Copy of `SBA - Small Business Terms`

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SBA - Small Business Terms Category: Business and Law > Small Business Admin Terms Date & country: 26/11/2008, USA Words: 125

accounts payable
Trade accounts of businesses representing obligations to pay for goods and services received.

accounts receivable
Trade accounts of businesses representing moneys due for goods sold or services rendered evidenced by notes, statements, invoices, or other written evidence of a present obligation.

accounting
The recording, classifying, summarizing, and interpreting in a significant manner and in terms of money, transactions, and events of a financial character.

assumptions
The act of assuming/undertaking another's debts or obligations.

auction
A public sale of goods to the highest bidder.

automatic data processing
Data processing largely performed by automatic means.

bankruptcy
A condition in which a business cannot meet its debt obligations and petitions a federal district court for either reorganization of its debts or liquidation of its assets. In the action the property of a debtor is taken over by a receiver or trustee in bankruptcy for the benefit of the creditors. This action is conducted as prescribed by the National Bankruptcy Act, and may be voluntary or involu...

balance sheet
A report of the status of a firm's assets, liabilities and owner's equity at a given time.

breakeven point
The breakeven point in any business is that point at which the volume of sales or revenues exactly equals total expenses -

business birth
Formation of a new establishment or enterprise.

business death
Voluntary or involuntary closure of a firm or establishment.

business dissolution
For enumeration purposes, the absence from any current record of a business that was present in a prior time period.

business failure
The closure of a business causing a loss to at least one creditor.

business plan
A comprehensive planning document which clearly describes the business developmental objective of an existing or proposed business applying for assistance in SBA's 8(a) or lending programs. The plan outlines what and how and from where the resources needed to accomplish the objective will be obtained and utilized.

business start
For enumeration purposes, a business with a name or similar designation that did not exist in a prior time period.

canceled loan
The annulment or rescission of an approved loan prior to disbursement.

capital
Assets less liabilities, representing the ownership interest in a business;

capital expenditures
Business spending on additional plant equipment and inventory.

capitalized property
Personal property of the agency which has an average dollar value of $300.00 or more and a life expectancy of one year or more. Capitalized property shall be depreciated annually over the expected useful life to the agency.

cash discount
An incentive offered by the seller to encourage the buyer to pay within a stipulated time. For example, if the terms are 2/10/N 30, the buyer may deduct 2 percent from the amount of the invoice (if paid within 10 days); otherwise, the full amount is due in 30 days.

cash flow
An accounting presentation showing how much of the cash generated by the business remains after both expenses (including interest) and principal repayment on financing are paid. A projected cash flow statement indicates whether the business will have cash to pay its expenses, loans, and make a profit. Cash flows can be calculated for any given period of time, normally done on a monthly basis.

cash flow
A report which analyzes the actual or projected source and disposition of cash during a past or future accounting period.

character
A letter, digit, or other symbol that is a part of the organization, control, or representation of data used in computer systems.

charge-off
An accounting transaction removing an uncollectible balance from the active receivable accounts.

charged off loan
An uncollectible loan for which the principal and accrued interest were removed from the receivable accounts.

closing
Actions and procedures required to affect the documentation and disbursement of loan funds after the application has been approved and the execution of all required documentation and its filing and recording where required.

closed loan
Any loan for which funds have been disbursed and all required documentation has been executed, received, and reviewed. For statistical purposes, first or total disbursement is counted as a closed loan.

collateral
Something of value - securities, evidence of deposit, or other property - pledged to support the repayment of an obligation.

collateral document
A legal document covering the item(s) pledged as collateral on a loan, i.e., note, mortgages, assignment, etc.

consortium
A coalition of organizations, such as banks and corporations, set up to fund ventures requiring large capital resources.

corporation
A group of persons granted a state charter legally recognizing them as a separate entity having its own rights, privileges, and liabilities distinct from those of its members. The process of incorporating should be completed with the state's secretary of state or state corporate counsel, and usually requires the services of an attorney.

compromise
The settlement of a claim resulting from a defaulted loan for less than the full amount due. Compromise settlement is a procedure available for use only in instances where the government cannot collect the full amount due within a reasonable time, by enforced collection proceedings, or where the cost of such proceedings would not justify such effort.

contingent liability
A potential obligation that may be incurred dependent upon the occurrence of a future event. Two examples are: (1) the liability of an endorser or guarantor of a note if the primary borrower fails to pay as agreed and (2) the liability that would be incurred if a pending lawsuit is resolved in the other party's favor.

costs
Money obligated for goods and services received during a given period of time, regardless of when ordered or whether paid for.

