Commercial Loans Glossary
Asset - Any item of economic value owned by you
or your corporation, especially that which could be converted
to cash.
Bank Base Rate - The minimum interest rate that
the bank will charge you for your loan.
Fixed Rate - The interest rate (i.e. the percentage)
applied to the outstanding principal remains constant through
out the life of the loan.
Lender - A financial entity that makes funds available
to others to borrow.
Loan Commitment - A formal offer by a lender making
explicit the terms under which it agrees to lend the money
to a borrower over a certain period of time.
Loan Schedule - A listing of the amount of principal
and interest, due dates and balance after payment for a
given loan.
LIBOR - London Inter-Bank Offer Rate is the interest
rate that the largest international banks charge each other
for loans.
Outstanding Principal - The amount borrowed from
the lender which, at a point in time, remains unpaid (this
excludes interest outstanding).
Principal - The amount borrowed from the lender.
Secured - A loan that is backed by the offering of an asset
to the lender.
Terms - The specific condition and details of an
agreement or contract.
Unsecured - A loan in which has no assets backing
the loan.
Variable Rate - The interest rate (i.e. the percentage)
applied on the outstanding principal amount fluctuates from
period to period.
Working Capital - The amount of funds in the business
required to finance the day-to-day operations of the business.
