Swoop Quick Guide to Funding Jargon

At Swoop, we understand that when you decide to go for funding, it can be a daunting experience – and it’s even tougher when there is so much jargon and specialist terminology thrown in too. So, we thought we’d offer a quick ‘at a glance’ guide to some of the key phrases and acronyms we know we’re guilty of using when discussing your funding options. Here we’re covering loans and investment terminology. 

Loan terminology

Short-term loan – usually lasting up to a year or 18 months. It is generally offered to companies that don’t offer a line of credit.

Long-term loan – can run from three  to 30 years. It requires monthly or quarterly payments from cash flow or profit. 

Intermediate-term loan – generally runs more than one – but less than three – years and is paid in monthly instalments from a company’s cash flow.

Balloon Loans – shorter long-term and intermediate-term loans and come with the final instalment which swells or “balloons” as a larger amount than previous ones.

Invoice finance – allows you to borrow money against the amounts invoiced to customers. This is particularly helpful with issues related to customers taking a long time to pay.

Supplier Finance – provides companies with credit to buy goods from their suppliers – they can use these goods to fulfil large orders or build inventory.

Order Finance – involves the lender paying the supplier of a company for goods that have been ordered to fulfil a job for a customer. Basically put, it is an advance covering some, or all, of the order placed.

Asset Finance is a type of business funding used to access the equipment, machinery and vehicles a company needs, without having to find the upfront costs. Businesses can also use Asset Finance to release cash in the value of their current assets.

Working Capital Loan is a short-term loan, made to businesses with unpredictable revenues throughout the year, taken to cover a company’s everyday operations such as rent and payroll. 

Retail Finance is the offering of stage payments or credit facilities to suitable creditworthy customers allowing them to pay for a product over the course of a set number of months at no extra cost. 

IP Finance allows knowledge intensive businesses to get debt facilities in place against the value of their Intellectual Property. 

Merchant Financing provides a cash advance on predicated debit or credit card sales. It’s a form of unsecured business financing for retailers and other consumer-facing sectors, such as restaurants and online businesses. 

Investment terminology

SEIS – Seed Enterprise Investment Scheme – a government scheme with tax relief for investors to be able to invest in young businesses under two years old. 

EIS – Enterprise Investment Scheme – a government scheme for investors to receive tax reliefs to be able to invest in young growing businesses over two years old. 

VCT – Venture Capital Trusts – are listed companies that are run by a fund manager and which invest mainly in smaller companies that are not quoted on stock exchanges.

Tier One – one of the immigration routes under the UK’s points-based visa system available to individuals from outside the European Economic Area (EEA).

This is quick overview of the most commonly used terms you will see and hear surrounding small business funding. We’d love to chat through some of the funding options available to you – and promise to speak in plain English! Just drop us a line hello@swoopfunding.com and we’ll be happy to help. 

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