Loan Terminology 101….

Trying to understand the world of financing and cash advance lenders can be a daunting experience. And let’s face it, anything having to do with money is already stressful (unless you’re receiving it free and clear). To make life easier, we’ve put together this quick little guide of commonly used terms in the world of cash advance lenders.

Accounts payable: appearing on the company balance sheet, this is money you owe to vendors for goods/services

Accounts receivable: after providing a product/service to your customer, you send an invoice. It then becomes an “account receivable” and shown as an asset on your balance sheet.

ACH: Automated Clearing House. These are payments that are automatically and regularly drawn electronically from your account

Balance Sheet: this is an overview of what the company owns and what the company owes. This is requested by lenders, on occasion, to assess whether a company qualifies for funding

Business Credit Report: reports the business’ credit history and is sometimes used to assess if a company is a risk to lend money to or not

Business Credit Score: this is based on the company’s credit and pay history, how long they’re in business, and legal filings

Capital: this refers to money put into a business as in debt/equity that will generate income

Debt Consolidation: when a company has more than one loan and they typically want to combine them for simpler pay options and/or lower fees and interest

Factor Rate:  Lending based on accounts receivable

Lien: when a debtor doesn’t meet the agreement of a signed contract, the creditor makes a legal claim to collateral (also see tax lien)

Non-Collateralized: a loan that doesn’t require security by way of a title, etc.

Personal Credit Report: similar to the business credit report, this gives an account of your financial history from banks, credit cards, taxes, collection agencies, etc.

Personal Credit Score: using the information listed in the above (Personal credit report), credit agencies take into account your history to assess your credit worth/risk

Principal: the amount borrowed or owed minus interest

Stacking: Stacking is when another unsecured loan is taken after a business has obtained an unsecured loan.

Tax Lien: this lien is issued by a government agency when either an individual or business fails to pay their taxes.

UCC: Uniform Commercial Code, filed when a business obtains a secured loan or lease

Working Capital: cash that is available for daily functions to maintain the business

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