Interested in taking out a business loan? Get a jump on the lending process with these nine essential financing terms.
Collateral
This is the asset or assets that a borrower (see below) pledges as a backup when they take out a loan. In the case of loans that involve a substantial amount of money, real estate is the most common form of collateral.
Down Payment
The initial amount you pay yourself before a loan is granted. In most cases, the larger the down payment, the lower the monthly payments you have to make.
Interest
Think of the interest as the amount you pay to borrow money from someone else. Interest rates are usually expressed in annual percentages, although other shorter or longer time periods (such as months, for example) can be used.
Borrower/Lender
Easy: if you take out a loan you become the borrower, while the institution that issues the loan is known technically as the lender.
Bridge Loan
A bridge loan is a short-term loan that meets immediate needs while you wait for permanent financing. Other names for bridge loans include swing loans, gap financing, or interim financing.
Loan Maturity
The date on which the last payment of your loan is due. For example, the maturity of SBA loans ranges between 5 and 25 years, depending on the type of loan.
Principal
In the context of financing, “principal” refers to the amount of debt remaining on a loan, excluding interests. In other words, it’s the initial size of your loan.
SBA
The Small Business Administration is a United States’ government agency whose mission is to support small-business owners and entrepreneurs. One of the ways the SBA fulfills this mission is by guaranteeing loans that business owners can use for a variety of business purposes, including purchasing commercial real estate and equipment.
Term
The term of a loan is the length of time it would take you to pay off the money by making regular (often monthly) payments.
Gellyfish: Certainty of Execution in Financing
Looking for SBA loans in California, or anywhere in the United States? Gellyfish is here to help. We offer financing with the certainty of execution you need to take your business to the next level.
Contact us today by email (info@gellyfishcommercial.com), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our full range of financing options
