. The loan’s payback is based on the generated cash flow.
This type of financing is particularly helpful to those businesses that generate significant amounts of cash from sales but don’t hold a wealth of physical assets, like equipment, which could otherwise be used as collateral for a loan.