Glossary

Funding glossary: forty terms in plain language.

Every term has a definition, an example in Canadian dollars, what to watch for and questions to ask.

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Factor rateA multiplier applied to the amount advanced to set the total you repay.Payback amountThe fixed total you repay on an advance or revenue-based facility.Holdback percentageThe share of daily sales or deposits taken as the payment on some advances.RemittanceA payment sent toward the payback, whether taken automatically or paid by you.Split fundingA structure where a share of each card settlement goes to the funder before the Daily debitA fixed amount taken from the business account each business day.Weekly debitA single larger debit taken once a week rather than every day.Pre-authorized debitAn authorization allowing a funder to withdraw payments from your business accou Average daily balanceThe typical amount in your account across the days in a period.NSF (non-sufficient funds)A payment returned because the account balance was too low.Negative daysDays when the account balance falls below zero.Low-balance daysDays when the balance drops under a set low threshold, even if not negative.Time in businessHow long the business has been operating, usually measured from its start date.Gross depositsThe total of all deposits into the business account in a period before any adjus StackingTaking more than one advance at the same time.First positionThe earliest advance on a business's receivables.Second positionAn advance that sits behind an existing first-position advance.BuyoutPaying off an existing advance with a new one so the old agreement is closed.ConsolidationCombining several advances into one agreement with a single payment.RefinanceReplacing an existing agreement with a new one on different terms.RenewalA new advance with the same funder after the earlier one is partly repaid.ReconciliationAn adjustment of the payment to reflect lower sales.Early-payoff discountA reduction in the total owed if you repay ahead of schedule.Origination feeA fee charged to set up the advance, often deducted from the amount.Net funded amountThe cash that actually reaches your account after any fees.PPSA registrationA public record in a province that shows a creditor's claim over certain busines Personal guaranteeA promise by an owner to be personally responsible for the debt if the business DefaultFailing to meet the terms of the agreement, such as missing payments.Working capitalThe money a business uses to cover day-to-day costs between paying and getting p Cash-flow gapThe period between paying costs and collecting revenue.ReceivablesMoney owed to a business for goods or services already delivered.Card settlementThe deposit of card payments into the business account by a processor.Revenue-based financingFunding repaid as a fixed percentage of revenue until a multiple is reached.Term loanA loan repaid in regular instalments over a fixed period with interest.Line of creditA revolving facility you can draw on, repay and draw again up to a limit.Invoice factoringSelling invoices at a discount to receive cash now.APR (annual percentage rate)The yearly cost of borrowing expressed as a percentage, including some fees.UnderwritingThe process of reviewing a file to decide whether and on what terms to fund.SeasonalityPredictable swings in revenue across the year.Customer concentrationHow much of revenue comes from one or a few customers.

About this glossary

Every definition is written to be used in a conversation with a funder: what the term is, how it is calculated and what to ask. Examples are in Canadian dollars. If a term appears in your agreement, read it and then the definition here, and ask your funder to confirm any detail that differs.

Common questions

Why a glossary?

Funding terms are easy to misread, and misreading them is how owners overpay.

Is it up to date?

It is reviewed regularly. Agreements vary, so read yours.

Keep reading

Canada funding hubMerchant cash advance and revenue-based funding for Canadian businesses ComparisonsAdvance vs loan, line, factoring and more GuidesPractical guides for Canadian owners

Educational information only. It is not legal, tax or accounting advice.

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