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Defining the Terms: Financing Your Business

Google Employee
# 1
Google Employee

Defining the Terms: Financing Your Business


Whether you’re in the beginning stages of launching a business, or have been around for 20 years, money management is a key factor in your planning. Below are a few financial terms you should know at all stages of your business.


Business plan

The road map to your success, the plan makes you think carefully about each phase of your business. The process of writing your business plan will help identify questions your lenders will ask you, including: How will the loan be used? What’s your growth plan? How will the loan be repaid? In addition to these questions, the plan should include information on managers & employees, operations & locations, and marketing. MasterCard provides an easy to follow step-by-step business plan workbook.


Cash flow statement

Identifying your intake and output, the cash flow statement reflects the liquidity of your company. Unlike a balance sheet or income statement, this is a living, breathing document, versus just a snapshot of your financial resources. The three segments included are: operating activities, investing activities, and financing activities. Intuit outlines the 6 essentials of a basic cash flow statement here.


Secured vs. unsecured loans

Simply put, a secured loan requires a collateral from the borrower - tangible or otherwise, that can be sold to cover the cost of the loan by the lending institution if the borrower defaults. An unsecured loan, such as credit cards, corporate bonds or a personal loan, is not secured against any asset.


Swipe fees or interchange fees

For every credit card transaction that takes place, the bank takes a percentage from the business SCORE has a free workshop you can take online to learn about strategies to lower credit card swipe fees.


Originally posted September, 2014

2 Expert replyverified_user

Re: Defining the Terms: Financing Your Business

Top Contributor
# 2
Top Contributor
Good points, when you're first starting out and you see offers for business financing you may think of something you could spend that money for but A good rule of thumb is if you don't need it don't borrow it.