Accounts receivable financing · ACH remittance · APR (annual percentage rate) · Bank statement underwriting · Bank verification · Business line of credit · Business purpose · Buy rate · Cash flow underwriting · Confession of judgment · Credit pull · Debt consolidation · Early payoff discount · EIN · Equipment financing · Factor rate · Holdback · Invoice factoring · Merchant cash advance · Net 30 · Net 60 · NSF (non-sufficient funds) · Origination fee · Personal guarantee · Purchase of future receivables · Renewal · Revenue-based financing · SBA loan · Stacking · Time in business · Total payback · UCC-1 · Weekly remittance · Working capital

All terms

Accounts receivable financing

Funding secured by, or advanced against, unpaid customer invoices. Includes invoice financing (you keep collecting) and factoring (the provider collects). Full entry →

ACH remittance

An automatic electronic debit from your business bank account, usually daily on business days or weekly, used to repay advances and some loans. Full entry →

APR (annual percentage rate)

The yearly cost of financing including interest and most fees, expressed on the balance outstanding. The right basis for comparing loans, and for comparing an advance once converted with stated assumptions. Full entry →

Bank statement underwriting

Evaluating a business mainly from recent bank statements (deposits, balances, negative days, existing debits) rather than tax returns and financial statements. Full entry →

Bank verification

Confirming the business bank account, typically by instant read-only connection, statements, or a voided check, before funding. Full entry →

Business line of credit

A revolving credit limit you can draw against, repay, and draw again, paying interest only on the drawn balance plus any fees. Full entry →

Business purpose

The requirement that funds be used for the business rather than personal expenses. Business-purpose financing is treated differently from consumer lending, subject to contract and state law. Full entry →

Buy rate

In brokered deals, the factor rate a funder offers before a broker adds its commission; the difference between buy rate and the rate you see is the broker’s margin. Full entry →

Cash flow underwriting

Deciding on funding based on the pattern of money into and out of the business, as opposed to credit scores or collateral alone. Full entry →

Confession of judgment

A clause allowing a creditor to obtain a court judgment against you without the usual litigation process. Treatment varies by state; never sign one you do not understand. Full entry →

Credit pull

A check of your credit file. A soft pull does not affect your score; a hard pull is recorded and can lower it modestly for a time. Full entry →

Debt consolidation

Replacing several obligations with one, ideally with a longer term and a lower total cost. Consolidating advances into another advance rarely lowers total cost. Full entry →

Early payoff discount

A written reduction in the payback amount of an advance if you repay before the end of the term. Without one, paying early does not reduce what you owe. Full entry →

EIN

Employer Identification Number: the IRS-issued tax id for a business. Required to open business accounts and build a business credit file. "EIN-only" funding claims deserve skepticism. Full entry →

Equipment financing

A loan or lease used to acquire equipment, where the equipment itself secures the financing. Full entry →

Factor rate

A multiplier (for example 1.25) applied to an advance amount to set the total payback. It is not an interest rate and does not account for the term. Full entry →

Holdback

In a merchant cash advance, the percentage of daily card sales remitted to the funder until the purchased amount is paid. Full entry →

Invoice factoring

Selling unpaid invoices to a factor, which advances most of their value now, collects from your customer, and pays you the remainder minus fees. Full entry →

Merchant cash advance

A purchase of a fixed amount of future receivables in exchange for cash now, repaid as a share of sales or by fixed debits. Legal treatment depends on the contract and state. Full entry →

Net 30

Payment terms requiring a customer (or you, with a supplier) to pay in full within 30 days of the invoice date. Full entry →

Net 60

Payment terms allowing 60 days to pay an invoice. Longer terms increase the working capital you need to carry. Full entry →

NSF (non-sufficient funds)

A returned payment because the account lacked the funds. NSF occurrences on bank statements are closely watched by revenue-based underwriters. Full entry →

Origination fee

A fee charged for setting up financing, often a percentage of the amount, frequently deducted before you receive funds. Include it in any cost comparison. Full entry →

Personal guarantee

The owner’s promise to repay personally if the business cannot. Standard in most small-business financing, including products marketed as unsecured. Full entry →

Purchase of future receivables

The legal form of many advances: the funder buys a set amount of your future sales at a discount. Whether it is treated as a loan depends on substance, contract, and jurisdiction. Full entry →

Renewal

A new advance offered before the current one is repaid. Check whether the new factor applies to the unpaid balance of the old one. Full entry →

Revenue-based financing

Capital repaid as a percentage of revenue until a stated multiple of the amount (the cap) is reached; term varies with revenue. Full entry →

SBA loan

A loan made under a U.S. Small Business Administration program: 7(a) and 504 loans are made by participating lenders with an SBA guarantee; microloans are made by SBA-funded nonprofit intermediaries. Full entry →

Stacking

Taking additional advances while earlier ones are still being repaid. Increases cost and risk for every position and usually breaches the first agreement. Full entry →

Time in business

How long the business has operated, usually measured from registration or first revenue. A common minimum criterion, set by each provider. Full entry →

Total payback

The full amount you will remit under an advance: advance amount × factor rate, plus any fees not deducted up front. Full entry →

UCC-1

A public filing under the Uniform Commercial Code giving notice that a creditor claims an interest in your business assets. Visible to other lenders; should be terminated after payoff. Full entry →

Weekly remittance

A fixed weekly payment on an advance or short-term loan. Easier to manage than daily debits; the total cost is the same for the same term. Full entry →

Working capital

Current assets minus current liabilities: the cash and near-cash available to run the business over the next year. Full entry →