Business Loan Glossary

 

Accounts Receivable Financing – A loan gained by borrowing against receivables. Loans are paid down as receivables are collected.

Annual Fee – The amount charged by the lender each year to cover the administrative costs of the loan.

Business Credit Card – An amount of money, which a business can borrow against at times it needs capital. Using a card accesses the money.

Commercial Real Estate Loans – Similar to residential mortgages, but collateral is business property. Interest rates are usually fixed, the length of the loan can range from 5 – 20 years and payments due monthly.

Commercial Term Loans – Loans made to businesses that can be either secured and unsecured. Usually made to mid-size and large businesses.

Credit Rating – A predictor of the ability to pay back a loan. The credit rating is a result of credit scoring

Credit Report – Financial history supplied by a credit information company like Dun and Bradstreet, Equifax, Experian or TransUnion. Contains credit information on a business or an individual, including payment history of bank cards, store cards, mortgages, student loans, and trade payments.

Credit Scoring – The evaluation system used by lending institutions to determine relative credit riskiness of a business or consumer. When evaluating businesses, it generally considers factors such as credit payment history, new credit sought by owner of business, and financial strength and longevity of business.

CreditFYI – A web site for checking business credit reports

Debt Financing – A loan with pre-agreed terms, including payback schedule and interest.

Dun & Bradstreet – Leading provider of business credit information.

Equifax – One of three leading providers of personal credit information.

Equipment Leases – Leases allowing companies to purchase new equipment.

Experian – One of three leading providers of personal and business credit information.

Fixed Interest Rate – An interest rate that is the same throughout the life of a loan.

Interest Rate – The amount charged by a lender for the money borrowed. It can be fixed or variable.

Inventory Financing – Money borrowed on the basis of finished inventory. The loan is paid as inventory is sold.

Line of Credit – An amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.

LiveCapital.com – A web site for small business loan offers from a variety of lenders instantly.

Loan Term – The length of time the borrower has to repay debt.

Long Term Debt – Financing used to purchase or improve assets such as plant, facilities, large equipment and real estate.

Maturity – A loan’s maturity is the life of the loan; that is, how long you have to repay the loan. It usually applies to term loans and not lines of credit.

Multi-Lender Environment – Numerous lending institution sharing the same site and information to provide instant financing to small businesses.

Personal Guarantee -A guarantee that the primary owner will assume personal responsibility for repayment of the loan, should the company not repay the loan.

Prime Rate – The rate a lender charges its best customers. The rate is calculated differently by each lender.

Revolving Credit – It is the same thing as a line of credit: an amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.

SBA Loan – Loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans, which are guaranteed by the Small Business Administration (SBA) — the SBA has no funds for direct lending or grants.

Secured Loan – A loan secured by specific collateral. Creditor may foreclose and seize the specific property that is collateral to satisfy an unpaid secure loan.

Small Business Administration -Established by Congress, the SBA provides financial, technical and management assistance to help Americans start, run, and grow their businesses.

Short Term Debt – Financing used to secure cash for accounts payable and inventory.

Subsequent Draw Fee – It’s a fee that the financial institution may charge each time you use the line of credit after the initial use.

Term Loan – A loan for a specific amount of money. It has either have a fixed or variable interest rate, matures in between one and ten years and has a set repayment schedule.

TransUnion Corporation – One of three leading providers of personal credit information.

Unsecured Loan – A loan granted upon the good credit of the borrower. No collateral involved.

Variable Interest Rate – An interest rate that changes during the life of a loan.