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Below is a list of common small business lending terms (and their definitions) often seen and heard in the loan process, to help you better understanding the nuts and bolts of a loan, business financials, and other related information.
The paying off of debt with a fixed repayment schedule in regular installments over a period of time.
Amortization can also be found on the balance sheet, as a way to spread the cost of an intangible asset over its useful life, or the life of the intangible asset in the business. Examples include: loan costs, goodwill, patents, etc. Amortization reduces a company’s assets and net worth (equity) on its balance sheet.
A professional opinion, usually written, of market value. There are typically three types of appraisals that may occur during the small business loan process:
An EIN is a unique identification number that is assigned to a business entity so that they can easily be identified by the Internal Revenue Service. When you receive your EIN number this certiﬁcate is mailed to your location.
Permanent working capital is also called fixed working capital. Permanent working capital does not depend on the level of production or sales.