Explore context in our glossary  

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Accounts Receivable Factoring

The sale of accounts receivable to a third-party at a discount to accelerate the receipt of cash.
Debt

Accounts Receivable Factoring

The sale of accounts receivable to a third-party at a discount to accelerate the receipt of cash.
Debt

Activation

The percentage of customers who upgrade on your product.
SaaS

Annual Recurring Revenue

Also known as the run rate, it's the recurring subscription-based revenue which SaaS companies receive annually.
SaaS

Asset Based Lending

Loaning money in an agreement that is secured by collateral.
Debt

Average Revenue per User (ARPU)

Indicates how much the whole of your customer base is bringing in to you on average.
SaaS

Bootstrapping

Building a company with nothing but personal savings and cash coming in from first sales.
SaaS

Bridge Loan

A short-term loan to bridge the gap between major financing. Also known as a swing loan.
Debt

Burn Rate

The amount of cash you are spending each month in relation to your capital.
SaaS

Business Credit Card

A revloving credit in which approval is based on personal credit history often used for operating expenses.
Debt

Business Line of Credit

A revolving credit that allows you to borrow capital when you need it up to a certain limit.
Debt

Cash Advance

A short-term loan from a bank or an alternative lender.
Debt

Cashflow

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Churn

A measure of attrition or loss and is the most widely tracked and discussed SaaS and subscription metric.
SaaS

Churn

A measure of attrition or loss and is the most widely tracked and discussed SaaS and subscription metric.
SaaS

Commercial Loan

A debt-based funding arrangement between a business and a financial institution.
Debt

Cost of Capital

The required return necessary to make a capital budgeting project worthwhile, typically discussed as a weighted average of the cost of debt and equity together.

Cost of Debt

Effective interest rate a company pays on its debts.
Debt

Credit Limit

Refers to the maximum amount of credit a financial institution extends to a client.
Debt

Creditworthiness

How a lender determines that you will default on your debt obligations, or how worthy you are to receive new credit.
Debt

Customer Acquisition Cost (CAC)

The total cost of sales and marketing efforts that are needed to acquire a customer.
SaaS

Customer Advances

Cash payments received before a company provide goods or services to its customer. These advances provide an important source of “no-cost” working capital financing.

Customer Advances

Cash payments received before a company provide goods or services to its customer. These advances provide an important source of “no-cost” working capital financing.

Customer Lifetime Value

The estimate of the projection of gross margin contribution per customer over the life of the average customer.
SaaS

Customer Lifetime Value

The estimate of the projection of gross margin contribution per customer over the life of the average customer.
SaaS

Debt Consolidation

Refers to the act of taking out a new loan to pay off other liabilities and consumer debts, generally unsecured ones.
Debt

Debt Financing

A type of financing that a company raises money by selling bonds, bills, or notes to an investor with the promise that the debt will be repaid with interest.
Debt

Debt Instrument

Any instrument evidencing the obligation of the maker to pay the holder of the debt instrument.
Debt

Debt Issue

Refers to the financial obligation that allows the issuer to raise funds by promising to repay the lender at a certain point in the future and in accordance with the terms of the contract.
Debt

Debt Overhang

Refers to a debt burden so large that an entity cannot take on additional debt to finance future projects.
Debt

Debt Restructuring

A process used by companies to avoid the risk of default on existing debt or lower available interest rates.
Debt

Debt Security

Refers to a debt instrument that can be bought or sold between two parties and has basic terms defined.
Debt

Debt Table

A table providing a summary and analysis of a startup's debt by type. It includes details related to the interest rates for each instrument and the debt service requirements.
Debt

Deferred Revenue

The sum of the total of Invoices for all Contract Elements for a single Contract minus the total of Recognizable Revenue for all Contract Elements for a single Contract.
SaaS

Equipment Financing

A loan used to purchase business-related equipment.
Debt

Factoring

Allows a business to obtain immediate capital or money based on the future income attributed to a particular amount due on an account receivable or a business invoice.
Debt

Grant

Money provided by a governement agency or other organization that does not need to be repaid and does not purchase equity.

