Commercial Lending Glossary

The schedule of regular payments that pays down loan principal and interest over time.

A large lump-sum payment due at the end of a loan that exceeds the regular monthly payment.

Annual Percentage Rate — the total cost of borrowing expressed as a yearly rate, including interest plus fees.

Upfront fee charged by the lender, typically 1%–2% of loan amount.

An MCA pricing metric expressed as a multiplier (e.g., 1.35) rather than APR.

Short-term financing (3–24 months) designed to fund a transaction faster than a conventional loan can close, with a defined exit source.

A short-term advance against future card receipts, repaid daily or weekly. Effective APRs often exceed 60%.

The SBA's flagship loan program — up to $5M, 10–25 year terms, partial federal guarantee.

An SBA loan structure for owner-occupied commercial real estate. 50% bank / 40% CDC / 10% borrower split.

A loan repaid in fixed installments over a defined period — typically 1–7 years for business term loans.

Funds used for short-cycle operating needs — inventory, payroll, vendor payments.

Real estate held for business use — office, retail, industrial, multifamily 5+ units, hospitality.

Annual net operating income divided by annual debt service. Lenders typically require 1.20x or higher.

Earnings Before Interest, Taxes, Depreciation, and Amortization — the standard proxy for operating cash flow.

Loan amount divided by collateral value.

Revenue minus operating expenses, excluding debt service and taxes.

A commitment by an owner to be personally liable for business debt if the business cannot pay.

Federal Deposit Insurance Corporation — insures bank deposits up to $250,000 per depositor.

SBA designation that authorizes a lender to issue final 7(a) credit decisions without external SBA review.

Statutory fee charged by the SBA based on loan size and term, typically 0%–3.75% of the guaranteed portion.

The lender's analysis of creditworthiness, cash flow, collateral, and use of funds.