SBA Loan Terms Glossary
For the official SBA Glossary click here.
- 504 Loan Program: A small business loan designed to help businesses acquire commercial property.
- 7(a) Loan Program: A flexible loan that can be used to purchase land, buildings, equipment, or other businesses.
- Accounts Payable: Accounts due to suppliers. Included as a currently liability on the balance sheet.
- Accounts Receivable: Money owed for sales or services performed. Included as a current asset on the balance sheet.
- Asset: Anything of value that an entity owns or benefits directly from.
- Bankruptcy: Legal process of closing an entity with insufficient assets to cover debts incurred.
- Business Plan: Document that outlines a firm's financial and operational goals and benchmarks.
- Capital: The owner or firm's resources, most often cash, available for investment.
- Collateral: Assets pledged as security to backup a borrower should a default occur.
- Debt Ratio: Financial indicator expressed as debt divided by total debt plus equity.
- Debt Financing: Financing business operations by taking on loans as opposed to forfeiting equity.
- Entrepreneur: Individual or group of individuals who take on the risk of starting a venture.
- Equity Financing: Financing business operations by giving investors equity in the firm as opposed to taking on debt.
- Easement: An interest or right to use a portion of another owner's land for a specific purpose.
- Fixed Assets: Assets which are not consumed or used up such as buildings, equipment, land, and machinery.
- Fixed Costs: Costs that do not fluctuate based on the level of output or services performed.
- Franchise: Licensing of a business concept to allow individual business owners to operate under a franchisor.
- Grant: Money or services given, usually by the government, that do not require repayment.
- Guarantor: Party that endorses an agreement and promises fulfilment of certain obligations.
- Incubator: Public or private organization created to help support startup entrepreneurs.
- Legal Insolvency: When a firm's liabilities are larger than the fair market value of its assets.
- Lease: Written contact where the owner of an asset allows a lesee certain privelages for compensation.
- Lender: Entity that lends cash to a borrower for an agreed upon purpose.
- Liability: Any claim against assets that does not provide a future economic benefit to a firm.
- Liquidity: A measure of how fast a firm can convert a specific asset to cash.
- Merger: combination of two firms into a new entity, gernally of similar size and scope.
- Mortgage: A loan to acquire real estate with the property in question as collaterol.
- Net Worth: In simple accounting this is merely a firm's, or individual's, assets minus liabilities.
- Partnership: Business structure where two or more parties co-invest resources and share profits.
- Patent: A legal ruling giving a firm or individual the sole rights to a product or process.
- Prime Rate: The base annual percentage rate that SBA loans are quoted against.
- Small Business Administration: Government agency that helps maintain liquidity in the small business finance market.
- Small Business Investment Company: An SBA-licensed, private company that profits by investing in small firms.
- Surety Bond: Bond issued by a third party that helps guarantee certain performance by the purchaser.
- Turnover: The number of times a firm's total inventor is sold in one year.
- Uniform Commercial Code: Laws that govern commercial transactions such as the sale of goods.
- Variable Costs: Costs that fluctuate based on the level of output or services performed.
Learn more about SBA Loan programs and the SBA Loan process by downloading our free step-by-step guide.
