Business Funding Glossary

An agreement with the Australian Taxation Office to pay a tax debt in instalments. Lenders generally view a business with an arrangement that is being kept more favourably than one with unmanaged tax arrears.

The typical amount held in a business bank account across a period. Lenders read it from bank statements as a sign of cash buffer: a healthy average balance suggests the business can absorb repayments in slower weeks.

A record on a credit file showing that a lender checked it as part of an application. Several enquiries in a short time can suggest the business has been declined elsewhere, so applying to many lenders at once can count against you.

A listing on a credit file recording an overdue debt that was reported by a creditor. Paid and older defaults are usually viewed less harshly than unpaid or recent ones, but a default narrows the range of lenders that will consider an application.

A personal promise by a company director to repay a business debt if the business cannot. Many lenders ask for one on unsecured business loans, so unsecured does not always mean the director carries no personal liability.

A payment that bounces because the account lacks funds. Dishonours in recent bank statements, especially the last 90 days, are one of the strongest negative signals in a business funding assessment.

A fee or the remaining cost a lender charges if a facility is paid out before the end of its term. Some short-term products charge the full agreed cost regardless of when they are repaid, which matters when refinancing.

A one-off fee charged when a business loan or facility is set up. It can be deducted from the funds advanced, so the amount that reaches the account may be less than the approved amount.

A multiplier used to price some short-term products and merchant cash advances. A $50,000 advance at a 1.20 factor rate repays $60,000. Because the cost is fixed on the full amount over a short term, the annualised rate is usually far higher than the factor rate suggests.

An agreement giving a lender security over a business's present and future assets, other than land. It is usually registered on the PPSR and can apply even to facilities marketed as unsecured, so check the terms.

The percentage of daily card sales collected to repay a merchant cash advance. Collections rise and fall with sales, which eases slow months, but the total amount repayable stays the same.

A form of invoice finance where the business borrows against its unpaid invoices but keeps collecting from its own customers, often confidentially.

A form of invoice finance where the lender advances part of the value of unpaid invoices and usually manages collection, with customers paying the lender directly.

A fee some lenders charge on the full limit of a line of credit, whether or not the funds are drawn. It sits alongside interest, which is typically charged only on the drawn balance.

Business funding assessed mainly on recent bank statements rather than lodged tax returns and full financial statements. It suits businesses whose financials are behind or do not reflect current trading, usually at a higher cost than full-doc lending.

A lump sum provided in exchange for a share of future card sales, repaid through a holdback on daily takings until a fixed total is collected. It is usually structured as a purchase of future sales rather than a loan.

The exact amount needed to fully repay an existing facility on a given date, including any early repayment costs. It is the starting point for any refinance or consolidation comparison.

The Personal Property Securities Register, a national register where lenders record security interests over business assets other than land, such as vehicles, equipment, stock and receivables.

Funding tied to specific supplier orders, where the lender pays the supplier and the business repays over an agreed term once the goods arrive and sell.

The cash a business uses to run day to day: stock, wages, rent and supplier bills. Working capital funding covers timing gaps between paying these costs and receiving revenue.