Cash flow lending for acquisitions, buyouts and growth.

A cash flow loan is a term facility sized on a company's future earnings and repaid out of the cash it generates. The lender's security is a debenture over the business and a pledge of its shares, not a charge on a specific machine or building, so the analysis is entirely about whether the earnings will still be there in year four. Facilities run three to six years, either amortising or with part of the principal repaid in a bullet at maturity.

One clarification worth making early, because search results blur it. At the short end of the market, revenue-based advances repaid as a percentage of daily card takings also trade under the cash flow banner, and they cost multiples of term debt. This page is about the corporate product: multi-year facilities of £500,000 upwards used to buy companies, fund buyouts and finance growth. We arrange that, not merchant advances.

Profitable, cash-generative businesses with few hard assets: services, software, recruitment, healthcare and distribution.

Three groups. Clearing bank acquisition finance teams take the strongest credits at the finest pricing, with quarterly covenants and amortisation; names active in this market include Barclays, HSBC UK, Lloyds Bank, NatWest. Challenger and specialist banks such as Allica Bank, OakNorth, Shawbrook, Cynergy Bank sit a notch further out on risk and move faster, often with a named credit decision-maker on the deal. Dedicated cash flow funds, ThinCats, Caple, Growth Lending, Boost&Co, Frontier Development Capital among them, exist for the deals both bank groups decline, and several lend at lower quantum than a leveraged desk will look at.

Above roughly £4 million of EBITDA the private debt funds enter, providing the same economics in unitranche form. Those funder names are illustrative of the panel, not a recommendation, and no funder is committed to a case until it confirms so in writing. We are an arranger and introducer rather than a lender, which is why we can run one credit paper across all three groups: the difference in appetite between a clearing bank and a cash flow fund on the same set of accounts is routinely a million pounds of quantum.

The full 40+ banks, debt funds and asset based lenders

Indicatively 9% to 14% all-in as at September 2026, against 7% to 10% all-in for bank senior debt on a stronger credit and 6% to 10% plus facility fees for an asset based line. Pricing is quoted as a margin over the Bank of England Bank Rate or over SONIA rather than as a fixed coupon, so the all-in cost moves with the reference rate across the life of the facility. The spread between those bands is the price of lending without hard security, and it is the honest cost of borrowing against a promise of future earnings.

Fees sit outside the margin. Arrangement fees of 1 to 2% of the facility, non-utilisation fees on any undrawn revolver, monitoring or covenant-review fees on fund debt, and prepayment or exit fees that bite if you sell or refinance early. Read those last ones closely: a facility that looks a point cheaper on margin can cost more than the alternative if you exit in year three. We model total cash cost over your expected hold period, and we show the comparison with the asset based route rather than presenting one option.

Whenever the balance sheet is worth more than the multiple. Asset based lending advances against specific assets: typically up to 85% of qualifying trade debtors, a smaller percentage against stock, plant and machinery on a valuation, and a loan to value figure against freehold property. Indicative cost is 6% to 10% plus facility fees, cheaper than cash flow debt because the lender can see what it would sell. Names active in this market include Close Brothers, Aldermore, Arbuthnot Commercial ABL, Secure Trust Bank Commercial Finance, Time Finance. Illustrative of the panel, not a recommendation.

The test is arithmetic. A distributor with £4 million of debtors, £2 million of stock and £900,000 of EBITDA raises more on an asset based facility than on a 3.0x cash flow multiple, and pays less for it. A software business with £900,000 of EBITDA and £200,000 of debtors raises almost nothing on assets and everything on cash flow. Plenty of deals want both: an asset based line against the working capital cycle plus a cash flow term loan for the price, which is a structure the two lender groups arrange between themselves through an intercreditor deed. Facility availability under an asset based line also flexes with the assets, which cuts both ways when trading slows.

Illustrative only, and not a transaction we have completed. A recruitment business generates £1.5 million of adjusted EBITDA and converts 80% of it into cash after tax and capital expenditure, so about £1.2 million a year is available to service debt. It owns almost nothing: £600,000 of debtors and no property. The owner wants £9.0 million, which is 6.0x earnings.

A cash flow term loan at 3.0x provides £4.5 million over six years. At an indicative 8.5% all-in, capital and interest run at roughly £960,000 a year, giving debt service cover of about 1.25x on that £1.2 million. An asset based line against the debtor book would have raised perhaps £500,000, which is why the cash flow route carries this deal. The remaining £4.5 million comes from buyer equity, a vendor loan of £1.5 million repaid over three years, and a modest junior layer if the equity is short. Change the conversion rate to 55% and the same business supports around £3.0 million, not £4.5 million. Indicative as at September 2026; every case is underwritten on its own figures.

Management team buying its own employer? See MBOFinance.co.uk or the guide to LBO versus MBO.