Cash Flow Lenders are focussed on the underlying cash flow of the business and will provide loans as a function usually 2 to 2.5 times (sometimes higher in certain circumstances) of maintainable EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation).
Whilst the asset values of debtors, stock and assets will be taken into account it is the underlying cashflow that is the main driver for these lenders.
Banks don’t tend to look at Cash Flow loans below £1m, and those that do will in most circumstances external due diligence on the robustness and sensitivity of any financial forecasts.
These lenders tend to be more sophisticated and apply financial metrics to evaluate serviceability and will build in covenants.
We work with a small number of flexible and sensible cash flow lenders outside of the High Street. We have financial models providing them with the metrics they need to evaluate your transaction.