Transactions
Debt obtained from a number of online companies. Borrowers need to disclose much less information about themselves to obtain online credit, and online credit companies make credit decisions much more quickly than banks. For these reasons, online credit is much more expensive for borrowers than bank loans.
Online Credit
Owning an asset without any associated debt. Example: "I paid off my car loan last month, so now I own my car 'free and clear.'"
Own "Free and Clear"
The amount of money borrowed.
Principal
Most projections are for a year (or “annual” projections). A “quarter” means three months. New and seasonable businesses are most likely to make quarterly projections to make sure they are on track for success.
Quarter
An investment vehicle. Different types of securities include stocks, bonds and mutual funds.
Security
The percentage of a loan a bank or online credit company charges when a small business receives a loan. Original fees add to the cost of the loan.
Origination fee
When two or more individuals own a company. Partners are taxed on the profits of the company, and are personally liable for any debts or judgments against the company.
Partnership
A Latin phrase (“for the sake of form”) that in business means a projection of future financial performance. A pro forma usually takes the form of a projection of future revenues and costs.
Pro Forma
Real estate is property and the building(s) on it. Real estate can be a piece of land, or it can be a home on that piece of land, or it can be a building. Real estate is typically purchased using a mortgage. The down payment the buyer makes is called the buyer’s “equity.”
Real Estate
The ability to pursue what you think is right or necessary to do despite temptations to quit. Self-command, persistence and resolve.
Self-Discipline
Services a company uses to maintain proper financial records, legal filings and employee documentation.
Outside services
Abilities an individual develops that helps him / her succeed. Personal capabilities are developed by a combination of observation, training and hands-on trial and error.
Personal Capabilities
The ability to find solutions to difficult or complex issues. The process of working through the details of a challenge or crisis – often under pressure – to reach a solution.
Problem Solving
Repaying the loan.
Satisfy a Loan
The ability to pursue a task without being told to by someone else. Individuals who are self-motivated can find the strength to start and then finish a task without giving up.
Self-Motivation
When a company issues a check or makes a financial commitment for an amount greater than the amount the company has deposited in the bank. Also called "a bounced check."
Overdraft
Relationships and resources that help individuals succeed. Support relationships are often with “mentors” (experienced individuals who help you learn and succeed). Support resources include both information sources (like the LA Star Jobs website) and the opportunity to experience new things (like an internship).
Personal Support Systems
Revenues minus costs.
Debt that includes a legal obligation by the borrower to repay the debt personally if the business is unable to make its scheduled debt payment. A secured debt can be guaranteed by the entrepreneur or by any credit-worthy guarantor.
Secured Debt
How a business moves a specific customer to buy their service or offering. Example: a special event in a store's parking lot featuring discount prices is selling.
Selling
Costs that a business incurs that are not part of producing the goods or services its sells, but which are required to operate legally and efficiently. Example: "The salary I pay my accountant is overhead - these funds don't help us sell more product, but I need my accountant to keep our financial records and submit all required filings."
Overhead
A legal agreement that an assets is part of a guarantee to a lender, when the lender can take possession of the assets and sell it to recover the funds owed by a borrower in the event the borrower is unable to make a required debt payment.
Pledged
Unit price minus cost of goods sold.
Profit per Unit
An investment worth money; a “financial instrument” indicating ownership. Example: stock in companies like Apple or McDonald’s that are traded in the stock market is a security.
Securities
Costs that vary somewhat based on the number of units you sell. Example: if your enterprise buys an iPhone you won’t have to pay again for apps you already own.
Semi-Variable Costs