Lenders want to see a cash flow to determine

• A. how much money the borrower will need and when the borrower can pay back the loan
• B. the credit score
• C. the collateral value
• D. the profitability of the business

Answer: (A)

Cash flow shows the timing and amount of cash available to meet obligations. By projecting all expected cash receipts and payments over time—sales, expenses, taxes, and the loan’s principal and interest—the lender can see how much money the borrower will need and when it can be paid back. This repayment capacity and schedule is the core reason cash flow is used in underwriting.

While other factors like credit history, collateral, and overall profitability provide useful context, they don’t directly demonstrate when cash will be available to make loan payments. A solid cash flow forecast shows not only how much funding is needed but also when those funds will be available to service the debt.