Cash flow loan
Cash flow loan is a type of debt financing, in which a bank lends funds, generally for working capital, using the expected cash flows that a borrowing company generates as collateral for the loan.
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. They will also take a charge over the assets of the business to provide the lender with the ability to take control of the cash flows in the event of default.
In contrast, an asset-based loan is lent against company's assets. Senior stretch loan is the mix of the two.
|This economics-related article is a stub. You can help Wikipedia by expanding it.|