Cost of Borrowing

When obtaining a loan, an individual is borrowing a certain amount of money. The overall expense of the loan is the sum of the borrowed amount and the interest that…

Cash Flow Adequacy Ratio – Definition and Formula

Investors and analysts can use the cash flow adequacy ratio to gauge a company’s financial health and determine its capacity to generate cash and handle its financial obligations. It is…

What is a Key Performance Indicator (KPI)?

A key performance indicator (KPI) is a metric that shows how well you accomplish an important business goal. KPIs help you assess how well you’re doing at achieving specific goals.…

Difference between Sales and Marketing

In the world of business, sales and marketing are two terms that are usually used together and sometimes even interchangeably. While both are primarily aimed at the purpose of increasing…

Difference between Recruitment and Selection

The process of employment is a rather long process that will require several steps and phases to be completed. Recruitment and selection are the two crucial aspects of employment that…

What is the difference between SEO and PPC?

When you are dealing with competition in your online business, you may need search engine optimization (SEO) and pay-per-click (PPC) to be part of your internet marketing. Both PPC and…

Key Difference between Trademark and Copyright

The main reason there are things such as trademarks and copyright is that every work or idea needs to be protected at all costs. Trademark and copyright are used to…

Difference between Merger and Acquisition

Merger and acquisition are very well-known terms that are used when people are talking about companies and organizations. Merger and acquisition are both processes of corporate restructuring. Both are defined…

Difference between Savings and Current Account

If you have a bank account, you must have heard the terms “saving account” and “current account”. The majority of us are unsure of what these are and how they…

Difference between Debit and Credit Card

Though the debit card is your debit money and credit card is your credit money, let’s drill down the exact differences between a debit card and a credit card. What is…

What is the difference between Management and Leadership?

Identifying the difference between management and leadership It has always been suggested by studies and research that management and leadership must go hand in hand for better organizational structure, but…

One Person Company (OPC) vs Private Limited Company – Difference

A one-person company refers to a business with just one member. A firm with just one shareholder among its members is an OPC. A private limited company is a type…

Weighted Average Cost of Capital (WACC)

The average cost of a particular fund can be used to define the cost of capital, which is the total composite cost of capital. The term “weighted average cost of…

Equities vs Bonds

There are two options open to you if you decide to invest in a company: equity (commonly known as stocks or shares) and debt (also known as bonds). Firms issue…

Statement of Shareholders Equity

The statement of shareholder equity may also be referred to as a statement of stockholders’ equity. A statement of owners’ equity or a statement of shareholders’ equity are other names…

Operating Working Capital (OWC)

Operating current liabilities minus Operating Current Assets is referred to as Operating Working Capital (OWC). When assets or liabilities are employed in the regular course of business or if they…

Internal vs External Recruitment

Internal and external recruitment are components of the HR procedures that businesses employ to surround themselves with the talent they need for their development. Still, they do not live up…

Peer-to-Peer Lending

What is Peer to Peer Lending? Peer-to-peer lending, also known as social network lending, allows borrower members to borrow money through personal loans, and lenders fund these loans by investing in…

Debt Service Coverage

In residential lending, the lender determines how much a borrower can afford by calculating his debt-to-income ratio – how much total monthly debt he has divided by his total monthly…

Wraparound Mortgage

A wraparound mortgage, also known as an all-inclusive trust deed, is a creative way to allow you to purchase property without having to qualify for a loan or pay closing costs.…

Wraparound Commercial Mortgages – Alternative Financing Solution

When the commercial lending market climate is dry, buyers and sellers of commercial real estate start looking for creative financing solutions. One possible alternative is called a “wraparound” mortgage. While not without…

Second Lien Business Loans – Definition, Risks and Benefits

A second lien loan is a secured loan tied to one of the company’s assets, specifically an asset that already has a first loan attached to it. The asset could…

What is Unsecured Business Loan?

