How does a cash flow loan differ from a traditional term loan?

A cash flow loan differs primarily from a traditional term loan in its repayment structure. While a traditional term loan typically follows a fixed repayment schedule, a cash flow loan is repaid based on the borrower’s projected cash flow. This means the repayment amount fluctuates based on the business’s cash flow, providing more flexibility. Cash flow loans often prioritise the borrower’s ability to generate consistent cash inflows rather than relying heavily on collateral or tangible assets as security.