Funding Glossary

The process of paying off a loan through regular, scheduled payments that cover both principal and interest over time.

The total yearly cost of borrowing, expressed as a percentage — includes interest plus most fees, making it a more complete cost comparison than the interest rate alone.

A credit profile tied to your business entity, independent of your personal credit history, built through trade lines and vendor accounts that report to business credit bureaus.

A mission-driven lender focused on serving businesses in underserved communities, often with more flexible requirements than traditional banks.

An asset pledged to secure a loan, which a lender can claim if the loan isn't repaid.

A measure lenders use to evaluate whether a business generates enough cash flow to cover its debt payments.

Raising capital by selling a portion of ownership in the business, rather than borrowing — investors receive a stake, not a repayment schedule.

Selling unpaid invoices to a third party at a discount in exchange for immediate cash, rather than waiting for customers to pay.

Financial documentation formatted and organized to the standard a lender expects to review — accurate, current, and complete.

A flexible financing arrangement allowing a business to draw funds up to a set limit as needed, paying interest only on the amount used.

A lump-sum advance repaid through a percentage of future card sales — often carries a significantly higher effective cost than its structure first suggests.

A vendor account allowing payment within 30 days of invoice — when the vendor reports to business credit bureaus, on-time payment builds business credit.

A commitment by a business owner to personally repay a business debt if the business itself cannot — it extends liability beyond the business entity.

Capital repaid as a percentage of ongoing revenue rather than a fixed monthly payment — repayment scales with how the business is actually performing.

A loan partially guaranteed by the U.S. Small Business Administration, reducing lender risk and often allowing more favorable terms than a conventional loan.

A credit account (loan, credit card, or vendor account) that appears on a credit report and factors into a credit profile.

A lender's process of evaluating a loan application — reviewing financials, credit, and risk — to decide whether and on what terms to approve it.

The funds available for day-to-day business operations — the difference between current assets and current liabilities.