An unsecured business loan is one that does not require collateral but is issued on the basis of the borrower’s creditworthiness. That means there is no house or car to…

7 Essential Commercial Mortgage Vocabulary Terms

Getting started in the commercial mortgage market can be daunting if you are not familiar with the jargon. In order to be a savvy commercial real estate investor, you first need to…

Business Interruption Insurance – When You Need It and When You Don’t

Most businesses protect themselves with insurance policies to cover disasters like fires, flooding, or earthquakes. However, while that basic insurance coverage will provide for repairs to the building or property, those repairs…

What is Business Insurance? Meaning and Types

Meaning of Business Insurance Like home insurance, business insurance protects the contents of your business against fire, theft and other losses. It is prudent for any business to purchase a…

Wrap-Around Mortgage

Wrap-around mortgage financing is the perfect solution for you if your business has a little business credit history. Most lenders won’t give large commercial loans, or small business loans for that…

Wrap Around Loan

A wrap around loan allows you to purchase property without having to qualify for a loan. This can save time, and also the hassle of getting denied for business financing. The seller,…

Venture Capital Limited Partnership

Venture capital limited partnership is a limited partnership that invests in small businesses with high growth potential. A venture capital limited partnership seeks out small businesses in markets with high potential…

Venture Capital Financing

Venture capital financing can inject your business with the necessary capital.  Venture capital financing can be an outstanding source of capital for a qualified business. There are millions of venture capital…

Venture Capital Equity

Venture capital equity means investing financial and human capital in partnership with you. Venture capital equity is the business of investing capital, either financial or human, in partnership with your business’s…

Unsecured Business Loan

Unsecured business loan financing can be used for almost anything surrounding your business including the purchase of equipment, remodeling, office expansion, or marketing. With this loan, your business would get…

Underwriting

Underwriting is the process through which a lender determines if your business is creditworthy and should receive the applied for loan. All businesses need capital of some sort to get…

Turnaround Financing

Turnaround financing can improve a dying business. Turnaround financing is for companies that have had a history of bad performance. It involves the challenge of improving a business by investing more…

Takeover Financing

Takeover financing is funding for the purpose of obtaining control over a corporation through the purchasing of stock. Takeover financing means exactly what it sounds like. It provides capital for someone…

Sweat Equity – Sources & Compensation

Sweat equity is a human contribution to a business. Sweat equity refers to the efforts of executives or other shareholders in a company. This does not include money that is put…

Startup Loan

Startup loan financing can provide financial flexibility for entrepreneurs. Startup loan financing often includes an unsecured line of credit. This can have many distinct advantages for any entrepreneur. A startup loan…

Startup Funding

Startup funding helps turn your vision into a reality. Startup funding is necessary for most businesses to get off the ground. This capital refers simply to the capital needed to launch…

Startup Capital

Startup capital is necessary to start your business. Startup capital is the money needed to begin your business. This would include everything essential for product development and the product launch. Before…

Small Business Loan

Small business loan is financing for your business success. Small business loan capital is one of the more common methods of raising financing for your business. A loan of this nature…

Small Business Funding

Small business funding provides working capital for your business through debt or equity financing. Small business funding is readily available to all businesses and entrepreneurs. These funds are available through business…

Silent Partner

Silent partner is a business partner who provides capital but does not participate in the management of the company. Any person who contributes nothing other than financial support to a company…

Seed Funding

Seed funding helps companies with a new product launch. Seed funding is most often confused with startup capital, but they are two different things. It is provided to help a business…

Seed Capital

Seed capital is money used as the initial investment for a new product or service launch. Seed capital enables businesses to launch a new product or service without depending fully on…

Second Round Financing

Second round financing allows you to maintain profitability and continually expand your business. Second round financing is for the initial expansion of an already established company. The company will have consistently…

Secondary Public Offering

Secondary public offering is an excellent method for a company to raise additional working capital Secondary public offering financial moves are an excellent way to generate quick capital for a business.…

Secondary Financing

Secondary financing plays an important role in some commercial real estate transactions. A second trust deed is often utilized to reduce the LTV (loan to value) of the first loan.…

SCOR (Small Corporate Offering Registration)

SCOR is the Small Corporate Offering Registration. SCOR allows small businesses the opportunity to go public with their business. It also enables them to avoid the legal costs and regulations associated with…

SBIC (Small Business Investment Company)

SBIC is the Small Business Investment Company SBIC is a private investment company co-funded by the Small Business Administration. SBICs provide businesses with debt or equity financing options. The government understands the…

