glossary

We deal with businesses of all experiences and we don’t want anyone to feel lost.

That’s why we do our best to keep the jargon to a minimum. But, if you see a word you’ve never seen before, have a glance below…

glossary

finance terminology

A table of periodic loan payments that shows the amount of principal and the amount of interest with each payment until the loan is paid off.

Stands for Annual Percentage Rate. This combines the interest rate and any admin fees with the term length of the deal to give you one figure that can be compared across products.

Stands for Coronavirus Business Interruption Loan Scheme. A government-backed scheme where businesses can get funding of up to £5m with interest payments made by the government. Ends March 31, 2021.

A long-term vehicle rental with an agreed mileage. The vehicle is then rented throughout the contract and then return it at the end of the term.

Stands for Earnings Before Interest, Taxes, Depreciation and Amortisation, is a measure of a company’s overall financial performance. EBITDA solely represents the result of a company’s activities, with interest costs, interest earned and depreciation excluded.

The ownership of any assets a business own that may have debts attached to them. If you own an asset worth £10,000 and have £2,000 left to pay – you have 80% equity.

Any form of financial assistance provided by us. This can range from a hire purchase facility or an invoice finance facility.

This is different to APR. A flat rate calculates your interest based on the original amount borrowed and doesn’t consider the amount you have paid off.

Stands for First Notification Of Loss. It is the first instance where an insurance provider is notified after an accident, theft or injury involving an asset. This is usually the first step in the claims process.

These are tangible assets that have fundamental value and are long-term. Hard assets are physical items and are usually forms of machinery or vehicles that have more than one year of useful life.

Stands for Know Your Customer. All customers are subject to identification and fraud checks and Know Your Customer is the process.

Stands for Loan-to-Value. The ratio of a loan to the value of the asset. If the asset is £100,000 and a business puts a £20,000 deposit down, it’s 80% LTV.

A form of finance lease that lets a business use an asset for part of its useful life but never transfers ownership to the business.

This is the estimated value of an asset at the end of its lease term of useful life. The longer the useful life or lease period, the lower the residual value.

Stands for Recovery Loan Scheme. Brought in on April 6 to replace CBILS. A government-backed scheme where businesses can get funding of up to £10m. Ends December 31, 2021.

Some industries rely on busy summer trading months and then business drops off in the winter. Seasonal payments allows businesses to make payments when during trading seasons.

These are assets that typically have no, or little, resale value – think IT software or gym equipment. They can also be intangible, like cloud storage systems.

Even though a business can reclaim VAT when paying for an asset, it can take a few months to be returned. A VAT deferral pushes the due date of this payment back 3 months. This allows businesses to submit their VAT claim straight away, meaning it will be refunded to them before it’s due to be paid to the HMRC.

When a business offers finance to it’s customers through a third party like us, it’s known as vendor finance.

The amount of cash that a business can safely spend after it accounts for money coming in and out.