Business finance glossary
Plain-English definitions of the terms you will see when comparing business finance.
- ABN age
- How long your Australian Business Number has been active. Many lenders set a minimum ABN age.
- Asset-backed finance
- Lending assessed mainly on the value of an asset offered as security, such as property or equipment, rather than on trading figures. Learn more
- Balloon payment
- A lump sum due at the end of a loan term that lowers regular repayments. Common in equipment and vehicle finance. Learn more
- Bridging loan
- Short-term finance that covers a gap until a sale, refinance or other payment arrives. Learn more
- Caveat loan
- A short-term loan where the lender lodges a caveat on a property title as security. Usually quick to settle and priced above mortgage lending. Learn more
- Cashflow lending
- Lending assessed mainly on how money moves through your business account, usually using bank statements. Learn more
- Chattel mortgage
- A loan to buy an asset where you own the asset from the start and the lender takes security over it. Learn more
- Debtor finance
- A facility secured by your receivables ledger. Available funds rise as you invoice and fall as customers pay. Learn more
- Director guarantee
- A personal promise by a company director to repay the loan if the business cannot. Common with unsecured business loans.
- Establishment fee
- A one-off fee charged when a loan is set up. Compare it alongside the rate to understand the total cost.
- Exit strategy
- How a short-term loan will be repaid, such as a refinance, property sale or incoming payment.
- Factor rate
- A pricing method that multiplies the amount borrowed by a fixed figure to set the total repayable. It is not the same as an annual interest rate.
- Factoring
- Invoice finance where the provider advances funds against invoices and usually collects directly from your customers. Learn more
- Finance lease
- An arrangement where the lender owns an asset and leases it to your business, usually with a residual payment at the end. Learn more
- First mortgage
- The primary registered mortgage over a property, repaid first if the property is sold.
- General interest charge (GIC)
- Interest the ATO charges on overdue tax. Not tax deductible for income years starting on or after 1 July 2025. Learn more
- General security agreement (GSA)
- Security over all of a business's present and future assets, often registered on the PPSR.
- Invoice discounting
- Confidential invoice finance where you keep control of collections. Learn more
- Line of credit
- An approved limit you can draw, repay and redraw. Interest is often charged only on the amount used. Learn more
- Loan-to-value ratio (LVR)
- The loan amount as a percentage of the security's value. Lenders set maximum LVRs by property type and documentation.
- Low doc
- Lending that accepts alternative income evidence, such as BAS or an accountant's letter, instead of full financials. Learn more
- PPSR
- The Personal Property Securities Register, where lenders register security interests over assets other than land.
- Residual value
- The amount payable at the end of a lease to own the asset or settle the agreement.
- Second mortgage
- A mortgage registered behind an existing first mortgage. The second lender is repaid after the first.
- Serviceability
- Whether the business can comfortably afford the repayments on top of existing commitments.
- Term loan
- A lump sum repaid over a set term with regular repayments. Learn more
- Trade finance
- Finance that pays suppliers so you can buy stock, repaid over an agreed trade cycle. Learn more