Cash Flow Lending Key Terms

Learn cash flow lending key terms to negotiate loans and grow your business assets

Cash flow lending helps businesses to manage cash flow by providing funds because of seasonal requirements, business expansions or declines. Cash flow loans help businesses generate cash for operations and acquisitions. When a company has predictable and sustainable cash flows or net income, it has more cash flow lending options available. There are cash flow lending key terms that both new and seasoned business owners should know before applying for a cash flow loan. Knowing these key terms will make negotiating loans less stressful. Become familiar with cash flow lending key terms to apply for a cash flow loan.

 

Advance rate

Advance rate is the face amount percentage of an income stream that a funding source advances to a client. The percentage of advance rates is usually part of the total invoice amount.
Try: Find out about advanced rates for cash flow lending at 1st Commercial Credit.

Depreciation expense

Depreciation is a decrease in value of assets. Depreciation expense is the reducing of net earnings or cash flow to write off the costs of assets.
Try: Review the information about cash flow lending depreciation expense at AccountingCoach.com.

Amortization

Amortization is act of paying off debts by making scheduled periodic payments. Mortgages and loans are examples of items with systematic payments. The abbreviation (EBITDA) earnings before interest, taxes, depreciation and amortization, is commonly used with reference to amortization.
Try: Read the article highlighting Amortization (EBITDA) at Club Industry's Fitness Business Pro.

Recapitalization

Recapitalizations allows company owners to diversify their own personal wealth while they continue to maintain ownership of their business. Owners sell off portions of their equity to increase cash flow to benefit their company's continued growth.
Try: Gather information about recapitalization at EconomyWatch.

Cash flow lender

Cash flow lenders analyze the cash flow of businesses to ensure their ability to repay loans. Cash flow lenders also review things such as collateral as well as credit and payment histories as part of their decision whether to provide loans.
Try: Find out about the services offered by cash flow lender, Wells Fargo.

Due diligence

Due diligence is when a potential buyer evaluates the cash flow or liabilities of a company. The results of due diligence can be legally binding but often investigations are done voluntarily. When an investor is interested in acquiring a company and does an evaluation of their assets and liabilities, that is an example of due diligence. Due diligence is a common practice in business though the methods used may differ depending on a company's interests.
Try: Read the information that features due diligence in the article at Bank of America.

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