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Business finance glossary

259 lending and finance terms, defined in plain Australian English. Search as you type, or browse by letter.

Showing all 259 terms

A — terms beginning with A

ABN (Australian Business Number): The 11-digit identifier the Australian Business Register issues to every business entity. Lenders use it to confirm who you are, how long you have been registered and whether you are registered for GST.
Acceleration clause: A term in a loan contract that lets the lender call up the whole outstanding balance after a default, instead of waiting for the scheduled repayments to fall due.
Accounts payable: The money your business owes to suppliers and other creditors for goods or services already received. Lenders compare it with receivables to see how tight your cash cycle is.
Accounts receivable: Money customers owe your business for invoices you have issued but not yet been paid. Receivables are the raw material of invoice finance. Full entry →
Accrual accounting: A method that records income when it is earned and expenses when they are incurred, regardless of when cash moves. It gives a truer picture of profit but can hide a cash shortage.
ACN (Australian Company Number): The nine-digit number ASIC gives each company when it is registered. It appears on loan contracts, guarantees and any PPSR registration made against the company.
Acquisition finance: Borrowing used to buy an existing business, a share of one, or its assets. Lenders look at the target's trading history as well as the buyer's own position. Full entry →
Add-back: An expense a lender adds back to profit when testing whether you can afford a loan — typically depreciation, one-off costs, or interest on debt that the new loan will replace. Full entry →
AFCA (Australian Financial Complaints Authority): The external dispute body for financial firms that are members. Lenders that only provide commercial credit are not required to join, so it pays to check membership before you sign.
Aged receivables report: A list of unpaid customer invoices grouped by how overdue they are, such as current, 30, 60 and 90-plus days. Invoice financiers read it before setting a limit.
Aggregated turnover: Your business's annual turnover combined with that of any affiliates or connected entities. The ATO uses it to decide who counts as a small business for concessions such as the instant asset write-off.
Amortisation: Paying off a loan's principal gradually through scheduled repayments. In accounting, it also means writing down the value of an intangible asset over time.
Annual review: A lender's yearly check of an ongoing facility such as an overdraft or line of credit. The limit can be renewed, increased, reduced or cancelled depending on what the review shows.
Approval in principle: A lender's early indication that it is prepared to lend, subject to conditions such as a valuation, documents or a credit check. It is not a binding commitment to fund.
Arrears: Repayments that are overdue. Arrears usually trigger fees and, if they continue, a formal default under the loan contract.
Asset and liability statement: A summary of what a borrower or director owns and owes. Many lenders ask each guarantor to complete one so they can see what backs the guarantee.
Asset finance: An umbrella term for loans, leases and hire purchase used to buy equipment, vehicles or machinery, with the asset itself usually acting as security. Full entry →
Asset-backed lending: Lending where the size of the loan is driven by the value of assets pledged, such as property, equipment or receivables.
Assignment of debts: The legal transfer of your right to collect an invoice to a financier. It is how factoring works and why customers are often told to pay the financier directly.
ATO payment plan: An arrangement with the Australian Taxation Office to pay a tax debt by instalments. The general interest charge keeps accruing on the unpaid balance while the plan runs. Full entry →
Available equity: The portion of a property's value a lender will lend against after existing mortgages are subtracted, calculated using that lender's maximum LVR. Full entry →

