Glossary: Key commercial finance terms
Introduction
Commercial finance has its own terminology. Here’s a simple glossary to help you understand the key terms you’ll encounter.
Glossary
| Term | Definition |
|---|---|
| Asset Finance | Funding used to acquire business equipment or vehicles, spreading the cost over time. |
| Bridging Loan | Short-term finance to “bridge” a gap before long-term funding is secured. |
| Invoice Finance | Releasing cash tied up in unpaid invoices by selling or borrowing against them. |
| Refinancing | Replacing existing finance with a new agreement to reduce cost or extend terms. |
| Secured Loan | A loan backed by an asset (like property or machinery). |
| Unsecured Loan | Finance not backed by specific collateral, usually based on business creditworthiness. |
| APR (Annual Percentage Rate) | The total yearly cost of borrowing, including interest and fees. |
| Credit Line / Facility | A flexible borrowing limit that allows you to draw and repay funds as needed. |
| Balloon Payment | A larger payment due at the end of a finance term. |
| Term Loan | Fixed-sum loan with regular repayments over a defined period. |
Summary
Understanding these terms makes discussions with lenders smoother and more transparent. Severn Commercial Finance will always explain everything clearly, no jargon, no confusion.