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Does Cash Flow Affect Business Loan Approval? If So, How?

Person counting dollar bills

Cash flow measures the net amount of cash (and its equivalents) coming into and going out of a company. Net money spent is called cash outflow, while net cash received is called inflow.

Cash flow analysis can give lenders insight into the financial health and stability of their company. For example, high amounts of cash going in and out shows that your business is sustainable. High long-term free cash flow also implies high profitability. Improving your cash flow makes your business more stable and increases profits, which is attractive to lenders.

NYC business loan agent referral companies like Whitestone Fund can refer you to loan offers suitable for your cash flow. Apply for a referral now!

How Inconsistent Cash Flow Affects Business Loan Approval

Having a high cash flow isn’t enough. Lenders want to see monthly recurring revenues and consistent cash flow to judge your business’s ability to repay the loans. If your cash flow is highly variable, there’s a risk that you won’t always be able to easily make the payments, which makes lending riskier.

This means only a few lenders will accept your loan request unless to apply for financial products suited for your company. Work with the referral team at Whitestone Fund to find the best loan packages in NYC.

Tips for Improving Your Cash Flow

Focus on Customer Retention

If a large percentage of your sales comes from returning customers, it will make your cash flow less dependent on your marketing campaigns and more stable.

Diversify Your Product Portfolio

Yearly patterns in your sales make your cash flow consistent. If your products sell more during some months than others, diversify your portfolio to make your sales and revenue even throughout the year.

Forecast Your Cash Flow and Manage Expenses Accordingly

Active management of cash flows can bring consistency. Forecast your cash flow and manage various business operations and activities to minimize inconsistencies in cash flow.

Consider Getting Merchant Cash Advances in NYC

An inconsistent cash flow is only an issue for lenders because it lowers your ability to make monthly payments. What if you could repay the loan in proportion to your profits? That’s exactly how merchant cash advances work.

A merchant cash advance loan is a quick way to support your cash flow and get your business out of a difficult situation. Instead of paying a fixed amount monthly or weekly, you pay the lender a percentage of your sales. It doesn’t matter how inconsistent your cash flow and revenue are as long as you’re making profits.

At Whitestone Fund, we offer business financing loans and merchant cash advances to small businesses in NYC. We have a loan application acceptance rate of 95% for cash advances of up to $1,500,000 with repayment terms of 6 to 36 months. Click here to contact one of our representatives today!

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