Sale and Leaseback Financing

Sale and leaseback financing is a unique and effective method for generating capital for your business needs. You use your equipment to get the capital. There are many potential benefits…

Rollover Mortgage

Rollover mortgage allows refinancing of loan balance at the current rate. Rollover mortgage is best defined as a short-term loan in which the unpaid balance is refinanced every few years at…

Risk Capital

Risk capital  is funding for firms with excellent growth potential. Risk capital is provided most of the time by venture capital firms or other investors that are willing to take a…

Revolving Line Of Credit

Revolving line of credit provides capital for your business in times of need.  Revolving line of credit financing can be an excellent method for financing your business. With a revolving line…

Revolving Collateral

Revolving collateral allows you to secure a loan. Revolving collateral is a unique way for your business to secure a loan. It is slightly different from regular collateral like a vehicle…

Reverse Merger

Reverse merger allows your private company to go public.   Reverse merger financial transactions are becoming increasingly popular and accepted. It is an alternative means for private companies to go public. The…

Reverse Acquisition

Reverse acquisition allows your private company to go public without regulatory requirements. Reverse acquisition is a technique where a private company can go public and avoid heavy regulations in the process…

Receivable Factoring

Receivable factoring allows you to sell invoices for instant capital.  Receivable factoring enables your business to have fast access to cash by allowing your business to sell account receivables for products or…

Real Estate Sale and Leaseback

Real estate sale and leaseback is an excellent financing method increasing in popularity. Real estate sale and leaseback financing allow your business to get instant access to working capital while saving…

Real Estate Sale-Leaseback

Real estate sale-leaseback financing is when a business sells its commercial property for current market value and then instantly leases it back. They sell it to gain built-up equity which…

Real Estate Purchase Loan

Real estate purchase loans are typically business loans that are collateralized with commercial real estate. Loans to expand or improve your existing business and loans to refinance existing debt. Both…

Purchase Order Financing

Purchase order financing offers quick cash flow reserves. Purchase order financing is an excellent method for a business to obtain quick capital. It is a great solution when cash flow reserves…

Purchase Order Factoring

Purchase order factoring – Grow and expand with your business. Purchase order factoring sometimes called “contract funding is great for businesses needing financing during times of growth and expansion. Cash flow…

Reverse Merger

Reverse merger allows your private company to go public.   Reverse merger financial transactions are becoming increasingly popular and accepted. It is an alternative means for private companies to go public. The…

Public Shell

Public shell is a viable alternative to going public Public shell transactions are a widely accepted, alternative means for a private company to go public. A necessary component to a completed reverse…

Privatization

Privatization is defined as the transfer of ownership from the public sector to the private sector. Privatization can also refer to the repurchasing of some or all of a company’s outstanding stock…

Private Investment In Public Entity

Private investment in public entity – Also known as PIPE investments Private investment in public entity financing takes a big stake in publicly traded companies whose valuations have dropped since going…

Private Equity Investments

Private equity investments are the most important funding source in the entrepreneurial marketplace. Private equity investments contribute to the funding of around 25 times the number of businesses the venture capitalists fund each year. Private equity investments…

Private Capital Investors

Private capital investors refer to private individuals who contribute their skills and money to start-up companies. They often work in groups to improve the efficiency of their due diligence and…

Primary Offering

Primary offering is the initial sale of a company’s stock.  The revenue from the sale of the stock will go straight to the company.  Many companies use this as a way…

Pre-Qualified Funding

Pre-qualified funding is the process of pre-qualifying your business funding request before you apply. This makes your business look much more appealing to the lender. It also requires that you know…

Preferred Debt

Preferred debt is debt that the repayment of or lien position takes precedence over other debts.   Your first mortgage would be a preferred debt over your second mortgage. The main types…

Pledging Assets

Pledging assets is an offering asset to a lender as collateral for a loan. During the period of the loan, the lender has possession of the asset but is not able…

PIPE Investments

PIPE investments (Private Investment in Public Entity) take a sizable position in publicly traded companies whose valuations have dropped since they went public and now are seeking new sources of…

Permanent End Loan

A permanent end loan refers to short term financing of real estate construction projects which are then followed by long term financing, called a “permanent end” loan. This type of loan is…

