Glossary · Reading the business
Cash flow cycle
In short
This describes the movement of cash into and out of a business over a period, from initial expenditures to collecting revenue from sales.
What it means in a deal
Understanding the target business's cash flow cycle is critical for managing working capital post-acquisition. A long cash flow cycle means more cash is tied up in inventory or accounts receivable, requiring more working capital to bridge the gap. Analyze the cycle to project your needs and avoid liquidity issues.
Related terms
Common questions about Cash flow cycle
- Can future cash flow or profits from the acquired business count as equity injection?
- How can an SBA 7(a) loan help with ongoing cash flow for my business?
- What is the primary factor a lender considers when evaluating the cash flow from an acquired business?
- Are there any restrictions on the use of cash flow projections for an SBA 7(a) acquisition loan?
- Can I use an SBA 7(a) loan for my business's daily operating expenses or cash flow?
- How does a lender evaluate the reasonableness of a borrower's projections for future revenue and cash flow?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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