Understanding loan words should not feel confusing. This glossary explains common U.S. business financing terms in plain English, so visitors can read Kevanzo with more confidence. These definitions are educational only. They do not replace advice from a qualified financial, tax, legal, or lending professional.
APR
APR means annual percentage rate. It shows the yearly cost of borrowing, including interest and some fees. APR can help borrowers compare offers, but every lender may calculate costs differently.
Business Loan
A business loan is money a business borrows and repays over time. The lender may charge interest, fees, or both. Terms can vary by lender, loan type, credit profile, revenue, and business history.
Business Line of Credit
A business line of credit is flexible funding a business may draw from when needed. Instead of receiving one lump sum, the business may access funds up to a set limit. Interest is usually charged only on the amount used.
Cash Flow
Cash flow means money moving in and out of a business. Strong cash flow can help a business pay bills, manage payroll, buy supplies, and handle slow seasons. Lenders often review cash flow before making decisions.
Collateral
Collateral is property or another asset used to secure a loan. If the borrower does not repay, the lender may have rights to the collateral. Common examples can include equipment, vehicles, inventory, or business assets.
Factor Rate
A factor rate is a cost number sometimes used with certain business funding products. It is different from APR. Borrowers should ask how the factor rate affects the total repayment amount before accepting any offer.
Fees
Fees are extra costs connected with borrowing. They may include origination fees, draw fees, maintenance fees, late fees, closing costs, or prepayment fees. Reading the full agreement helps borrowers understand the real cost.
Invoice Financing
Invoice financing lets a business use unpaid customer invoices to access funds. The lender or financing company reviews the invoices and customer payment history. This option can help with timing gaps, but costs and terms matter.
Invoice Factoring
Invoice factoring means selling unpaid invoices to a factoring company. The company collects payment from the customer. This can improve short-term cash flow, but the business should review fees, customer contact, and contract rules.
Interest
Interest is the cost charged for borrowing money. It may be fixed or variable. A fixed rate usually stays the same. A variable rate can change, which may affect future payments.
Lender Checks
Lender checks are the items a lender reviews before making a decision. These may include credit, revenue, bank statements, time in business, existing debt, industry, cash flow, and repayment ability.
Personal Guarantee
A personal guarantee means a business owner agrees to be personally responsible for repayment. This can create personal financial risk. Business owners should understand this term carefully before signing any agreement.
Repayment Term
A repayment term is the time allowed to repay borrowed money. Shorter terms may mean higher payments. Longer terms may reduce each payment, but total borrowing costs can still be higher.
Secured Loan
A secured loan is backed by collateral. Because an asset supports the loan, the lender may have more protection. Borrowers should understand what asset is involved and what may happen after missed payments.
Unsecured Loan
An unsecured loan does not require specific collateral in the same way. However, it may still involve personal guarantees, higher costs, stricter checks, or other conditions. “Unsecured” does not mean risk-free.
Working Capital
Working capital is money available for everyday business needs. It can help cover payroll, rent, supplies, inventory, repairs, taxes, or seasonal gaps. Working capital financing is often used for operations, not long-term expansion.
Responsible Borrowing
Responsible borrowing means comparing options carefully before accepting funding. Business owners can review total cost, payment schedule, fees, lender reputation, contract terms, and realistic repayment ability. A loan should fit the business, not just feel quick.
How to Use This Glossary
Use this glossary as a simple starting point while reading Kevanzo articles. Loan terms can look similar, but small wording differences may change cost, risk, and repayment duties. When a term affects a real business decision, consider speaking with a qualified professional. Keep notes on payment dates, required documents, and questions for the lender. Clear notes make it easier to compare choices without rushing or missing important details.
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