credit rating
A grade assigned to a business concern to denote the net worth and credit standing to which the concern is entitled in the opinion of the rating agency as a result of its investigation.

data element
The basic unit of identifiable and definable information. A data element occupies the space provided by fields in a record or blocks on a form. It has an identifying name and value or values for expressing a specific fact. For example, a data element named 'Color of Eyes' could have recorded values of 'Blue (a name),' 'Bl (an abbreviation),' '06 (a code).' Similarly, a data element named ...

debenture
Debt instrument evidencing the holder's right to receive interest and principal installments from the named obligor. Applies to all forms of unsecured, long-term debt evidenced by a certificate of debt.

debt capital
Business financing that normally requires periodic interest payments and repayment of the principal within a specified time.

debt financing
The provision of long term loans to small business concerns in exchange for debt securities or a note.

deed of trust
A document under seal which, when delivered, transfers a present interest in property. May be held as collateral.

defaults
The nonpayment of principal and/or interest on the due date as provided by the terms and conditions of the note.

deferred loan
Loans whose principal and or interest installments are postponed for a specified period of time.

disbursement
The actual payout to borrower of loan funds, in whole or part. It may be concurrent with the closing or follow it.

disbursing officer
An employee authorized to pay out cash or issue checks in settlement of vouchers approved by a certifying officer.

divestiture
Change of ownership and/or control of a business from a majority (non-disadvantaged) to disadvantaged persons.

earning power
The demonstrated ability of a business to earn a profit, over time, while following good accounting practices. When a business shows a reasonable profit on invested capital after fully maintaining the business property, appropriately compensating its owner and employees, servicing its obligations, and fully recognizing its costs, the business may be said to have demonstrated earning power. Demonst...

easement
A right or privilege that a person may have on another's land, as the right of a way or ingress or egress.

eap counselor
Conducts confidential consultations with troubled employees who so request, who are referred for objective analysis of a personal problem, and for identification of the best available assistance and/or professional services needed to resolve the employee's problem.

enterprise
Aggregation of all establishments owned by a parent company. An enterprise can consist of a single, independent establishment or it can include subsidiaries or other branch establishments under the same ownership and control.

entrepreneur
One who assumes the financial risk of the initiation, operation, and management of a given business or undertaking.

equity
An ownership interest in a business.

equity financing
The provision of funds for capital or operating expenses in exchange for capital stock, stock purchase warrants, and options in the business financed without any guaranteed return, but with the opportunity to share in the company's profits. Equity financing includes long-term subordinated securities containing stock options and/or warrants. Utilized in SBIC financing activities.

equity partnership
A limited partnership arrangement for providing startup and seed capital to businesses.

escrow accounts
Funds placed in trust with a third party by a borrower for a specific purpose and to be delivered to the borrower only upon the fulfillment of certain conditions.

establishment
A single-location business unit, which may be independent - called a single- establishment enterprise - or owned by a parent enterprise.

financial reports
Reports commonly required from applicants request for financial assistance

financing
New funds provided to a business, by either loans, purchase of debt securities, or capital stock.

flow chart
A graphical representation for the definition, analysis, or solution of a problem, in which symbols are used to represent operations, data, flow, equipment, etc.

foreclosure
The act by the mortgagee or trustee upon default in the payment of interest or principal of a mortgage of enforcing payment of the debt by selling the underlying security.

franchising
A continuing relationship in which the franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing, and managing in return for a consideration. Franchising is a form of business by which the owner (franchisor) of a product, service, or method obtains distribution through affiliated dealers (franchisees). The prod...

gross domestic product
The most comprehensive single measure of aggregate economic output. Represents the market value of the total output of the goods and services produced by a nation's economy.

gross national product
A measure of a nation's aggregate economic output. Since 1991 GDP, a slightly different calculation, has replaced GNP as a measure of U.S. economic output.

guaranteed loan
A loan made and serviced by a lending institution under agreement that a governmental agency will purchase the guaranteed portion if the borrower defaults.

hardware
A term used to describe the mechanical, electrical, and electronic elements of a data processing system.

hazard insurance
Insurance required showing lender as loss payee covering certain risks on real and personal property used for securing loans.

income statement
A report of revenue and expense which shows the results of business operations or net income for a specified period of time.

incubator
A facility designed to encourage entrepreneurship and minimize obstacles to new business formation and growth, particularly for high technology firms, by housing a number of fledgling enterprises that share an array of services. These shared services may include meeting areas, secretarial services, accounting services, research libraries, on-site financial and management counseling, and word proce...

industrial revenue bond
A tax-exempt bond issued by a state or local government agency to finance industrial or commercial projects that serve a public good. The bond usually is not backed by the full faith and credit of the government that issues it, but is repaid solely from the revenues of the project and requires a private sector commitment for repayment.