Paid In Capital

Paid in capital also known as contributed capital. Paid in capital is the capital a company receives from investors on top of the par value of the stock. Simply stated, any money…

Open End Lease vs Close End Lease

Open end lease is a lease requiring an additional payment at the lease end, the amount of which is dependant upon on the fair market value of the asset at that time.…

Open End Credit

Open end credit is an agreement by a lender to lend a specific amount to a borrower and to allow that amount to be borrowed again once it is repaid. This…

Off-Balance Sheet Financing

Off-balance-sheet financing is financing from sources other than debt or equity offerings, such as joint ventures, R&D partnerships, and operating leases.  Usually used by companies in order to keep their debt to equity-ratio…

Nonrecourse Debt

Nonrecourse debt – A secured loan with no personal liability. Nonrecourse debt is secured by some form of collateral, under which the borrower has no personal liability.  If the loan defaults,…

Minority Business Finance

Minority business finance is the process of providing working capital to minority-owned businesses either through debt or equity.  It has been shown that minority business owners are more likely to have their requests for…

Micro Loans

Micro loans provide your business with small capital injections that can really make a huge difference to your company. Typically micro loans are $35,000 and under. They also work for both…

Mezzanine Finance

Mezzanine finance funding can come in the form of stand-alone subordinated debt or equity transactions. Most often it is found in the form of subordinated debt. Mezzanine financing is a…

Mezzanine Financing

Mezzanine financing – Bridging financial gaps Mezzanine financing gives businesses access to capital when a bank won’t finance them initially. It is an excellent method for a new, but profitable company…

Mezzanine Investment

Definition of Mezzanine Investment Mezzanine investment financing (also referred to as third-stage capital) refers to a later-stage investment provided to a company that is already producing and selling a product or…

Mezzanine Funding

Mezzanine funding, in a generic sense, is a venture capital term used to describe funding for a company that is somewhere between being a startup and IPO, or Independent Public…

Merger and Acquisition Financing

Merger and acquisition funding at a competitive rate requires a properly structured transaction. Financing for such scenarios comes in a variety of alternatives. These financing alternatives include: New private equity placement…

Merger Financing

Merger financing enables the combination of two quality companies. Merger financing is a necessity when two companies want to join forces and form a much larger company. This financing is…

Letter of Credit

Letter of credit is a document issued by a bank that guarantees the payment of a customer’s drafts for a specified period and up to a specified amount. Letters of credit…

Leveraged Buyout (LBO)

Leveraged buyout financing (LBO) is typically provided for the strategic purchase of other product lines, divisions, or companies. They can also be used for, but are not limited to management…

Later Stage Funding

Later stage funding is normally for a company expecting to go public usually within a year. Often this funding is structured so that it can be repaid from proceeds of…

Joint Venture

Joint venture financing for commercial property Joint venture financing is a means of structuring a mortgage in order to help you, the client, maximize cash flow potential. How? By “teaming”…

Initial Public Offering (IPO)

IPO (Initial public offering) is the first sale of stock by a company to the public.  An initial public offering is designed to generate capital for a business that decides to take the…

Inventory Loan

Inventory loan uses your inventory to secure a loan. Inventory loan financing (also known as “Flooring”) is the leveraging of inventory using the value of the financed equipment or stock as…

Intrastate Offering

Intrastate offering enables your business to sell stock within one state. Intrastate offering financing is a very unique method for financing a business. It allows your business to sell stock…

Interim Financing

Interim financing is a short-term loan that can become a permanent financing source for your business. This loan is typically made during the production or construction of a project or…

Intangible Asset

Intangible asset is something of value that cannot be physically touched, such as a brand name, franchise, trademark, or patent. There are two basic types of intangible assets. One type of…

Hypothecation

Hypothecation is the pledging of securities or other assets to secure a loan without actually transferring possession of the security used as collateral. This is the opposite of modern mortgages where the…

Hard Money

Hard money is a type of financing where real estate is usually used as collateral. The amount of funds a borrower receives is based on the value of the particular real…

Government Loans

Government loans from the SBA (Small Business Administration) can be used for most business purposes The purchase of real estate to house the business Construction, renovation or leasehold improvements To…

Going Public

Going public is the process of an initial public offering(IPO.) An initial public offering is when a company offers part ownership of the business to the public through the sale of…