20/02/2018
Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z(All)
 
Accounts Receivable Financing - A loan gained by borrowing against receivables. Loans are paid down as receivables are collected.
 
Annual Fee - The amount charged by the lender each year to cover the administrative costs of the loan.
 
AssetsThese include everything of value that is owned, including tangible (physical) items, like cash, accounts receivable, inventory, land, buildings, equipment, etc., and intangible (non-physical) items, like trademarks, licences, and goodwill.
 
Bad DebtA debt that is not collectible and is therefore worthless to the creditor.
 
Balance SheetFinancial statement presenting measures of the assets, liabilities and owner's equity or net worth of business firm or nonprofit organization as of a specific moment in time.
 
Bridge LoanShort-term loan to provide temporary financing until more permanent financing is available.
 
Business Credit Card - An amount of money, which a business can borrow against at times it needs capital. Using a card accesses the money.
 
CapitalBroadly, all the money and other property of a corporation or other enterprise used in transacting its business.
 
Capital MarketsThose financial markets, including institutions and individuals, that exchange securities, especially long-term debt instruments.
 
Cash Flow FinancingShort-term loan providing additional cash to cover cash shortfalls in anticipation of revenue, such as the payment(s) of receivables.
 
Cash Flow Statement A financial statement that shows when cash flows into and out of a business.
 
certificate of depositCommonly known as a 'CD', certificates of deposit bear a maturity date and a specified rate of interest. Penalties may apply for early withdrawal.
 
CollateralAssets pledged to secure the repayment of a loan.
 
Commercial Real Estate Loans - Similar to residential mortgages, but collateral is business property.
 
Commercial Term Loans - Loans made to businesses that can be either secured and unsecured. Usually made to mid-size and large businesses.
 
Commitment FeeThe sum paid by a borrower to a lender in exchange for a promise to lend money on certain terms for a specified period.
 
Corporate loansBusiness loans granted to large companies /corporations
 
Credit LimitYour?credit limit?is the maximum amount you can charge on your credit card. This includes purchases, balance transfers, cash advances, finance charges, and fees.
 
Credit Rating - A predictor of the ability to pay back a loan. The credit rating is a result of credit scoring
 
Credit Report - Financial history supplied by a credit information company and contains credit information on a business or an individual, including payment history
 
Current AssetCash, accounts receivable, inventory, all term deposits and prepaid expenses or any other asset which will be converted to cash within one year.
 
Current Liabilities These include all operating loans, accounts payable and accrued charges including outstanding cheques, wages, long-term debt payments and taxes that are due within a year.
 
Current RatioCurrent assets divided by current liabilities -- a measure of liquidity. Generally, the higher the ratio, the greater the 'cushion' between current obligations and a firm's ability to meet them.
 
Debt ServiceAmount of payment due regularly to meet a debt agreement; usually a monthly, quarterly or annual obligation.
 
Discounted billsBank gives cash to a customer in exchange of bills at a discount
 
Down paymentThe amount of money that should be paid by the buyer to the seller upon the signing of the agreement of sale.
 
Equipment Leases - Leases allowing companies to purchase new equipment.
 
Equity ParticipationAn ownership position in an organization or venture taken through an investment. Returns on the investment are dependent on the profitability of the organization or venture.
 
Fixed Assets A fixed asset generally includes the land, building, and equipment / machinery that are likely to have a useful life to the company for more than one year.
 
Fixed Costs This is a cost your business pays that remains unchanged, whatever your level of sales, for example, the company's monthly rent.
 
Fixed Rate Loan A type of loan in which the interest rate does not change during the term of the loan.
 
Fund BalanceNet worth in a nonprofit organization; total assets minus total liabilities.
 
General RecourseRights to demand payment from the general assets of the debtor, without seniority in access to any specific assets.
 
Goodwill An amount that represents the excess paid for a company, its shares, or other assets over its net asset value.
 
grace periodit is the amount of time you have to pay your balance in full without paying a finance charge. The grace period usually starts on the billing date and ends a certain number of days after.
 
Guaranteed LoanA pledge to cover the payment of debt or to perform some obligation if the person liable fails to perform. When a third party guarantees a loan, it promises to pay in the event of a default by the borrower.
 
Incorporation This is a process that legally makes a business a separate entity from its owners. The business operates as a corporation.
 
Interest Rate - The amount charged by a lender for the money borrowed. It can be fixed or variable.
 
Interim FinancingShort-term loan to provide temporary financing until more permanent financing is available.
 
Inventory Financing - Money borrowed on the basis of finished inventory. The loan is paid as inventory is sold.
 
LeaseA form of rental which you use a vehicle for a period of time in exchange for making payments to the leasing company. In a lease, the leasing company continues to own the vehicle.
 
Leasehold Improvement This is an improvement made on leased premises, for example, redecorating
 
LesseeThe individual who signs a lease.
 
LessorThe individual who grants a lease.
 
Letters of Credit a written undertaking given by a bank on behalf of an Importer to pay the Exporter a given sum of money
 
Letters of guaranteeA letter from a bank stating that the bank will guarantee payment on behalf of the customer
 
Letters of guaranteean undertaking given by a bank on behalf of a client to pay his obligations
 
LeverageUsing long-term debt to secure funds for an organization. In the social investment world, often refers to financial participation by other private, public or individual sources.
 
Liabilities, Total LiabilitiesTotal value of financial claims on a firm's assets. Equals total assets minus net worth.
 