Interest Rate

Amount a lender charges for the use of assets expressed as a percentage of the principal.
Debt

Invoice Discounting

The assignment of accounts receivable to a third-party as collateral for a loan
Debt

Invoice Discounting

The assignment of accounts receivable to a third-party as collateral for a loan
Debt

Invoice Financing

A way for businesses to borrow money against the amounts due from customers.
Debt

Life Cycle Renewal Rate

The renewal rate throughout the customer contract life cycle.
SaaS

MRR line of credit

A loan facility in which the amount available for borrowing is tied directly to the borrower’s monthly recurring revenue.
Debt

MRR line of credit

A loan facility in which the amount available for borrowing is tied directly to the borrower’s monthly recurring revenue.
Debt

Merchant Cash Advances

Upfront payments that you receive in exchange for a percentage of your future daily credit/debit card receipts.
Debt

Merchant Cash Advances

Upfront payments that you receive in exchange for a percentage of your future daily credit/debit card receipts.
Debt

Mezzanine Debt

Used when a company has maximized its bank and asset-based loans but needs additional funding to expand operations, make an acquisition, or buy out a partner.
Debt

Mezzanine Debt

Used when a company has maximized its bank and asset-based loans but needs additional funding to expand operations, make an acquisition, or buy out a partner.
Debt

Mezzanine Financing

A hybrid of debt and equity that ranks below senior debt but above common stock in a capital structure.
Debt

Mezzanine Financing

A hybrid of debt and equity that ranks below senior debt but above common stock in a capital structure.
Debt

Microloan

Any loan that's $50,000 or less. Typically given to specific types of entrepreneurs, such as those in low-income communities or female entrepreneurs.
Debt

New Bookings

Refers to the portion of bookings attributed to new customers, or more specifically new contracts with new or existing customers.
SaaS

Onboarding

The process of taking on a new client.
SaaS

Payday Loan

A type of short-term borrowing where the lender will extend high interest credit based on a borrower's income and credit profile.
Debt

Peer-to-Peer (P2P) Lending

Enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman.
Debt

Purchase Order Financing

An advance given to your supplier by a lender for goods your company needs to fulfill a customer order
Debt

Purchase Order Financing

An advance given to your supplier by a lender for goods your company needs to fulfill a customer order.
Debt

Recurring Revenue

A portion of a company's revenue that is expected to continue in the future.
SaaS

Renewal Rate

A measure of retention, expressed as a percentage.
SaaS

Revenue Backlog

The balance of unrecognized revenue that occurs when you recognize revenue for term subscriptions over the term of the subscription.
SaaS

Revenue Recognition

An accounting principle and process for reporting revenues by recognizing by the monetary value of transaction or contract over a period of time as the revenue is earned.
SaaS

Revenue Run Rate

Calculating run rate is pretty easy. Take revenue over a period of time – typically a month or quarterly revenue – and multiply it to get a year’s worth of revenue – typically by 12.
SaaS

Revenue Run Rate

Calculating run rate is pretty easy. Take revenue over a period of time – typically a month or quarterly revenue – and multiply it to get a year’s worth of revenue – typically by 12.
SaaS

Revenue-based financing

A loan in which repayments are based on a percentage of the borrower's monthly revenue rather than a fixed amount. The payments fluctuate with the borrower's financial performance, going up when revenue is strong and down when it is lower.
Debt

Revenue-based financing

A loan in which repayments are based on a percentage of the borrower's monthly revenue rather than a fixed amount. The payments fluctuate with the borrower's financial performance, going up when revenue is strong and down when it is lower.
Debt

Rollover as Business Start-Up (ROBS)

An arrangement in which prospective business owners use their retirement funds to pay for new start-up costs.

Royalty Based Financing

This type of financing presumes a fundamental tradeoff between the investor and the business owner. Instead of equity ownership, business owners agree to return to the investor the original principal plus either a predetermined multiple or payment of the royalty until a fixed period of time has elapsed.