innovation
Introduction of a new idea into the marketplace in the form of a new product or service or an improvement in organization or process.

insolvency
The inability of a borrower to meet financial obligations as they mature or having insufficient assets to pay legal debts.

interest
An amount paid a lender for the use of funds.

inverse order of maturity
When payments are received from borrowers that are larger than the authorized repayment schedules, the overpayment is credited to the final installments of the principal, which reduces the maturity of the loan and does not affect the original repayment schedule.

investment banking
Businesses specializing in the formation of capital. This is done by outright purchase and sale of securities offered by the issuer, standby underwriting, or 'best efforts selling.'

invitation for bids
Formal solicitations for offerings to perform procurements by competitive bids when the specifications describe the requirements of the government clearly, accurately, and completely, but avoiding unnecessarily restrictive specifications or requirements which might unduly limit the number of bidders.

job description
A written statement listing the elements of a particular job or occupation, e.g., purpose, duties, equipment used, qualifications, training, physical and mental demands, working conditions, etc.

judgment
Judicial determination of the existence of an indebtedness or other legal liability.

judgment by confession
The act of debtors permitting judgment to be entered against them for a given sum with a statement to that effect, without the institution of legal proceedings.

junk bond
A high-yield corporate bond issue with a below-investment rating that became a growing source of corporate funding in the 1980s.

lease
A contract between the owner (leassor) and the tenant (leassee) stating the conditions under which the tenant may occupy or use the property.

legal rate of interest
The maximum rate of interest fixed by the laws of the various states which a lender may charge a borrower for the use of money.

lending institution
Any institution, including a commercial bank, savings and loan association, commercial finance company, or other lender qualified to participate with SBA in the making of loans.

leveraged buy-out
The purchase of a business with financing provided largely by borrowed money, often in the form of junk bonds.

lien
A charge upon or security interest in real or personal property maintained to ensure the satisfaction of a debt or duty ordinarily arising by operation of law.

liquidation
The disposal, at maximum prices, of the collateral securing a loan and the voluntary and enforced collection of the remaining loan balance from the obligators and/or guarantors.

liquidation value
The net value realizable in the sale (ordinarily a forced sale) of a business or a particular asset.

litigation
Refers to a loan in 'liquidation status' which has been referred to attorneys for legal action.

loan agreement
Agreement to be executed by borrower, containing pertinent terms, conditions, covenants, and restrictions.

loan payoff amount
The total amount of money needed to meet a borrower's obligation on a loan. It is arrived at by accruing gross interest for one day and multiplying this figure by the number of days that exist between the date of the last repayment and the date on which the loan is to be completely paid off. This amount, known as accrued interest, is combined with the latest principal and escrow balances that are...

loss rate
A rate developed by comparing the ratio of total loans charged off to the total loans disbursed from inception of the program to the present date.

loss reserve adjustment rate
A reserve rate based upon the ratio of the aggregate net chargeoffs (chargeoffs less recoveries) for the most

markup
Markup is the difference between invoice cost and selling price. It may be expressed either as a percentage of the selling price or the cost price and is supposed to cover all the costs of doing business plus a profit. Whether markup is based on the selling price or the cost price, the base is always equal to 100 percent.

maturity
As applied to securities and commercial paper, the period end date when payment of principal is due.

maturity extensions
Extensions of payment beyond the original period established for repayment of a loan.

merger
A combination of two or more corporations wherein the dominant unit absorbs the passive ones, the former continuing operation usually under the same name. In a consolidation two units combine and are succeeded by a new corporation, usually with a new title.

mortgage
An instrument giving legal title to secure the repayment of a loan made by the mortgagee (lender). In legal contemplation there are two types: (1) title theory - operates as a transfer of the legal title of the property to the mortgagee, and (2) lien theory - creates a lien upon the property in favor of the mortgagee.

negotiation
The face to face process used by local unions and the employer to exchange their views on those matters involving personnel policies and practices or other matters affecting the working conditions of employees in the unit and reduced to a written binding agreement. Used also by contracting officers to reach agreement with potential contractors.

negotiation dispute
That point in negotiations where labor and management cannot come to an agreement on some or all of the issues on the bargaining table and the services of the FMCS have not been utilized.

negotiated grievance procedure
The sole and exclusive procedure available to all employees in a bargaining unit and the employer for processing grievances and disputes.

net worth
Property owned (assets), minus debts and obligations owed (liabilities), is the owner's equity (net worth).

notes and accounts receivable
A secured or unsecured receivable evidenced by a note or open account arising from activities involving liquidation and disposal of loan collateral.