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Business Loans & Leasing - Industry Lingo
To make the right business purchases, you have to know the language. Here's a guide to business loans lingo.
Collateral
Collateral refers to property offered to support a loan that can be seized by the lender if you default payment of the loan.
Fixed Rate
This is an interest rate that remains unchanged throughout the life of a loan.
Interest
Interest is the amount charged by a lender for the money borrowed.
Principal
The principal is the original amount of the loan.
Secured Loan
A secured loan is one that is supported by collateral, which the lender can seize if one fails to repay the loan.
Term Loan
The full amount of the loan is given to the business upfront in a term loan. The business then makes pre-determined monthly payments to the lender for a percentage of the principal plus interest.
Unsecured Loan
This kind of a loan does not involve collateral and is granted to a business on good credit alone.
Variable Rates
A variable rate is an interest rate that changes over the life of the loan.
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