What is Mezzanine Financing?
A Simple Guide to Mezzanine Financing: Mezzanine financing is a fancy term for a type of funding that sits between Debt and Equity. To understand it, think of it as the middle layer in a sandwich. It combines elements of both Debt and Equity. With mezzanine financing, a business can… Read more »
What is Loan-to-Value Ratio in a Business Loan?
The Loan-to-Value ratio (LTV) calculates the maximum amount of a secured loan offered by a lender to a borrower based on the market value of collateral offered by the borrower to the lender to secure the business loan. For example, let’s assume that some equipment that is needed for a… Read more »
Finally Receiving the Loan Authorization Approval for a Business Loan
After a business goes through the necessary loan application process, the desired outcome is to get approved for the business loan. Once the due diligence process is completed by the lender, if the loan is approved, the lender will deliver its Loan Authorization. How Fast Does a Loan Get Approved… Read more »
What are Long-Term Liabilities in a Business?
Long-term Liabilities are liabilities that a business owes to its creditors that are due after 12 months. On the other hand, Current Liabilities are liabilities that are due within 12 months. Long term liabilities appear on the business Balance Sheet. Long-term debt is generally used to invest in long-term assets… Read more »
What is Inventory Turnover in a Business?
Inventory Turnover measures how many times per year a business converts its Inventory into Sales. That is, how quickly the business is able to sell its inventory. Along with Receivables Turnover, it measures the liquidity of a business, which is the ability of a business to pay its current liabilities…. Read more »
What is a Variable Rate or Floating Rate Loan?
A Variable-rate or Floating-rate loan is a loan in which the interest rate varies over the loan term. This is different from a fixed rate loan that has the same interest rate throughout the loan term. The base interest rate is the prime rate, which is based on the Central Bank’s overnight rate. And then… Read more »
What is a Demand Loan?
A demand loan is a loan in which the Lender can require the full repayment of the loan by the Borrower at any time during the loan term. A demand loan can be used in many different types of loans and loan structures. It is outlined in a promissory note,… Read more »
Balloon Payment in Business Loans
In a loan that has a balloon payment, the terms of the loan require the Borrower to pay a larger final payment than previous smaller payments to settle the outstanding loan. This is called a balloon payment. It is normally the loan Principal that is paid in the balloon payment…. Read more »
What is a Debenture?
A debenture is a type of financial security that a business issues to investors in order to obtain long-term financing from these investors without needing to put up any collateral as in a traditional loan. The business also does not have to issue new shares in order to raise capital…. Read more »
What is Bridge Financing? The Temporary Business Financing Solution
Bridge Financing: The Quick Fix When Your Business Needs It Bridge financing is like a lifeline for a business that needs immediate cash flow. Imagine a bridge connecting two islands: one representing the current financial situation of the business, and the other island representing the future financial goals of the… Read more »