Cash Flow Finance is a general term encompassing the types of funding options available to help businesses with their ongoing cash flow. It enables businesses to fund key operations, reach goals and avoid risk. Even if you have no problems with your cash flow, taking out a business cash flow loan can help push your company to new heights by enabling the business to grow without worrying about paying the day-to-day expenses.
If your business takes invoices, for example, you might not see that money until the job is finished. If you need to purchase materials and inventory, you might struggle to get the funds together to complete the job. With Cash Flow Finance, you can get a loan to cover the cost of materials to complete the job and then pay the loan off once the money has come in.
Business actions that can be funded with this type of finance include:
- Paying suppliers
- Purchasing stock
- Funding an upcoming expense
- Paying unexpected bills
- Paying VAT and tax bills
What are the different types of cash flow finance?
Cash Flow Finance is a general term that covers several separate business funding products that we can offer at Aurora Capital. Find out more about each of our available business cash flow loans below.
VAT/Tax loans
- Loans up to £85k
- Paid directly to HMRC
- Terms over 12 months
If you’re running a business, you’ll be well-aware of your tax and bookkeeping, and depending on how much you earn as a company, you may need to pay VAT tax at the end of each quarter.
The same goes for corporation tax, which needs to be paid at the end of the year. Because corporation tax is calculated retrospectively, you need to have a pocket of cash put aside for the returns. If you don’t, your business could run into trouble.
A VAT/Tax business cash flow loan is a short-term finance facility allowing you to clear outstanding Vat or Tax before HMRC comes knocking. We can raise up to £85k in a matter of hours, allowing you to get on with your daily tasks. VAT and tax loans can give your business the cash flow boost it needs to pay the bills and keep the taxman at bay. Many lenders can offer to send the funds straight to HMRC and structure repayments over 1-12 months. Other lenders may offer a simple unsecured business loan.
Invoice finance
- Facilities up to £2m
- Selective and whole debtors facilities
- Raise up to 90% of invoice value
If you have money tied up in unpaid invoices, invoice finance could provide the funding your business needs to maintain operations. As invoices can take a long time to complete, you can be left without money for days or even months. Invoice finance enables a quick cash injection to get your business on its feet and moving in the right direction.
With this business funding product, you can receive up to 90% of your unpaid invoice amounts without the need for a PG or credit check. If you have clients with a good record for paying bills, invoice finance could be your best option for getting cash fast.
Explore Invoice Finance Options
Trade finance
- Line of credit up to £3m
- Extend supplier credit terms up to 150 days
- Completely unsecured
Trade finance is a broad term to describe finance used to aid businesses who trade internationally, domestically, or both. This finance is used to help fund transactions between your suppliers. If you find yourself short of cash when buying inventory, trade finance could give you the capital needed to fulfil a purchase.
If your business is unable to purchase a large shipment of important stock, trade finance can be there to pick up the financial load. Your supplier can invoice directly to the lender, cutting out unnecessary transactions and adding security for the seller. Trade finance allows the buyer to honour a large wholesale order and allows the seller to fulfil the order without any risk.
Revolving credit facilities
- Make multiple drawdowns
- Terms up to 2 years
- Only pay for what you use
A Revolving credit facility is a line of credit which allows a UK business to access funds whenever necessary. Instead of having to reapply for new credit once you’ve paid it back, this type of credit remains accessible for the term agreed. You’ll agree to a limit based on affordability tests and your credit rating, and have access to that amount until your terms are up or you decide to end the service. This business cash flow loan is ideal for businesses that may not need all the funding at once.
Explore Revolving Credit Facility Options
Business Cash Flow Loan FAQs
How to apply for a business Cash Flow Loan with Aurora Capital
To begin with, you will need to find out if you will be eligible, which will be determined by the type of business finance you decide to apply for. Cash Flow Finance is a general term that covers a range of products and services, and details of each can be found above. You need to first decide what you need the capital for and apply for the correct service.
For a quick example, if you were to require trade finance, you will typically need to have a turnover of £1 million a year. However, there are lenders who will provide funds to smaller companies. Lenders will still need to assess the order quantity, end-buyer, and a few other things before they can offer business financing.
