1. Cash Flow Lending: Backed by Recurring Revenue

Cash flow lending is one of the most popular and scalable forms of finance in the advice sector. It allows you to borrow against the predictable, recurring revenue stream generated from ongoing client relationships.

How it works:

Lenders assess the stability and quality of your recurring revenue (typically derived from service agreements or FUM-based fees). You’re then offered a loan based on a multiple of that revenue, often in the range of 2.5x to 3.5x recurring revenue.

When it fits:

• You’re acquiring another practice
• You’re consolidating debts or refinancing for better terms
• You need upfront capital for hiring or tech investment

Pros:

• Fast to arrange (if your books are clean)
• No need to offer hard assets as collateral
• Typically interest-only during growth phases

Considerations:

• Lenders want to see clean compliance, low client churn, and documented service agreements
• Personal guarantees are usually required

2. Asset-Based Lending: Using Tangible Security

In contrast to cash flow lending, asset-based lending involves securing a loan against hard assets—such as office equipment, property, or vehicles—or even financial assets like client portfolios.

How it works:

Asset-based lenders will value the asset (at fair market value or forced-sale value), then lend a percentage of that—typically 60–80% of the asset’s value.

When it fits:

• You’re investing in fit-out, IT infrastructure, or vehicles
• You want lower interest rates and are happy to offer security

Pros:

• Often lower interest rates due to secured nature
• Useful for CAPEX-heavy business needs

Considerations:

• You must own valuable assets or be acquiring them
• Not ideal for businesses whose value is primarily intangible

3. CVR Financing: Lending Against the Future Value of Clients

Client Value Recognition (CVR) is an emerging model of finance built around the true commercial value of your client relationships. It’s especially relevant in practice acquisitions or succession deals.

How it works:

A CVR-based lender or buyer values your client book based on revenue, client demographics, service type, and stickiness—then offers capital in exchange for a share of that future value. It can take the form of upfront cash with an earn-out, or a structured repayment tied to retained client revenue.

When it fits:

• You’re acquiring a book of clients and want to fund the deal over time
• You’re transitioning equity to a new partner or successor
• You want to de-risk vendor finance in a sale

Pros:

• Flexible structures aligned to performance
• Doesn’t require hard collateral
• Can be paired with partial ownership or equity earn-ins

Considerations:

• Requires deep due diligence
• Typically more negotiation-heavy than traditional loans

Choosing the Right Fit

Final Thoughts

Capital is oxygen for business growth, but the source of that capital matters just as much as the amount. Whether you’re scaling organically or buying another firm, understanding the financial instruments available can help you structure smarter, de-risk your journey, and increase your ROI.

Before taking on any financing, ensure your business fundamentals are sound—clear compliance, sticky client relationships, and clean books. The stronger your foundation, the better the terms and opportunities you’ll unlock.

Need help funding your next move? Contact us for a list of lenders in your sector