B — terms beginning with B

Balloon payment: A larger lump sum due at the end of a loan or lease, which lowers the regular repayments along the way. You need a plan to pay it, refinance it or sell the asset. Full entry →
Bank guarantee: A bank's promise to pay a third party, such as a landlord or supplier, if your business does not. Banks usually want cash or property security behind it.
Bank statement lending: Assessing a loan mainly from recent business bank statements rather than tax returns. It is common for unsecured and short-term facilities sized on turnover. Full entry →
Bankruptcy: The formal insolvency process for individuals, administered by AFSA. It stays on a person's credit report for years and limits their ability to act as a director or guarantor.
BAS (business activity statement): The form GST-registered businesses lodge with the ATO to report and pay GST, PAYG withholding and PAYG instalments. Quarterly BAS is generally due on 28 October, 28 February, 28 April and 28 July.
Bill of sale: An older form of security over goods, largely replaced by PPSR registrations since 2012.
Borrower: The person or entity that receives the loan and is primarily liable to repay it. In business lending this is often a company or trust, with directors signing as guarantors.
Break costs: Charges some lenders apply when a fixed-term loan is repaid early, to cover what they lose by ending the arrangement ahead of schedule. Full entry →
Break-even point: The level of sales at which revenue exactly covers costs. Knowing it tells you how much extra borrowing a business can realistically carry.
Bridging finance: Short-term borrowing that covers the gap between needing money now and receiving it later, such as from a property sale or a delayed payment. Full entry →
Broker: An intermediary who arranges finance from one or more lenders. Business finance brokers are paid by commission, a fee, or both, and should tell you how.
Buffer: Cash kept in reserve for slow months, surprise bills or late payers. A healthy buffer makes a business less likely to need emergency borrowing and more attractive to lenders.
Business credit report: A file held by a commercial credit bureau showing a company's enquiries, defaults, court actions and payment behaviour. Lenders check it alongside the directors' personal files. Full entry →
Business line of credit: A revolving limit you can draw, repay and draw again, usually through a separate loan account rather than your everyday account. Full entry →
Business overdraft: A facility attached to a transaction account that lets the balance go below zero up to an agreed limit. Interest is charged only on the overdrawn amount. Full entry →
Business plan: A written outline of what a business does, its market, and its financial projections. Lenders rarely need a long one for established firms, but start-ups and acquisitions often do.
Business purpose declaration: A signed statement confirming a loan is predominantly for business purposes. It determines which legal framework applies to the credit. Full entry →
Business-use percentage: The share of an asset's use that is for business. It affects tax deductions and sometimes what a lender treats as a business purpose.
Buy now pay later (business): Short instalment credit for business purchases, offered at checkout or through supplier platforms.
Buyer's due diligence: The investigation a buyer carries out before purchasing a business — accounts, leases, contracts, staff and tax position. Lenders financing the purchase often ask to see the findings.

C — terms beginning with C

Capitalised interest: Interest that is added to the loan balance instead of being paid as it falls due. It lets a borrower make no repayments during a short term, with everything cleared at the end. Full entry →
Cash accounting: Recording income and expenses when cash actually moves. Many small businesses report GST on a cash basis.
Cash conversion cycle: The days between paying suppliers and collecting from customers: stock days plus debtor days minus creditor days.
Cash flow: The movement of money into and out of a business over a period. A business can be profitable on paper and still run short of cash flow. Full entry →
Cash flow forecast: A projection of cash coming in and going out, week by week or month by month. It shows when a shortfall will arrive and how big it is likely to be.
Cash flow lending: Lending based on the strength of a business's trading cash flow rather than on property or equipment security. Full entry →
Caveat: A notice lodged on a property title that warns anyone dealing with the land that someone else claims an interest in it. It stops certain dealings from being registered without notice to the caveator. Full entry →
Caveat loan: A short-term loan where the lender protects its position by lodging a caveat on the borrower's property, rather than registering a mortgage. It is often used when speed matters. Full entry →
Caveatable interest: An interest in land strong enough to support a caveat, such as a signed agreement to grant a mortgage. Without one, a caveat can be challenged and removed.
Certificate of title: The official record of who owns a parcel of land and what is registered against it, such as mortgages, caveats and easements. Most titles are now electronic.
Chattel mortgage: A loan to buy a vehicle or equipment where the business owns the asset from day one and the lender takes security over it until the loan is repaid. Full entry →
Collateral: Another word for security — an asset the lender can claim if the loan is not repaid.
Commercial security: A shop, office, warehouse, factory or other commercial property used as security for a loan.
Comprehensive credit reporting: The system under which lenders share positive repayment history as well as negative events. On-time repayments now help a credit file, not just the absence of defaults.
Conditional approval: Approval that still depends on specific items being satisfied before funds are released — for example, a valuation, signed guarantees or updated statements.
Consumer Data Right (open banking): The framework that lets you direct your bank to share your data securely with an accredited recipient. Some lenders use it to read transaction history instead of asking for PDF statements.
Contingent liability: A possible obligation that depends on a future event — for example, a guarantee you have given for someone else's loan.
Covenant: A promise in a loan contract that the borrower will do, or not do, certain things — such as keep a minimum cash balance or provide accounts each year. Full entry →
Credit enquiry: A record on your credit file that you applied for credit. Enquiries stay on a consumer file for five years, so shopping loans around widely can leave a trail.
Credit file: The information credit reporting bodies hold about your borrowing history, including accounts, repayment history, enquiries and defaults.
Credit limit: The maximum amount you can owe on a revolving facility such as an overdraft, line of credit or card.
Credit reporting body: An organisation that collects credit information and supplies credit reports and scores to lenders. You can get your own consumer credit report free every three months.
Credit score: A number summarising the information in a credit file. Different credit reporting bodies use different scales, so scores are not directly comparable.
Cross-collateralisation: Using one asset as security for more than one loan, or several assets for one loan. It can make it harder to release a property later without refinancing everything.
Current ratio: Current assets divided by current liabilities. A ratio above one suggests the business can cover its short-term obligations from short-term assets.
Customer concentration: How much of your revenue comes from a small number of customers. Lenders and invoice financiers see heavy concentration as extra risk.

