Glossary

Plain-language definitions of common financing terms.

• Business credit

  Business credit is the credit history and risk information associated with a company rather than an individual consumer.

• Equipment appraisal and valuation

  Equipment valuation estimates the supportable value of an asset, while an appraisal is a documented professional opinion developed for a stated purpose.

• Equipment financing

  Equipment financing is business-purpose funding used to purchase or use equipment, with the financed asset commonly serving as collateral.

• Loan-to-value

  Loan-to-value is the financed amount divided by the supportable value of the equipment, expressed as a percentage.

• Personal guarantee

  A personal guarantee is a contractual promise by an individual to pay a business obligation if the business does not perform as agreed.

• Soft credit pull vs. hard credit pull

  A soft credit pull reviews a consumer credit file without affecting the score, while a hard inquiry is tied to an application and may affect the score.

• Stipulations

  Stipulations, or stips, are documents, verifications, or conditions that a funding partner requires before final approval or funding.

• Time in business

  Time in business is the length of a company's operating history, measured using formation, start-of-operations, licensing, banking, or tax records.

• UCC-1 financing statement

  A UCC-1 financing statement is a public record used to provide notice that a secured party claims a security interest in described business collateral.

• Underwriting

  Underwriting is the review used to decide whether a financing request fits a funding partner's credit, collateral, capacity, and program requirements.