The vocabulary. Defined plainly.

Accounts receivable are amounts owed to a business by its customers for goods delivered or services rendered but not yet paid for.

An ACH debit is an electronic withdrawal from a business bank account used to collect fixed daily or weekly loan payments.

An ACH hold is a temporary debit placed on a bank account before a transaction settles, typically during application underwriting verification.

An adverse action notice is a written statement a lender must send when they deny credit, explaining the principal reasons for the decision.

Amortization is the repayment of a loan through scheduled periodic payments that cover both principal and interest.

Interest rate is the cost of borrowing the principal; APR adds origination fees and other charges to express the true annualized cost.

A balloon payment is a large lump-sum payment due at the end of a loan after smaller periodic payments.

A bank statement loan is underwritten primarily on 3–6 months of business bank statements, without tax returns or financial statements.

A BCA is a purchase of future receivables, the funder advances cash and collects a fixed percentage of daily card or bank deposits until repaid.

A blanket lien is a security interest covering all business assets, equipment, inventory, receivables, rather than one specific item.

Bridge capital is short-term funding designed to cover an immediate cash need until longer-term financing or a revenue event closes.

A bridge loan is short-term financing that covers a funding gap until longer-term capital or an expected cash event arrives.

A business cash advance is a lump sum of capital exchanged for a portion of future sales, repaid through daily or weekly deductions.

A business credit score rates a business’s creditworthiness separately from its owners, issued by Dun & Bradstreet, Experian Business, and others.

Cash flow is the net movement of cash into and out of a business over a period, positive when inflows exceed outflows, negative when the reverse.

COGS is the direct cost of producing the goods or services a business sells, inventory, raw materials, direct labor.

Collateral is a specific asset pledged to secure a loan, the lender can seize and sell it if the borrower defaults.

Daily ACH is a repayment structure where a fixed dollar amount is debited from the business bank account every business day.

Debt consolidation is replacing multiple existing business debts with a single new loan, usually to reduce total monthly payment or interest cost.

Debt service is the total principal and interest payments a business owes on its existing debt over a period, usually expressed annually.

Default is a borrower’s failure to meet the terms of a loan, typically missed payments, covenant breach, or unauthorized second financing.

Double-dipping is when a broker or lender charges interest or fees on a rolled-over balance that has already been paid for in the previous advance.

DSCR is net operating income divided by total debt service, it tells a lender whether your business generates enough cash to cover its loan payments.

Dun & Bradstreet (D&B) is the oldest business credit bureau, famous for issuing DUNS numbers and the PAYDEX payment score.

EBITDA is earnings before interest, taxes, depreciation, and amortization, a proxy for operating cash flow used in underwriting and business valuation.

ECOA is the federal law prohibiting discrimination in any credit transaction based on race, sex, age, national origin, religion, marital status, or public assistance.

Equipment financing is a loan or lease used to purchase business equipment where the equipment itself serves as collateral.

Experian Business is one of the three major business credit bureaus, publishing the Intelliscore Plus commercial credit score.

A factor rate is a decimal multiplier (e.g. 1.25) applied to a funded amount to express total repayment, instead of an interest rate.

A FICO score is a personal credit score between 300 and 850 that predicts the likelihood of repaying consumer credit obligations.

Gross margin is revenue minus cost of goods sold, expressed as a percentage of revenue.

A guarantor is a person or entity that agrees to repay a loan if the primary borrower defaults.

A hard pull is a credit inquiry that appears on your credit report and temporarily lowers your FICO score.

A holdback is the fixed percentage of daily credit card or bank deposits automatically withheld to repay a business cash advance.

Invoice factoring is the sale of unpaid invoices to a third-party (the factor) at a discount, the factor collects directly from your customer.

Invoice financing is a short-term loan using unpaid customer invoices as collateral, you retain the invoices and collect them yourself.

An ISO (Independent Sales Organization) or broker is a third party that markets funding products and earns a commission on funded deals.

A junior lien is a security interest that ranks behind an existing senior lien on the same collateral, also called a second-position or subordinate lien.

A Schedule K-1 is an IRS tax form that reports each partner's or S-corp shareholder's share of business income, deductions, and credits.

A lien is a legal claim a creditor holds against an asset as security for a debt.

A business line of credit is a revolving credit facility you can draw from as needed, repay, and draw again up to an approved limit.

Loan-to-value is the ratio of a loan amount to the appraised value of the collateral securing it, expressed as a percentage.

Net margin is final profit after all expenses, taxes, and interest, divided by revenue.

Net operating income is revenue minus operating expenses, before debt service, taxes, depreciation, and amortization.

An origination fee is a one-time charge, usually 1% to 5% of the funded amount, deducted at closing to cover underwriting and disbursement.

PayNet (now part of Equifax) is a commercial credit bureau focused on small-business loan and equipment lease repayment data.

A personal guarantee is a contractual promise by a business owner to repay a business loan personally if the business defaults.

A prepayment penalty is a fee charged when you pay off a loan ahead of schedule.

The principal is the original amount borrowed, separate from interest, fees, or any factor-rate cost layered on top.

Qualifying revenue is the minimum verified average monthly gross revenue a business must demonstrate to be eligible for a specific funding product.

Recourse factoring requires you to buy back unpaid invoices; non-recourse shifts customer-default risk to the factor.

Refinancing is replacing existing debt with new debt at different terms, typically to lower the rate, extend the term, or change the collateral.

Revenue-based funding is a working capital product priced on monthly business revenue rather than credit score, repaid through fixed daily or weekly ACH.

Revolving credit is a line of credit you can draw, repay, and redraw up to a set limit, interest accrues only on the outstanding balance.

Same-day funding means the approved capital is wired to your business bank account the same business day the offer is accepted.

An SBA 504 loan is a long-term fixed-rate loan for major fixed-asset purchases, typically real estate or heavy equipment.

An SBA 7(a) loan is a partially government-guaranteed bank loan for small businesses, used for working capital, acquisitions, and general expansion.

A soft pull is a credit inquiry that does not affect your credit score, used during pre-qualification and offer sizing.

Stacking is taking on multiple business cash advances or revenue-based advances simultaneously, typically without disclosing them to each funder.

Subordination is an agreement by one lender to rank its lien behind another lender’s lien on the same collateral.

A term loan is a fixed-amount business loan repaid over a set period with scheduled monthly principal and interest payments.

Time in business is the number of months or years since your business was legally formed and began operating.

A UCC filing is a public notice recorded with a state that a lender has a security interest in some or all of a borrower’s business assets.

A UCC-1 is the specific form used to record a secured party’s lien on business assets with a state Secretary of State.

Underwriting is the risk-assessment process a lender uses to evaluate your business, revenue, and creditworthiness before issuing an offer.

Vendor financing is credit extended directly by a supplier to a business customer, allowing purchase of goods or services on deferred payment terms.

A wire transfer is an electronic bank-to-bank funds transfer used to disburse loan or advance proceeds directly to a business bank account.

Working capital is current assets minus current liabilities, the short-term liquidity a business has to operate day-to-day.

A workout agreement is a negotiated modification to an existing loan's terms, reduced payments, extended timeline, or temporary forbearance, that a lender agrees to when a borrower is in financial distress.

Yield is the total return a lender earns on a loan or advance, expressed as an annualized percentage of the capital deployed.