D — terms beginning with D

Debt consolidation: Rolling several debts into one new loan so there is a single repayment and, ideally, a better structure. Full entry →
Debt service coverage ratio (DSCR): Available cash flow divided by total loan repayments. A ratio comfortably above one tells a lender the business can meet its repayments with room to spare. Full entry →
Debtor days: The average number of days customers take to pay you. Rising debtor days drain working capital even when sales are healthy.
Debtor finance: Another name for invoice finance: borrowing against the money customers owe your business. Full entry →
Deed of priority: An agreement between two lenders that sets out who gets paid first from the same security, and up to what amount. Second mortgages often need one.
Default: Failing to meet an obligation under a loan contract, most often missing repayments. A listed default stays on a consumer credit report for five years.
Default interest: A higher interest charge that applies to a loan while it is in default. Loan offers should state exactly when it applies and how it is calculated.
Deposit: The borrower's own contribution toward a purchase. A larger deposit usually means a lower LVR and more lender choice.
Depreciation: The accounting allocation of an asset's cost over its useful life. It reduces profit on paper but is not a cash cost, so lenders usually add it back.
Director ID: A unique identifier every company director must hold, issued through the Australian Business Registry Services. It stays with the person across every company they direct.
Director penalty notice (DPN): An ATO notice making a company director personally liable for unpaid PAYG withholding, GST or super guarantee charge. How it can be remitted depends on whether the amounts were reported on time. Full entry →
Disbursements: Third-party costs passed on at cost — title searches, registration fees, valuations and similar.
Discharge: Removing a mortgage or other security from a title or register once the loan is repaid. Lenders usually charge a discharge fee to prepare the paperwork.
Dishonour fee: A fee charged when a scheduled repayment bounces because there is not enough money in the account.
Division 7A: Tax rules that treat loans and payments from a private company to its shareholders or their associates as dividends unless they are properly structured. Relevant when company money is used to guarantee or repay a director's borrowing.
Drawdown: Taking money from an approved facility. A term loan usually has one drawdown; a line of credit can have many.
Drawings: Money an owner takes out of a sole trader or partnership business for personal use.
Due diligence: The checks a lender or buyer carries out before committing — identity, title, credit history, financials and legal searches.

E — terms beginning with E

Early repayment fee: A fee for paying a loan off before the end of its term. Some short-term loans have a minimum interest period instead.
EBITDA: Earnings before interest, tax, depreciation and amortisation. It is a common starting point for measuring how much debt a business can support.
Encumbrance: Any claim registered against an asset, such as a mortgage, caveat or PPSR registration. An unencumbered asset has none.
EOFY (end of financial year): 30 June in Australia. Many owners time equipment purchases, stock-takes and tax planning around it.
Equipment finance: Finance to buy or use business equipment, including chattel mortgages, finance leases and hire purchase. Full entry →
Equity (property): The difference between what a property is worth and what is owed on it. Business owners often borrow against this equity. Full entry →
Equity finance: Raising money by selling a share of the business to investors instead of borrowing. You keep no repayment obligation but give up part of the ownership.
Equity release: Borrowing against the equity in a property you already own.
Establishment fee: A one-off fee a lender charges for assessing and setting up a loan. It is usually deducted from the loan amount or added to it. Full entry →
Exit strategy: How a short-term loan will be repaid at the end of its term — a sale, refinance or expected payment. Private lenders assess the exit as closely as the security. Full entry →
Export finance: Funding that helps exporters pay for materials and production before overseas buyers pay. Export Finance Australia is the government's specialist export lender. Full entry →

