Glossary
Asset Based Lending: Lending
against specific assets of borrower, i.e. accounts receivable,
inventory, equipment, etc. which becomes collateral for the loan.
Cash-Flow: The
net cash that flows into or out of a business during a specific period
of time.
Commercial Finance Company: Provides loans to finance the
working capital needs of a business.
Factoring: A
form of accounts receivable financing involving the sale of accounts
receivable to a factoring company either with or without recourse.
Factoring can be on a notification or non-notification basis. In a
notification agreement, the seller's customers will make payment
directly to the factor. A credit check is usually made on the
seller's customer; so the factor can serve as a credit information
resource for the seller.
Large Business:
Defined by Abingdon as those businesses needing from $750,000 to $3
million in receivables financing.
Medium Business:
Abingdon Business Capital defines medium businesses as those requiring
from $150,000 to $750,000 in receivables financing.
Recourse Loan:
Loan for which the endorser or guarantor has a secondary liability in
the case of a default by the borrower.
Small Business:
Abingdon Business Capital defines small businesses as businesses
needing from $5,000 to $150,000 monthly in receivables financing.
Working Capital:
The excess of current assets over current liabilities. It indicates
the short-term liquidity of the company.
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