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Accounts Payable – Trade debt extended from suppliers.

Accounts Receivable – Trade extended to customers of the business, typically due within 30 days.

Accounts Receivable Financing – A loan gained by borrowing against receivables. Loans are paid down as receivables are collected. See also Factoring.

Accrual Basis of Accounting – A method of accounting in which, revenue is recognized when earned, expenses are recognized when incurred, and other changes in financial condition are recognized as they occur, without regard to the timing of the actual cash receipts and expenditures. Compare with Cash Basis Accounting.

Amortization – A systematic apportionment of the cost basis of intangible assets to future periods in which benefits accrue from such assets. Amortization is treated as an expense in the income statement for the period, while accumulated amortization is treated as a deduction from the asset category to which it relates. Also - a tax concept, the recovery of the cost or other basis of an intangible asset over its estimated useful life in a manner similar to straight-line depreciation.

Annual Fee – The amount charged by the lender each year to cover the administrative costs of the financing.

Annual Percentage Rate (APR) - The effective interest rate taking into account compounded interest and other fees for a specified period (usually one year).

Appraised Value – The formal independent opinion of an assets value from an expert "appraiser."

Assets – Anything of value that is owned by or owed to a business. Assets are usually categorized into current and fixed assets. Current assets can be readily turned into cash without disrupting the business operation. Current assets include cash, marketable securities, inventory and accounts receivable. Fixed assets cannot be readily turned into cash and include such things as land, buildings and equipment. Intangible assets are a type of fixed asset and include patents, trademarks and goodwill.

Audited Financial Statements – The highest level of financial statements with detailed opinion provided and verified by a CPA.

Average Cost – This is an inventory valuation method that allocates the business cost of goods purchased or manufactured. All costs assigned to those goods is averaged to arrive at a total inventory valuation.

Balance Sheet – The financial exhibit that lists the assets, liabilities and net worth for either the business or its owners.

Bargain Purchase Lease – A lease option that allows the business to purchase the equipment at a price that is less than the expected fair market value.

Basis Point – A financial measure equal to one one-hundredth (1/100) of one percent. One hundred basis points equals one percent. Basis points are used in connection with interest rates or yields on financing.

"Buk-Out" Lease ($101) – A lease option that allows the business to purchase leased equipment for $101 at the end of the lease term. This type of lease is similar to an Equipment Loan.

Business Assets – Assets of the business that may include cash, marketable securities, inventory, accounts receivables, equipment, machinery, vehicles, furniture, fixtures, real estate and more.

Business Credit Card – A type of financing that offers the flexibility of a credit card, including generally no interest charges if the balance is paid in full every month, with the convenience of widespread acceptance for routine business expenses. These cards have similar terms as personal credit cards, however they generally offer slightly lower interest rates.

Cash Basis of Accounting – An accounting system in which revenues and expenses are recorded and realized only when the accompanying cash receipt or payment occurs, without regard to the actual period to which the transactions apply. Compare to Accrual Basis of Accounting.

Cash Flow – The cash generated during normal business operations and the measurement of its flow in and out of the business. Surplus cash is referred to as positive cash flow. The absence of cash is referred to as negative cash flow.

Collateral – Any property that is pledged to secure financing. If the financing terms are not met, this property may be forfeited to the lender.

Commercial Real Estate Loans – Loans for the purchase, new construction or refinance of commercial, industrial or investment property. They are generally available for up to 75% of the property value and can be extended for up to 25 years. As with residential mortgages, commercial real estate loans can have fixed or adjustable rates.

Commercial Term Loans – Loans made to businesses that can be either secured or unsecured. Usually made to mid-size and large businesses.

Compiled Financial Statements – Lowest level of prepared financial statements with a CPA opinion and disclaimer.

Corporation – A legal business entity formed for the purpose of conducting business. The principal’s interests are represented through shares of stock. For taxation purposes, there are two types of corporations, a C-Corp. and a S-Corp. C-Corporations are taxed as a business entity (schedule 1120) and S-Corporations (schedule 1120S) are taxed like Partnerships (through the individuals).

Cost of Goods Sold – The direct cost associated with manufacturing products sold by manufacturers, or the cost of inventory for wholesale or retail companies.

CPA – Certified Public Accountant

Credit Rating – A predictor of the ability to pay back a loan. The credit rating is a result of credit scoring.

Credit Report – Financial history supplied by a credit information company like Dun & Bradstreet, Equifax, Experian or Trans Union. Contains credit information on a business or an individual, including payment history of credit cards, mortgages, student loans, trade payments, and more.