F — terms beginning with F

Facility: Lender language for an approved loan, limit or credit arrangement — a term loan facility, overdraft facility, trade facility and so on.
Facility fee: An ongoing fee for having a limit available, charged whether or not you draw it. Common on lines of credit and overdrafts. Full entry →
Factoring: Selling your invoices to a financier who advances most of their value and then collects from your customers directly. Full entry →
Finance lease: An arrangement where a financier buys an asset and leases it to your business for most of its useful life, usually with a residual value at the end. Full entry →
First mortgage: The mortgage that ranks first on a property title, so its lender is repaid first from any sale. Full entry →
Fixed and floating charge: The older name for security over a company's assets. Since the PPSR began in 2012, this is generally done through a general security agreement.
Fixed term: A loan with a set end date, as opposed to a revolving facility with no fixed repayment date.
Floorplan finance: A revolving facility that lets dealers stock vehicles or equipment, with each unit repaid as it is sold.
Franchise finance: Funding to buy into a franchise system, including the fee, fit-out and working capital. Some lenders take the franchisor's track record into account. Full entry →
Fully drawn advance: A term loan paid out in one lump sum and repaid over a set period. It is the classic bank business loan.
Funds to complete: The total amount a borrower must pay at settlement after loan proceeds are applied — deposit, duty, fees and adjustments.

G — terms beginning with G

Gearing: The level of debt compared with equity in a business. Highly geared businesses are more exposed if trading dips.
General interest charge (GIC): The ATO's interest on overdue tax debts. GIC incurred on or after 1 July 2025 is no longer tax deductible. Full entry →
General security agreement (GSA): A security agreement giving a lender a claim over some or all of a business's personal property — equipment, stock, receivables and more — registered on the PPSR. Full entry →
Goodwill: The value of a business beyond its tangible assets — its name, customers and reputation. Lenders rarely lend against goodwill alone.
Gross profit: Revenue minus the direct cost of goods sold, before overheads.
GST (goods and services tax): A tax on most goods and services sold in Australia. GST-registered businesses collect it on sales and claim credits for GST paid on business purchases.
Guarantee and indemnity: The document a guarantor signs. The guarantee covers the borrower's debt; the indemnity makes the guarantor liable even if the main contract turns out to be unenforceable. Full entry →
Guarantor: A person or entity who promises to repay a loan if the borrower cannot. Directors usually guarantee their company's borrowing.
Guarantor's independent legal advice: Advice a guarantor gets from their own lawyer before signing. Many lenders require a certificate confirming it was given.

H — terms beginning with H

Heads of agreement: A short, usually non-binding document setting out the main terms of a deal, such as buying a business, before the full contract is drafted.
Hire purchase: An agreement where the financier owns the asset while you pay for it by instalments, with ownership passing to you after the final payment. Full entry →
Holding costs: The ongoing costs of owning an asset while you wait to sell or use it — interest, rates, insurance and maintenance.
Home equity: The equity in a residential property you own. Many business owners use it as security to borrow more, or on better terms, than an unsecured loan allows. Full entry →

I — terms beginning with I

Indicative offer: A lender's outline of the amount, term, fees and conditions it is likely to offer, before full assessment. It helps you compare options but is not binding.
Insolvency: Being unable to pay debts as and when they fall due. Directors of an insolvent company face personal risks if it keeps incurring debts.
Instalment: One of a series of regular payments that repay a loan or lease.
Instalment arrangement: A general term for paying a debt, tax bill or purchase in agreed parts over time.
Instant asset write-off: A tax rule letting small businesses with aggregated turnover under $10m immediately deduct eligible assets costing less than $20,000 each. The ATO confirmed in 2026 that the $20,000 threshold is permanent. Full entry →
Interest: The price of borrowing, charged on the outstanding balance. For business loans it is set by the lender for each borrower's circumstances.
Interest cover ratio: Earnings before interest and tax divided by interest expense. It shows how many times over a business could meet its interest bill.
Interest-only: A period during which repayments cover interest but not principal, keeping repayments lower. The principal is repaid later or at the end. Full entry →
Inventory finance: Borrowing secured by, or used to buy, stock. It helps businesses that must pay for goods well before they sell them. Full entry →
Invoice: A document requesting payment for goods or services supplied. A valid tax invoice lets your customer claim GST credits.
Invoice discounting: Borrowing against your invoices while you keep collecting from customers yourself, often without them knowing a financier is involved. Full entry →
Invoice finance: Using unpaid customer invoices to unlock cash before the customer pays. It includes both factoring and invoice discounting. Full entry →

J — terms beginning with J

Joint and several liability: When two or more people are each liable for the whole debt, not just a share. If one guarantor cannot pay, the lender can pursue the others for everything.
Judgment: A court order to pay a debt. Court judgments can appear on credit reports and weigh heavily in a lender's assessment.

