Glossary
Business funding glossary
The words you will hear when you look for business funding, each explained in a sentence or two.
Lending has its own vocabulary, and the middle of a cash crunch is a bad time to learn it. These are the terms that come up most often. Where we have a deeper explanation, the term links to it.
- ABN
- Australian Business Number. Lenders check it on the Australian Business Register to confirm the business is active and when it registered.
- ACN
- Australian Company Number, issued by ASIC to every company. Used to confirm directors and company status.
- Advance rate
- In invoice finance, the share of an approved invoice paid to you up front. Not an interest rate.
- At call
- Available immediately, without waiting for a term to end. Funding on call means money you can reach when the business needs it.
- BAS
- Business Activity Statement, lodged with the ATO to report GST, PAYG withholding and other amounts.
- Bridging finance
- Short-term funding that covers the gap until a known event, such as a property sale or refinance.
- Capitalised interest
- Interest added to the loan balance instead of paid as you go, so there are no regular repayments during the term.
- Cash conversion cycle
- The days between paying for stock or materials and collecting cash from customers.
- Cash flow lending
- Unsecured lending sized mainly on how the business trades, as shown in its bank statements.
- Cash runway
- How long the business could keep paying its bills from current cash at the current pattern of money in and out.
- Caveat
- A notice on a property title warning that someone claims an interest in the property. A caveat loan uses it as security.
- Debtor days
- The average number of days customers take to pay you.
- Default
- A record on a credit file that an overdue debt was reported. Considered case by case for business funding.
- Director penalty notice
- A notice from the ATO that can make directors personally liable for certain unpaid company tax amounts.
- Drawdown
- Taking money out of an approved facility such as a line of credit.
- Equity
- The part of a property you own outright: its worth minus every loan secured against it.
- Establishment fee
- A one-off fee for setting up a loan. Always part of the total cost of finance.
- Exit strategy
- How a short-term loan will be repaid: a sale, a refinance, a large receivable or trading cash.
- First mortgage
- The main mortgage on a property, registered first and repaid first if the property is sold.
- General interest charge (GIC)
- The ATO's interest on overdue tax. For charges incurred from 1 July 2025 it is no longer tax deductible.
- Guarantor
- A person who agrees to repay a loan if the borrower cannot.
- Invoice finance
- Funding that advances part of the value of unpaid invoices owed by business customers.
- Line fee
- A charge some facilities apply to the approved limit, whether or not it is drawn.
- Line of credit
- A limit you can draw, repay and draw again, paying mainly for what you use.
- Low doc
- Lending that relies on bank statements, BAS or security rather than full financial statements.
- LVR
- Loan-to-value ratio: all loans on a property divided by its worth, as a percentage.
- PAYG withholding
- Tax a business withholds from wages and pays to the ATO.
- Payout figure
- The exact amount needed to repay a loan in full on a given date.
- PPSR
- Personal Property Securities Register, where security over equipment and other non-land assets is registered.
- Prepaid interest
- Interest paid up front for a period, so no repayments fall due during it.
- Second mortgage
- A registered mortgage that sits behind an existing first mortgage.
- Security
- An asset, such as property or equipment, the lender can rely on if the loan is not repaid.
- Total cost of finance
- Everything you repay above the amount you receive, including interest and all fees.
- Valuation
- A formal report on a property's worth. The property-secured loans we arrange need no valuation.
- Working capital
- The cash a business needs to run day to day while it waits for customers to pay.
Common questions
What is the difference between a caveat loan and a second mortgage?
Both sit behind an existing first mortgage. A caveat loan relies on a caveat lodged on the title, which can be put in place quickly. A second mortgage is registered on the title. A caveat can later be converted to a registered second mortgage.
What does at call mean in business finance?
Money at call is money you can reach straight away. For a business, funding on call usually means a line of credit or standby facility you can draw when you need it, rather than applying for a new loan each time.
What is the total cost of finance?
Everything you repay above the amount you actually receive, including interest and every fee. It is the fairest single figure for comparing offers.
What is an LVR?
Loan-to-value ratio: the total of all loans on a property divided by what it is worth, as a percentage. Each lender sets its own maximum.
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