Current Assets – Cash, marketable securities, or other assets that can be converted to cash within one year.

Current Portion of Long Term Debt (CPLTD) – Principal payments on long-term debt that are to be paid within one year.

DBA (Doing Business As) – A business entity that is using a name for business that is different from the business entity. DBA’s are created by filing a "Fictitious Business Name Statement" with the county or counties in which they operate. This filing reserves the business’ right to use that name.

Debt Financing – A loan with pre-agreed terms, including a payback schedule and interest.

Debt to Income Ratio – The total debt in relation to income for Sole Proprietors.

Debt to Worth Ratio – The ratio between the percentage of a company the creditor(s) own and the principal(s) own. This ratio reflects the debt pressure on the company. Lenders look at the debt-to-worth ratio when reviewing a credit application. The debt-to-worth ratio is also called the Leverage Ratio.

Equipment Leases – See Lease.

Equipment Loan – A type of financing, generally a term loan or line of credit, that is used to finance equipment purchased. See also Term Loan and Line of Credit.

Factoring – A type of financing where a lender purchases your business's accounts receivables in exchange for a percentage of these funds by a lender. It enables any business to obtain immediate, short-term cash, improving cash flow, without diluting equity or incurring long-term debt. With factoring, the lender may actually assume the responsibility for collecting your outstanding receivables, for a larger percentage of the funds.

Fair Market Value Lease (True Lease) – A lease where the lender purchases the equipment from a qualified vendor of your choice and leases the equipment to your business for a fixed term with a specified payment structure. At the end of the lease you have the option to renew the lease, buy the equipment for the Fair Market Value or walk away from the equipment at no additional cost.

Financial Statement(s) – The financial statements of a company including a Balance Sheet, Income Statement, and Statement of Cash Flow.

Fixed Interest Rate – An interest rate that is the same throughout the life of the financing.

Fixed Purchase Option Lease – An option in the lease agreement that allows the business to purchase the leased equipment for a fixed amount at the end of the lease term.

Fixed Rate Loan – A loan whose rate does not vary with market conditions but is constant over the life of the loan.

Funds Flow – The calculation of Net Income + Interest Expense + Depreciation + Amortization + any other allowed non-cash expense.

Goodwill – The value of a business in patronage, reputation, etc., over and beyond its tangible assets.

Income Statement – A statement that measures the financial performance of a business entity over a period of time (usually one year). This statement is prepared in combination with the balance sheet. It is also know as Profit/Loss Statement, P + L or Profit Statement.

Interest Rate – The amount charged by a lender for the money borrowed. It can be fixed or variable.

Inventory Financing – Money borrowed on the basis of finished inventory. The loan is paid as inventory is sold. See also Factoring.

Lease – A type of financing that allows a business to obtain business equipment - computers, vehicles, machinery, tools and more - from a single item to an entire business' needs. The lender purchases the equipment and through a monthly payment, usually fixed, gives the business use of that equipment. Generally, the equipment serves as collateral, so often little or no money is required up front. This allows the business to purchase the equipment they need even if they do not have the cash on hand to pay for it. While the lender owns the equipment through the duration of the lease, business may be able to purchase the equipment depending on the structure of the lease.

Lendable Equity – Typically 80% of the appraised value of an asset, less any liens on the asset.

Leverage Ratio – See Debt to Worth Ratio.

Liabilities – A business’ financial obligations such as debts, salaries, taxes, accounts payable, dividends, and more.

Line of Credit – A predetermined amount of money offered by a lender against which a business can borrow. It gives the business the flexibility to draw only the amount of funds required at any given time. Interest is charged only on the outstanding balance, not on the unused portion of the line of credit. Interest rates usually are variable in relation to the Prime Rate. A line of credit is generally open for one year with annual renewals at the lender's discretion.

LiveCapital –The leading online business financing web site. Businesses can comparison shop for, apply for, and secure term loans, lines of credit, SBA loans, equipment leases, credit cards, and more from many of the nation's best-known financial institutions. LiveCapital offers businesses a uniquely easy way of obtaining the financing that they need: submit just one short online application – free of charge – choose from multiple offers and a variety of lenders, and receive a lender’s decision on screen instantly.

Small Business Administration –Established by Congress, the SBA provides financial, technical and management assistance to help Americans start, run, and grow their businesses.

Trans Union Corporation – One of three leading providers of personal credit information.