K — terms beginning with K

Key person insurance: Cover that pays the business if an owner or critical staff member dies or becomes disabled. Some lenders ask for it on larger loans.
KYC (know your customer): The identity and background checks lenders must run before funding, such as verifying photo ID and confirming who owns and controls the borrowing entity.

L — terms beginning with L

Leaseback (sale and leaseback): Selling an asset you own to a financier and leasing it back, freeing cash while you keep using the asset.
Legal fees: Costs for preparing and reviewing loan and security documents. In private and property-secured lending, the borrower usually pays the lender's legal costs as well as their own.
Lender: The organisation that provides the money — a bank, non-bank lender, private lender or specialist financier. Full entry →
Letter of credit: A bank's promise to pay an overseas supplier once agreed shipping documents are presented. It reduces risk for both importer and exporter. Full entry →
Letter of demand: A formal written request to pay a debt before legal action. It is usually the step before a statutory demand or court claim.
Letter of offer: The formal document setting out a loan's amount, term, security, fees and conditions. Read it line by line before signing. Full entry →
Line fee: Another name for a facility fee — the charge for keeping a credit limit available.
Line of credit: A revolving limit you draw on as needed and pay interest only on what you use. Full entry →
Liquidation: The winding up of a company, in which a liquidator sells its assets to pay creditors. A company can be placed into liquidation voluntarily or by court order.
Liquidity: How easily a business can meet short-term obligations with cash or assets that turn into cash quickly.
Loan agreement: The binding contract that sets out the borrower's and lender's obligations. It usually sits alongside security documents and guarantees.
Loan servicing: The ongoing administration of a loan — collecting repayments, statements, reviews and discharge.
Loan term: The period over which a loan must be repaid. Business loans range from a few months for bridging and caveat loans to many years for property-backed term loans. Full entry →
Loan-to-cost ratio (LTC): The loan amount as a percentage of the total cost of a project or purchase, used alongside LVR in development and acquisition lending.
Loan-to-value ratio (LVR): The loan amount as a percentage of the security property's value. It is the single most important number in property-secured lending. Full entry →
Low doc loan: A loan assessed on fewer documents than a standard bank loan — commonly bank statements, BAS or an accountant's declaration instead of full tax returns. Full entry →

M — terms beginning with M

Margin (profit): Profit as a share of revenue. Thin margins leave little room for repayments, which lenders notice.
Maturity date: The date by which a loan must be fully repaid.
Merchant cash advance: An advance repaid through an agreed share of your future card or online sales, so repayments rise and fall with takings. Full entry →
Mezzanine finance: Funding that ranks behind senior debt but ahead of equity, commonly used in property development and acquisitions.
Minimum term: A period during which a loan cannot be repaid without paying some or all of the interest that would have been earned. Common in short-term private lending.
Month-end reconciliation: Matching the accounts to bank statements at the end of each month. Tidy reconciliations make any loan application faster.
Mortgage: Security over land registered on title. If the loan is not repaid, the mortgagee can ultimately sell the property to recover the debt.
Mortgage registration fee: The land registry's fee for registering a mortgage on title, passed on as a disbursement.
Mortgagee: The lender who holds a mortgage.
Mortgagee in possession: A lender that has taken control of a mortgaged property after default, usually so it can be sold.
Mortgagor: The owner of the property who grants the mortgage — which can be a director or family member rather than the borrowing business.