Run Rate

The estimation of future performance based on current data.
SaaS

Runway

Refers to the amount of time a company has before it runs out of cash.
SaaS

SBA Loan

Term loans from a bank or commercial lending institution that the SBA guarantees as much as 80 percent of the loan principal for.
Debt

Second Lien Term Loan

A loan that is repaid in regular payments over a set period of time. Similar to a senior term loan but with a second lien rather than first lien on collateral.
Debt

Second Lien Term Loan

A loan that is repaid in regular payments over a set period of time. Similar to a senior term loan but with a second lien rather than first lien on collateral.
Debt

Selective Receivables Financing

Allows companies to pick and choose which receivables to advance for early payment.
Debt

Signature Loan

This type of loan is secured by the signature or promise to pay by the borrower. There may or may not be restrictions on its use.

Subordinated Debt

A note or loan which can only be paid after other, more senior or higher ranking obligations can be paid, in the event of liquidations.
Debt

Subordination Agreement

A legal document that establishes one debt ranking behind another in priority for collecting repayment from a debtor.
Debt

Subprime Loan

A type of loan offered at a rate above prime to individuals who don't qualify for prime-rate loans.
Debt

Term Loan

A loan that is paid off in a set period of time, usually in equal monthly installments throughout the duration of the loan.
Debt

Term Sheet

An outline of terms of investment upon interest between investors and founders. Generally a starting point for negotiations.

Trade Finance

Facilitates international trade by transferring to a third-party the risk that an exporter will not receive payment, or an importer will not receive its goods
Debt

Trade Finance

Facilitates international trade by transferring to a third-party the risk that an exporter will not receive payment, or an importer will not receive its goods
Debt

Unbilled Accrued Revenue

An asset account on the balance sheet that represents amounts recognized as revenue for which invoices have not yet been sent.
SaaS

Unearned Interest

Interest that has been collected on a loan by a lending institution but has not be recognized as income. It is initially recorded as a liability.
Debt

Unitranche Financing

A hybrid loan structure that combines senior debt and subordinated debt into one loan, allowing banks to compete better against private debt funds. The borrower of this kind of debt typically pays an interest rate that falls in between the interest rates that each type of loan would command individually.
SaaS

Unitranche Financing

A hybrid loan structure that combines senior debt and subordinated debt into one loan, allowing banks to compete better against private debt funds. The borrower of this kind of debt typically pays an interest rate that falls in between the interest rates that each type of loan would command individually.
SaaS

Unsecured Creditor

An individual or insitution that lends money without obtaining specific assets as collateral.
Debt

Unsecured Debt

Refers to loans that are not backed up collateral.
Debt

Unsubordinated Debt

Also known as senior debt, refers to a type of obligation that must be repaid before any other form of debt.
Debt

Vendor Credit

Enables you to wait a specified period of time before paying for goods or services provided by a supplier or vendor.
Debt

Vendor Credit

Enables you to wait a specified period of time before paying for goods or services provided by a supplier or vendor.
Debt

Venture Bank

A unique type of bank that offer services primarily to venture capital backed firms. Venture banks differ from traditional business banks because they will typically have warrants for the purchase of stock in addition to a traditional interest rate.
Debt

Venture Bank

A unique type of bank that offer services primarily to venture capital backed firms. Venture banks differ from traditional business banks because they will typically have warrants for the purchase of stock in addition to a traditional interest rate.
Debt

Venture Debt

A type of debt financing provided to venture-backed companies from specialized banks or non-bank lenders
Debt

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is propotionally weighted.

Working Capital Financing

Used to fund your company’s investment in short-term assets such as accounts receivable and inventory, and to provide liquidity so that your company can fund its day-to-day operations including payroll, overhead and other expenses.
Debt

Working Capital Financing

Used to fund your company’s investment in short-term assets such as accounts receivable and inventory, and to provide liquidity so that your company can fund its day-to-day operations including payroll, overhead and other expenses.
Debt

Working Capital Revolver

A line of credit in which the maximum amount available for borrowing is tied to the amount of accounts receivable and inventory on the company's balance sheet
Debt

Working Capital Revolver

A line of credit in which the maximum amount available for borrowing is tied to the amount of accounts receivable and inventory on the company's balance sheet
Debt
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