Glossary

Additional Security – usually an asset that can be used as security to help secure additional funding.

Aged Debtors – money a company is owed by its customers over an agreed date or timescale.

Agreement in Principle (AIP) – an agreement of offer of a loan subject to the meeting of various criteria

Amortisation – the depreciation of assets value over a period of time.

Arrangement Fee – the fee charged for setting up a loan and associated administration

Bridging loans at 100% – a debt and equity loan that equates to 100% of the property value.

Buy To Let (BTL) – usually referring to a mortgage that is specifically used for the purchase of a house to rent to a 3^rd party.

Cash-Flow – the movement of cash in and out of a business on a daily basis.

Compounding Interest – interest payable on interest – usually on savings

Cost of Acquisition – the total cost to acquire a property including all fees.

Debt or Debtor Finance – usually refers to invoice factoring or funding.

Depreciation – see amortisation.

Development Appraisal – a comprehensive document that covers all elements of a development project including acquisition costs, project planning, fees and interest.

Development Finance at 100% – requesting or receiving 100% of the required development finance usually through debt and equity. .

Decision in Principle (DIP) – when a lender offers to make a loan available subject to the evidence of agreed criteria.

Earnings Before Interest – measure of company profit before tax and interest.

Equity Finance – raising capital by selling shares in the business.

Exit Fee – a fee payable usually when a loan is settled early.

First Charge – a loan secured against a property when the lender has first charge over the property.

Gross Development Value (GDV) – the total value of a property being developed, at completion stage.

Guarantor – a person that will guarantee a loan repayment should the borrow default on payments.

Interest and Capital Repayment Loan – a loan which repays both initial capital as well as interest.

Interest Only Loan – a loan which only requires the repayment of the interest on the amount borrowed.

Interest Rate per calender month (pcm) – the monthly interest per calendar month being charged on a loan.

Invoice Finance – a loan on invoice values future sold to a lender.

Invoice Factoring – the sale of invoices to a 3^rd party company to aid a business cash flow. Invoices are then settled and the 3^rd party chases the invoice payment.

Junior Debt – a secondary or subordinate debt.

Loan To Gross Development Value (LTGDV) – the amount of loan offered in proportion to the gross development value. Normally as a percentage figure.

Loan To Value (LTV) – this is the amount of the loan in relation to the value of the property or asset being loaned against.

Management Buy In (MBI) – An outside management team buying a part of a company but usually leaving the existing management team in place.

Management Buy Out (MBO) – when the existing management team of a business buy the controlling shares to take control of the company.

Mezzanine Finance – a further line of credit over and above the primary debt.

Merchant Identification Number (MID) – a unique number issued by a card processing company to a business that takes card payments. .

Non-Status Loan – a loan given when the borrow does not need to prove income or credit score.

Overdraft – a facility usually offered by a bank that allows a borrower to exceed pre- agreed credit limits. Overdrafts attract fees.

Point of Sale (POS) Machine – an electronic terminal that allows a business to transact credit and debit cards.

Processing Data Quickly (PDQ) Machine – a POS device.

Personal Guarantee (PG) –a guarantee from an individual; to agree to repay the loan if the principle borrower defaults.

Revolving Credit Facility – funds such as credit cards with fluctuating usage amounts allowing a small business a flexible line of credit.

Rolled Up Interest – a loan when the interest is paid at the end of the term, not monthly. Suitable for development loans when funds are available at completion and sale of the property or asset.

Second Charge – when the lender provides a second line of credit secured on the same asset as a primary loan.

Secured Loan – a loan secured against an asset, usually a property.

Senior Debt – the person or business that has the first charge on a loan. .

Serviced Interest – a loan where interest is spread monthly and pain over the duration of the loan.

Simple Interest – where the interest charged is not calculated on a compounding basis.

Stretched Senior Finance – a combined loan of senior and junior debt.

Valuation – a value placed on a property or development that allows a LTV – Loan to Value to be calculated.

Valuation Fee – a charge normally paid by the borrower for a professional valuation of property, development or asset.

Undertaking for legal fees – a legally binding agreement when the borrower agrees to pay all fees – usually an indication of intention to proceed.