Cash flow loan

Cash flow loan is a sort of debt financing, in which a bank lends funds against cash flows that a borrowing company generates. To secure repayment, the bank covenants a borrower on such levels and ratios as enterprise value, EBITDA, total interest coverage ratio, Total debt/EBITDA, and so on. In contrast, an asset-based loan is lent against company's assets. Senior stretch loan is the mix of the two.

Cash flow loans are usually senior term loans or subordinated debt, being used for funding growth or financing an acquisition.

ee also

*Asset-based loan
*Senior stretch loan
*Seniority (finance)


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