If you’re ready, you can apply online now and our decision engine will match you with an ideal lender depending on your requirements. From there, you can begin discussions with the lender and have your funds in your account within days.
Why might a business need a cash flow loan, and what can a business cash flow loan be used for?
A business cash flow loan can be used for a range of business operations, such as
buying premises, paying tax, releasing cash from invoices, hiring new staff, and much more. It is essentially used for specific cases where cash flow is needed to complete a transaction. But why might businesses need one in the first place? Here are some of the most common reasons:
Low profit margins
Naturally, one of the main reasons businesses apply for loans is because they are lacking in profits. This is particularly common for startup businesses who are yet to establish themselves in the market. While a cash flow loan can help to get companies with low profit margins back on their feet, it is also useful to engage in powerful marketing activities, redefine your service offering as something unique within our field and interact more with potential buyers, both on and offline.
High overloads
This is usually more of a problem for bigger companies, but all businesses can experience high overloads due to unexpected expenses, such as growing supplier costs or monthly maintenance bills. While it can be an option to try and make some cuts across the board, applying for cash flow finance is often the simpler and easier solution.
Poor planning
When it comes to keeping track of your finances, planning is key, and lack of it can result in you having to apply for funding. When you have multiple large sums of money leaving and entering your business accounts, this can have a direct impact on your cash flow if not properly managed. Try to forecast when money will be coming in, and align any payments you need to make so that you can avoid dipping into an overdraft.
Late invoices
As one of the most common factors that result in businesses needing a sudden cash flow boost, late invoices can be detrimental and difficult to manage. If you have funds outstanding in invoices, applying for cash flow finance can help. Of course, other more specific products on the market such as invoice finance can also support you here. In the meantime, tightening up on credit control and developing a system where you can track and chase late invoices can at least release some of your missing cash.
How much can I borrow and how long can I borrow for?
How much you borrow and the length of time you can borrow for will largely depend on which business cash flow loan you apply for – for example, with Revolving Credit Facilities you could have funds for up to 24 months, but others may have much shorter terms. It will also depend on the lender, but at Aurora Capital we will ensure you are provided with the options that will best suit your needs.
How can I find a lender?
As funding specialists, Aurora Capital provides SMEs with business loans that are suited directly to their needs. Over the years we have built up relationships with multiple lenders who can provide fast and flexible funding, meaning we can offer a wide array of business loan types with numerous benefits and competitive rates.
Finding the right funding is often a long-winded process, with plenty of variables to consider from all the different providers. Our finance experts can help, providing you with a list of the best deals and rates.
What are the limitations of cash flow finance?
As with any business loan, there are some limitations to cash flow finance that you should try to keep in mind. Typically, a cash flow injection to your business will involve:
- Higher fees: It is not unusual for cash flow loans to have higher interest rates than traditional loans. You should make sure you have the capacity to not only repay the loan, but also deal with these fees when necessary.
- Guarantees: Most of the time a cash flow loan will not require you to put up any assets as collateral, but a lender may request that you sign a personal guarantee (making you personally liable for the loan repayment). Alternatively, your business itself may be included in the terms of the loan as a way to secure it.
- Automatic, regular repayments: For lenders to ensure they are receiving regular repayments, they could potentially make it a requirement to set them up automatically, giving you little control. If you fail to plan ahead for this, you may not have the funds in your business account to make timely repayments, and would therefore be faced with late fees.
If you’re thinking about applying for cash flow financing, be sure to consider the above limitations and conduct some careful planning before you agree on terms with your lender. At Aurora Capital, we’ll help to keep things as transparent as possible and make sure you aren’t caught out with additional fees or time constraints.
Why choose Aurora Capital for cash flow finance?
Aurora Capital are experts in business funding in all capacities, and have had years of experience helping clients raise the necessary capital to grow and expand.
Our powerful decision engine pairs businesses looking for quick loans with trusted lenders offering great interest rates and other repayment terms. Whether you’re looking for Cash Flow Finance, secured or unsecured business loans or property finance, we have the expertise to guide you towards the best decision for you and your business.
If money is posing a problem for your company, apply for a business cash flow loan today and help support your operations and prevent significant dents in your business bank account.
