- A/B Testing
A/B Testing is a process of testing two versions of something to determine which performs better. In business loans, A/B Testing can be used to test different loan terms to see which results in more successful repayments.
- Accounts Payable
Accounts payable is a measure of how much a business owes its creditors for goods or services supplied to it. This is important for managing cash flow and ensuring bills are paid on time. Creditors are typically suppliers who have delivered goods or services but have not yet been paid.
When a company purchases goods or services on credit, the supplier sends an invoice to the company. The company then records the Accounts Payable (AP) on its balance sheet, which is a record of all money owed by the business.
- Accounts Receivable
Accounts receivable financing is a type of business loan that allows companies to borrow against their accounts receivable. This can be helpful for companies that have strong accounts receivable but need cash flow help. It is important to note that this type of financing can be expensive, so businesses should only consider it if they absolutely need the cash and cannot get it elsewhere.
- Accrual Basis
Under accrual-based accounting, businesses would owe taxes on revenue even if they haven't yet collected payment from the customer. This can become an issue if customers take a long time to pay their invoices. Accounts receivable count as an asset on a business's balance sheet, but it's important to track how long a sale is outstanding to manage cash flow effectively.
- Annual Percentage Rate
The interest rate is the cost of borrowing money and is typically expressed as a percentage of the total loan amount. The APR, or annual percentage rate, is the cost of borrowing money expressed as a yearly rate. Your APR will also include any origination fees, closing fees, documentation fees, etc.
- Analytics
Analytics is the process of gathering intelligence about customer needs and wants to make informed business decisions. It can be used to understand customer behavior, trends, and preferences. Analytics data can be used to improve decision-making across the business.
- Asset
An asset is anything of value that a business owns. This can include physical goods, such as inventory or equipment, or intangible items, such as patents or copyrights. Not all assets are physical, and some assets may have greater value than others.
An asset can be used as collateral for a business loan. This means that if the business is unable to repay the loan, the lender can seize the asset to recoup its losses. The value of the asset must be equal to or greater than the amount of the loan for it to be used as collateral.
- B2B
B2B businesses provide goods or services to other businesses. Common business loan terms for B2B loans include the following:
- The loan amounts
- The interest rate
- The repayment schedules
- The collateral requirements
- B2C
B2C businesses usually involve providing goods or services directly to consumers. In contrast, B2B businesses typically deal with other businesses rather than consumers. Because of this difference, the way that B2C and B2B businesses operate can be quite different.
There are a few keyways in which business loans for B2C businesses differ from those for B2B businesses. One is that the loan amount may be smaller for a B2C business since they generally deal in smaller transactions than B2Bs.
- Benchmarking
Benchmarking can be used in business loans to help determine which advertisement, web page, or app is performing better. By comparing the performance of different ads, pages, or apps, you can get an idea of which one is more effective and make better use of your loan.
- BoFu
BoFu is a business loan term that refers to the equal installments that are automatically debited from your business bank account. BoFu can help businesses manage their data and improve their efficiency. BoFu loans are typically repaid through equal installments that are automatically debited from your business bank account.
- Bookkeeping
Bookkeeping is the process of recording and reporting business financial transactions. This includes tracking income and expenses, as well as recording other financial transactions such as asset purchases and sales.
- Bounce Rate
A bounce rate is the percentage of visitors who leave your website after viewing only one page. A high bounce rate can indicate that your website is not user-friendly or that you are not providing the information your visitors are looking for. A low bounce rate can indicate that your website is well-designed and that you are providing the information your visitors are looking for.
- Brand
A brand is often used as collateral for a business loan. This means that if the business defaults on the loan, the lender can take possession of the brand and use it to recoup their losses. Therefore, it is important for businesses to consider the value of their brand when taking out a loan.
- Business Loan
A business loan is a loan used by businesses to expand or purchase new assets. The repayment period for a business loan is typically three to ten years. Interest rates on business loans are usually lower than on personal loans. Business loans can help improve a company's credit score and financial stability.
- Capital
Capital is used to finance a company's operations. This can be for one-time large purposes, such as creating a special purpose vehicle (SPV) to reduce debt exposure. Off-balance balance financing can be useful in this case.
- Cash Flow
Cash flow is the money that comes in and goes out of a business. It is important to have more money coming in than going out, to have a healthy business. Short-term financing obligations are included in the cash flow definition.
- Conversion Rate
Conversion rates are important because they give businesses insight into how effective their marketing campaigns are and whether their message is resonating with their audience. To calculate business loan terms, lenders will often use conversion rates as one metric to gauge the health of a company.
- CPL
CPL is a loan term that refers to the amount of money you borrow, the interest rate, and the length of the loan. There are three types of CPL loans: short-term, middle-term, and long-term. Short-term loans have a base rate of + 4.25% or 4.75%. Long-term loans have a base rate of + 2.25% or 2.75%. Prime rates (currently 6.25%) apply to all CPL loans regardless of length.
Conclusion
If you are an entrepreneur looking to secure a business loan, this guide is must-read. This list of common business loan terms provides you with the information you need to understand your obligations and manage your finances more effectively. By understanding these terms, you will be able to make informed decisions when securing a business loan.