Merchant Funding

Loan Term – The length of time the borrower has to repay debt.

Long Term Debt – Financing used to purchase or improve assets such as plant, facilities, large equipment and real estate.

Maturity – A loan’s maturity is the life of the loan; that is, how long you have to repay the loan. It usually applies to term loans and not lines of credit.

Multi-Lender Environment – Numerous lending institution sharing the same site and information to provide instant financing to small businesses.

Personal Guarantee -A guarantee that the primary owner will assume personal responsibility for repayment of the loan, should the company not repay the loan.

Prime Rate – The rate a lender charges its best customers. The rate is calculated differently by each lender.

Revolving Credit – It is the same thing as a line of credit: an amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.

SBA Loan – Loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans, which are guaranteed by the Small Business Administration (SBA) — the SBA has no funds for direct lending or grants.

Secured Loan – A loan secured by specific collateral. Creditor may foreclose and seize the specific property that is collateral to satisfy an unpaid secure loan.

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

Short Term Debt – Financing used to secure cash for accounts payable and inventory.

Subsequent Draw Fee – It’s a fee that the financial institution may charge each time you use the line of credit after the initial use.

Term Loan – A loan for a specific amount of money. It has either have a fixed or variable interest rate, matures in between one and ten years and has a set repayment schedule.

TransUnion Corporation – One of three leading providers of personal credit information.

Unsecured Loan – A loan granted upon the good credit of the borrower. No collateral involved.

Variable Interest Rate – An interest rate that changes during the life of a loan.

Popularity: 41% [?]

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

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

Business Credit Card – An amount of money, which a business can borrow against at times it needs capital. Using a card accesses the money.

Commercial Real Estate Loans - Similar to residential mortgages, but collateral is business property. Interest rates are usually fixed, the length of the loan can range from 5 – 20 years and payments due monthly.

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

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 and Bradstreet, Equifax, Experian or TransUnion. Contains credit information on a business or an individual, including payment history of bank cards, store cards, mortgages, student loans, and trade payments.

Credit Scoring – The evaluation system used by lending institutions to determine relative credit riskiness of a business or consumer. When evaluating businesses, it generally considers factors such as credit payment history, new credit sought by owner of business, and financial strength and longevity of business.

CreditFYI – A web site for checking business credit reports

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

Dun & Bradstreet – Leading provider of business credit information.

Equifax – One of three leading providers of personal credit information.

Equipment Leases – Leases allowing companies to purchase new equipment.

Experian – One of three leading providers of personal and business credit information.

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

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.

Line of Credit – An amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.

Popularity: 41% [?]

Many say the economy is improving, and experts say once frozen credit markets are beginning to thaw, but some small businesses are still having a tough time getting loans.

The owners of Twilight Bistro are hoping to expand, but they said the market for loans is still tight.

“They want as much assets as what it is worth,” Twilight Bistro owner Joe Anglin said. ”If I had that I’d just buy it.”

Anglin said part of the problem is, the business is not only small, but new.

“We’ve been here less than two years, and our track record does show a profit, but still with only two years and not a lot of assets, we expected to be told no,” Anglin said.

“The greater the risk, which often comes in smaller start up companies, the harder it is going to be to get those dollars,” Tricia Hollander with Hillyard Lyons said.

Still, Hollander said there are more dollars to be had, and credit is starting to ease up.

“We tend to see the pendulum swing,” Hollander said. ”I think maybe we’ve swung so far in one direction that at some point we’ll come back to the middle.”

She said new credit card rules that took effect Monday don’t apply to businesses, but that exemption could have an impact.

Some banks may try to make up lost revenue on the backs of businesses, and some businesses may put their credit on personal cards.

That makes financial institutions nervous.

“That becomes a little bit of a muddy issue when businesses take on personal liability, so that is a concern,” Hollander said.

As for Twilight, they said their best bet for a loan right now is the small business administration.

They said the wait could be a little longer, but they believe it will work out in the end.

Hollander said some small businesses are avoiding expansion right now anyway because they are focused on getting their financial house in order.

Popularity: 27% [?]