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The Importance of Cash Flow Projections in Obtaining a Loan for Your Cafe

  • 4 min read

Getting Your Coffee Shop Cash Flow Projections Right

As a cafe or coffee shop owner, you may find yourself in need of a loan at some point in order to pay for expansion, cover unexpected expenses, or make necessary repairs.

Whether you’re looking to secure a loan from a traditional lender or crowdfunding platform, one of the key things lenders will consider is your cash flow projections.

What are cash flow projections?

Cash flow projections are a forecast (an estimate or guess) of the inflow and outflow of cash in your business over a given period of time, usually a year. They help you anticipate how much money you’ll have coming in and going out, and can give lenders a sense of your business’s financial stability and ability to repay the loan.

Why are cash flow projections important for obtaining a loan?

Banks and other lenders want to see that you have a solid plan for how you’ll use the loan and that you have the financial stability to repay it. By showing lenders your cash flow projections, you’re demonstrating that you have a clear understanding of your business’s financial health and that you have a plan in place to use the loan to generate revenue (make money) and improve your cash flow.

What should be included in cash flow projections?

The key things to include in your cash flow projections are:


This is the money you expect to bring in through sales, either in your cafe (and through other channels, such as online, apps, etc). Be sure to include details about your pricing, any seasonal fluctuations in sales, and any expected changes in revenue.


This includes everything from rent and utilities (water, electricity, gas) to payroll and supplies. Be sure to include all fixed (things that cost the same each time they are billed) and variable (things that change in cost, such as supply orders) expenses, as well as one-time costs such as equipment purchases or renovations.

Net income

This is the difference between your revenue and expenses. It is calculated by subtracting. Revenue minus Expenses = Net Income. Your net income will give lenders a sense of your business’s profitability and ability to repay the loan.

Debt repayment

If you have a loan(s) to pay off, this is called existing debt. Be sure to include those payments in your cash flow projections. This will show lenders that you have a plan in place to manage your current debts and that you have the financial stability to make those plus any new loan payments.

What if my cash flow projections aren’t strong?

If your cash flow projections aren’t as strong as you’d like, there are a few things you can do to improve your chances of securing a loan:

1. Consider alternative financing options

If traditional lenders, such as banks, aren’t an option, you may want to consider alternative financing options such as crowdfunding or small business grants. These options can have different requirements and may be more flexible when it comes to assessing cash flow projections.

2. Make a plan to improve cash flow

If your cash flow projections are weak due to low sales or high expenses, you’ll need to come up with a plan to improve them. Now is that you know, you can do something about it to improve your cafe business health. Doing things like increasing prices, cutting costs, doing more marketing and finding new ways to generate more revenue will all improve your position.

Check out the Cafe Coach 48 Ways to Increase Your Cafe Profits for more practical ideas on improving your revenue.

3. Offer collateral

Lenders can be more flexible if there are things of value you are willing to add into a deal/loan agreement.

If you have assets such as equipment or real estate that you can use as collateral, this may help improve your chances of getting a loan.

Find a co-signer

If you have a trusted business partner or friend with good credit, they may be willing to co-sign the loan with you. This can help improve your chances of getting approved, as the lender will have an additional source of repayment if necessary.

Being Prepared with Your Loan Application

Cash flow projections are an important part of obtaining a loan for your cafe or coffee shop, especially when you are just starting out in business.

Before contacting a lender, make sure you have checked their website so that you know which other documents they will need from you as part of your loan application.

By demonstrating your business’s financial stability and an ability to repay a loan, you increase your chances of getting approved and secure the funding you need to grow and succeed.

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