Funding glossary
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Full disclosure below.
Every term you will see on an offer, in one sentence each.
- APR
- Annual percentage rate: the yearly cost of borrowing including fees.
- Factor rate
- A multiplier used by cash advances. 1.3 on $10K means you repay $13K.
- Personal guarantee
- A promise to repay business debt personally if the business cannot.
- DSCR
- Debt service coverage ratio: cash flow divided by debt payments.
- UCC lien
- A public filing that gives a lender a claim on business assets.
- Soft pull
- A credit check that does not affect your score.
- Hard pull
- A credit check that can lower your score slightly for a time.
- Debt-to-income ratio
- Monthly debt payments divided by gross monthly income.
- Time in business
- How long the business has been operating, usually from its first deposits or registration.
- Draw
- Money you take from a line of credit.
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