Swoop's Quick Guide to Funding Jargon
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.
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.
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.
This is a just quick overview of the most commonly used terms you will see and hear surrounding small business funding. At Swoop, we're dedicated to making funding simple, secure and speedy...and if you liked this guide, then you'll love Accountancy Cloud's next LinkedIn Live event.
Finding your Funding will explore, in detail, the funding resources available from R&D Tax Credits to grants and investment (with a focus on tech & eCommerce startups). We'll see you there!