Swoop Quick Guide to Funding Jargon

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      At Swoop, we understand that when you decide to go for fuAt 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

      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.

      This is a 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 canada@swoopfunding.com and we’ll be happy to help. 

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