Finance Blog Cold cash or cash flow?
Cold cash or cash flow?
Written by Larry Johnson Friday, 06 November 2009 16:32
Cold cash or cash flow? Which one does the lender underline when examining financial statements? Knowing what lenders look for when they are appraising a projects financial viability can help a BFA Associate provide quick and effective advice to his clients. Cash flow, more than cash, is what the majority of asset-based lenders consider the most important issue when examining the financials.
Cash flow is the borrowers ability to repay a debt from their available net income. Lenders examine cash flow in the financial statements to determine if the business can support loan payments. Most lenders want to see a minimum amount of cash flow to service a debt. How much debt coverage is required is often a matter of the type of financing sought by your client.