LienA legal claim against property for payment of a debt or for services rendered. One who holds a lien has the right to sell the property to obtain the money, or to recover the money when the property is sold.
 
Limited LiabilityLimitation of shareholders' losses to the amount invested.
 
Limited RecourseRights only to specifically stipulated assets to satisfy an unpaid debt.
 
Line of CreditAgreement by a bank that a company may borrow at any time up to an established limit.
 
Line of credit A approved amount of money which you can borrow at times of need. Often accessed by check, ATM, or business card.
 
Line of Credit - An amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.
 
Liquidation Value The amount for which an asset can be sold.
 
Liquidity This describes how readily your assets can be converted into cash.
 
LoanA form of financing in which you borrow money that allows you to purchase a vehicle.
 
Loan AgreementA written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan.
 
Loan Application FeeA fee charged by a lender for accepting a document in which a prospective borrower details his or her financial situation to qualify for a loan.
 
Loan CommitmentA lender's promise to advance a specific amount of money on specific terms.
 
Loan Origination FeeA fee charged by a lender for underwriting a loan. The fee often is expressed in points. A point is 1 percent of the loan amount.
 
Loan Processing FeeA fee charged by a lender for accepting a loan application and gathering the supporting paperwork.
 
Loan Term - The length of time the borrower has to repay debt.
 
Long-Term debt These are liabilities (like loans or debts) that are not payable within one year.
 
Market RateThe rate of interest a company must pay to borrow funds currently. Program-related investments generally are offered at below market rates or at no interest rate.
 
Maturity - A loan's maturity is the life of the loan; that is, how long you have to repay the loan. It usually applies to term loans and not lines of credit.
 
MudaribIn a Mudaraba contract, the expert who manages the investment is known as a Mudarib.
 
Net Working CapitalCurrent assets minus current liabilities.
 
Net Worth Indicates the owner's equity in a business, calculated by deducting total liabilities from total assets. Similarly, the net worth of an individual is calculated by deducting all personal liabilities from personal assets.
 
Operating Loan (or Revolving Loan)Short-term financing to supply cash flow support or cover day-to-day operating expenses - including, but not limited to, accounts receivable and inventory.
 
Opportunity CostThe potential benefit that is foregone from not following the best (financially optimal) alternative course of action.
 
over-the-limit feeAn over-the-limit fee is charged when you exceed your credit limit through purchases, fees, or finance charges.
 
OverdraftAgreement by a bank that a company may borrow at any time up to an established limit.
 
PartnershipA form of business ownership made up of two or more people. Partners share an agreed upon percentage in the responsibility, profits, and/or losses of their business.
 
Personal Guarantee: A guarantee to the lender that you will take personal responsibility for repaying the loan or any other debt obligation.
 
PINPIN stands for personal identification number.You use your PIN number to verify your identity in order to access your bank accounts or withdraw from your credit card.
 
PortfolioA combination of assets held for its investment benefits, including financial and non-financial returns. The asset mix is usually varied in kind and size to maintain an acceptable level of risk and return.
 
POSPoints of Sale
 
POS feesPOS Fees are point-of-sale fees. Banks charge POS fees when you use your debit card in certain transactions.
 
Prime Rate - The rate a lender charges its best customers. The rate is calculated differently by each lender.
 
PrincipalIn commercial law, the principal is the amount that is received, in the case of a loan, or the amount from which flows the interest.
 
Promissory NotePromise to pay. Written contract between a borrower and a lender that is signed by the borrower and provides evidence of the borrower's indebtedness to the lender.
 
ReceivablesAccounts receivable; an amount that is owed the business, usually by one of its customers as a result of the ordinary extension of credit,
 
Return on Investment (ROI) ROI is commonly used as a test of a company's profitability. Investors can compare this figure to other types of investments. To calculate your ROI divide the net profits by total assets.
 
Revolving loanA short term financing with a set limit that can be settled and withdrawn again
 
RibaRiba means interest, which is prohibited in Islamic law. Any risk-free or guaranteed interest on a loan is considered to be usury.
 
Roll OverPrior to or at the time of the maturity of an investment or loan, the interested parties agree to continue to carry over the investment or loan for another, successive period of time.
 
Secured Loan - A loan secured by specific collateral. Creditor may foreclose and seize the specific property that is collateral to satisfy an unpaid secure loan.
 
Short Term Debt - Financing used to secure cash for accounts payable and inventory.
 
SME loansLoans to small and middle sized enterprises
 
Sole Proprietorship: A form of business organization in which one person is the sole owner. In effect, there is no distinction between the owner's and the business' responsibility regarding the commitments made on behalf of the business.
 
specialized loansLoans granted by funding programs or agencies to encourage a specialized economic activity
 
Start-up loansLoans to new or start up companies
 
Subsidized loansloans that are backed by government programs to lower interest rates in order to encourage investment in certain economic sectors
 
TermRefers to the maturity or length of time until final repayment on a loan, bond, sale or other contractual obligation.
 
Variable Interest Rate - An interest rate that changes during the life of a loan.
 
WakalaWakala is an agency contract, which usually includes in its terms a fee for the expertise of the agent. We may use it for our large Deposit accounts: you own the capital invested, you appoint us as your agent and pay a fee for our expertise.
 
Working CapitalThe term often is used to refer to all short-term funding needs for operations (excluding debt service and fixed assets).
 
Write offWhen an investment, such as a loan, becomes seriously delinquent or in default and is determined to be uncollectible, the lender may choose to charge the outstanding investment amount as an expense or a loss.
 
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