Glossary

Unsure about any of the financial terms described? No problem, let us help guide you through it. Just click on any of the below for a description.

 


 

Assets

An asset is anything that's owned that has an economic value e.g. money your business owns but also personal items such as your house or car. Depending on the funding product you're requesting a lender might require to see your assets and lend against those assets as they act as a form of security for the lender that you're able to pay them back for providing the loan. Normally, your balance sheet will record the monetary value of all the assets you/your company owns.


 

Accounts Receivable

This is also known as your sales ledger. It's the amount owed to you from your customers/clients - normally associated with invoices, where credit is owed to you.


 

Alternative Finance

Alternative Finance refers to financial channels (such as lenders on Funding Xchange) that provide lending to businesses that aren't considered as the normal/traditional routes to sourcing finance, like your bank. Read more in our SME Funding Guide.


 

Balance Sheet

This is a statement that summarise your company's assets and liabilities (and any equity owned by a shareholder). It gives lenders an idea about what's owned and what's owed by a business.


Bank Referral Scheme

The Government's Bank Referral Scheme is designed to help you find an alternative funding solution if you've made an unsuccessful application for bank finance. The banks involved in the scheme are obliged to offer you a referral to one of three designated online 'Finance Platforms' (ie. Funding Xchange) that can provide you with access to a broad range of non-bank lenders - we are one of those platforms. By using our service you have a much better opportunity of finding the right funding that suits your needs. See here for more information.


Budget

A budget contains the revenue and costs you expect to have in the future. It's an important plan as some lenders will assess your company's budget and your assets in order to give you the loan as they want to check you're able to repay them.


Capital

Businesses need capital (money) to purchase products and assets. Business capital incorporates both equity and debt.


Case Studies

Businesses like yours that Funding Xchange has managed to help get funding. See case studies here.


Cashflow

Cashflow is the difference between how much money your business takes in and how much money you spend, e.g., by buying stock or paying debts. It is important to forecast your monthly cashflow to ensure that the business has sufficient funds to make required payments.


Credit Record

This is a detailed account of your business's credit history. Lenders will use this to determine the worthiness of your business to apply for a loan. You can contact Experian or Equifax to find out more about your business' credit record.


Draw-down

Take money out of an account that's available to you. For example, a Flexible Credit Line you can draw-down money when you need it.


 

Debt

The amount a business owes for the funds its borrowed.


 

Equity

Ownership of stock/shares in a company. Read more in our SME Funding Guide.


Fast Business Cash

Fast Business provides cash for your business when you need it quickly. It's ideal for seasonal businesses who need to smooth cash flow, like hospitality and retail establishments. The cost can be more than other types of loans but that's because it's often unsecured. It can be in a matter of days from the time of application and even available to you if your credit history isn't perfect.


Fixed Period

This is in reference to the time of which a loan is provided.


Finance Provider

See Lender


 

Flexible Credit Line

A flexible line of credit allows you to access money - up to £100,000 - as and when you need it. You can re-pay and re-draw money like a traditional bank overdraft (although there's no bank account required).


 

Funds/Funding

Money that you can receive from a lender. Normally returned with interest. It can also be in return for equity (although this is not the case with lenders on Funding Xchange).


 

Invoice

A commercial documentation of goods or services purchased and sold from a buyer and seller.


 

Invoice Finance

Invoice finance provides an advance against unpaid invoices. Funding providers may offer payment of up to 98% of your unpaid invoices. You can select individual invoices that you want to finance or get financing for your full sales ledger.


 

Liabilities

A liability is the debt or obligation that's reconciled through money, goods or services.


 

Lender

A lender or finance provider makes funds available to your company. Funding Xchange works with a panel of 45 finance providers that are seeking to fund businesses like yours. All our finance providers have been vetted by Funding Xchange and have an excellent track record of treating customers fairly.


 

Loan

An amount of money (and sometimes an asset) that is provided to a business, which relies on a debt to be repaid with interest. Read more in our SME Funding Guide.


Merchant Funding

Merchant Funding is a flexible alternative to a traditional bank loan as it gives you an advance on predicted credit / debit card sales. It's most suitable for consumer-facing sectors such as outlets, retailers, restaurants, online merchants or businesses with card terminals and visibility on future payment streams.


Net Worth

Net worth is used when talking about a company's value - it's the total amount of assets minus the liabilities.


Not-For-Profit/Social Enterprise Lending

Responsible finance providers lend to not-for-profit businesses, charities, social enterprises and other community and voluntary organisations that can't access finance from high street banks or other providers.


Overheads

The costs of operating a business that aren't related to the actual manufacturing or production or service - expenses that aren't specifically labour related (e.g. the rent of your premises).


 

Partner

A contractual alliance with another business or organisation. In addition to our lenders, see our partner list here.


Peer-to-Peer Lending

Sometimes abbreviated P2P lending or marketplace lending. Ratesetter and MarketInvoice are examples of finance providers that using funds extended by individuals or businesses (peers) to make loans or revenue advances to small businesses.


Personal Guarantee

An agreement that means a director takes on a certain level of personal responsibility for the debt through their own finances/assets.


Profit

When the income exceeds the costs (and expenses/tax) to maintain or grow the business.


P&L Statement

P&L is the abbreviated form of Profit and Loss. This is a financial statement that summarises all costs and revenues of a business.


Repayment/Repayment Schedule

The schedule a business agrees with a lender to repay a loan or revenue advance. Repayments can be daily, weekly or monthly.


 

Revenue

The amount of money a company gets from selling its products or services. Costs are taken from this to calculate net income.


 

Revenue Advance

Finance providers can provide a revenue advance to a company by 'purchasing' future expected income of the businesses. Invoice finance is typically set up as a revenue advance - where the finance provider 'buys' an invoice and expects to receive the receipts once the invoice is paid in full.


Revenue Management

Typically known as analysing customer or supplier behaviour and, where necessary, implementing changes to ensure better efficiency. With Invoice Finance, lenders may take over revenue management, which in this instance means making sure money is received in a timely fashion.


 

Sales Ledger

See Accounts Receivable.


 

Secured Business Loan

A Secured Business Loan is suitable where businesses make significant investments in fixed assets as it allows you to draw funds against an asset such as machinery or property. It's arranged for a fixed period, typically over the expected life-span of the asset used to secure the loan.


 

Security

A financial product/instrument that provides testament of ownership and has value that can be traded.


SME Funding Guide

A useful resource for small businesses! We have worked with our partners KPMG Small Business Accounting to create the SME Funding Guide.


Social Enterprise/Not-For-Profit Lending

Responsible finance providers lend to not-for-profit businesses, charities, social enterprises and other community and voluntary organisations that can't access finance from high street banks or other providers.


Start-up business

A start-up company is a business in its first stage of growing/developing.


Start-up Loan

A Start Up Loan is a personal loan for a business available to individuals who want to start or grow a business in the UK. Funding Xchange is a partner of the Startup Loan Company (SULCo), which is a government-funded scheme that provides Start Up Loans, as well as mentoring.


Suppliers

The company or companies that provides you with the resources or products to run your business.


Turnover

The value of total sales.


Underwriting

When a lender analyses the risk and creditworthiness of a customer.


Unsecured term loan

Unlike Secured Business Loans, for an Unsecured Term Loan lenders don't require any assets (e.g., equipment or property) as security for the funds.