| Franchise
Financing Lingo - Glossary of franchise financing and loan terms Amortization
- To provide systematic equal amounts of money in order to replenish the full
loan amount. Asset - Something of value against which
you can borrow money Balloon - When the final payment in
a loan is greatly higher than prior payments. Cash flow lending
- When a bank provides a loan based solely on the cash flow of the borrower. Collateral
- Assets a borrower provides the bank with as security to ensure loan repayment.
If borrower defaults on loan, the collateral assets are the bank's property.
Debt financing - borrowing another person's money and
paying rent for using it. Demand loan - A type of loan
where the bank can force the borrower to repay at any given time. Equity
financing - selling a part of your ownership therefore relinquishing
some control. Interest - The cost of borrowing money, expressed
as a percentage of the total amount. Lien - An example
would be the security interest earned on a mortgage. Something a creditor will
claim on property. Principal - The dollar amount of a loan
where interested is owed. Secured debt - is debt that is
attached to a reasonable amount of collateral. Security interest
- A bank's lien. (see lien definition above). Term loan
- A loan outlining specific time periods when repayment is due
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