N — terms beginning with N

National Credit Code: The part of the National Consumer Credit Protection Act that regulates consumer lending. Credit used predominantly for business purposes generally falls outside it. Full entry →
Net profit: What is left after all expenses, including tax, are deducted from revenue.
Net tangible assets: Total assets minus intangible assets (such as goodwill) and total liabilities. It shows what the business would be worth on its physical and financial assets alone.
Net worth: Total assets minus total liabilities for a person or business.
No-doc loan: A loan with little or no financial documentation, relying mostly on property security and a declaration of ability to pay. True no-doc lending is now rare and usually conservative on LVR.
Non-bank lender: A lender that is not an authorised deposit-taking institution. Non-banks fund loans from investors, warehouses or their own capital and often move faster than banks. Full entry →
Novated lease: A three-way agreement between employer, employee and financier to lease a car through salary packaging. It is a staff benefit rather than a business loan.

O — terms beginning with O

Off-balance-sheet finance: Funding that does not appear as debt on the balance sheet, such as some operating leases. Accounting standards have narrowed what qualifies.
Offset of funds: Where a lender deducts fees, prepaid interest or existing debts from the loan proceeds, so you receive a smaller net amount than the approved loan.
Open banking: The everyday name for the Consumer Data Right in banking — sharing your bank data securely with an accredited provider.
Operating lease: A rental of equipment for less than its useful life, with the asset returned at the end. Payments are generally treated as operating expenses.
Overdraft: A limit that lets a business account run below zero, usually reviewed each year. Full entry →
Overdrawn: When an account balance is below zero, with or without an agreed overdraft.
Overheads: The fixed running costs of a business — rent, insurance, software, admin wages — that continue regardless of sales.

P — terms beginning with P

P&L (profit and loss statement): A summary of revenue, expenses and profit over a period. Lenders usually want the last one or two full years plus year-to-date figures.
Payday Super: The rules from 1 July 2026 requiring employers to pay super at the same time as wages, with contributions reaching the fund within seven business days. Full entry →
PAYG instalments: Regular prepayments of expected income tax, paid through the BAS so tax is not all due in one hit.
PAYG withholding: Tax an employer withholds from wages and pays to the ATO. Unpaid PAYG withholding can expose directors to personal liability.
Payment arrangement: An agreement with a creditor to repay an overdue amount over time.
Personal guarantee: A director's or owner's personal promise to repay a business debt if the business cannot. It puts personal assets within reach of the lender. Full entry →
Personal property: Under the PPSA, any property other than land and buildings — vehicles, equipment, stock, receivables, intellectual property and more.
Personal Property Securities Act (PPSA): The Commonwealth law that created the PPSR and sets the rules for security interests in personal property.
PMSI (purchase money security interest): A security interest given to the financier of a specific asset. If registered correctly, it can rank ahead of an earlier general security over the same asset.
PPSR (Personal Property Securities Register): The national register of security interests in personal property, operating since January 2012. Search it before buying a used vehicle or equipment. Full entry →
Prepaid interest: Interest paid in advance for part or all of a loan term, often deducted from the loan proceeds at settlement.
Principal: The amount borrowed, as distinct from the interest charged on it.
Principal and interest: Repayments that cover both interest and part of the principal, so the balance falls over the term. Full entry →
Priority: The order in which secured lenders are paid from the same asset. A first mortgage has priority over a second mortgage. Full entry →
Private lender: A lender that uses private or investor capital, typically secured by property, and assesses each deal on its merits. Full entry →
Progress payments: Staged payments made as a project reaches milestones, common in construction. Gaps between work and payment strain cash flow.
Property valuation: An independent assessment of a property's market value, used by a lender to set the maximum loan. Full entry →
Purchase order finance: Funding to pay suppliers so you can fulfil a confirmed customer order, repaid when the customer pays. Full entry →

Q — terms beginning with Q

Quarterly BAS: The business activity statement most small businesses lodge four times a year. Planning for each due date avoids tax debt building up.
Quote (finance quote): A written estimate of the amount, fees and terms a lender is prepared to offer. Ask for all fees in writing so quotes can be compared fairly.

R — terms beginning with R

Refinance: Replacing an existing loan with a new one, often to change lender, structure or term, or to release equity. Full entry →
Refinance risk: The risk that a borrower cannot refinance a loan when it matures, for example because property values or trading have fallen.
Registered mortgage: A mortgage recorded on the property title by the land registry. Registration gives the lender formal priority.
Repayment holiday: An agreed period with reduced or no repayments. Interest usually keeps accruing and is added to the balance.
Residential security: A house, unit or other home used as security for a business loan.
Residual value: The amount owing at the end of a lease or hire purchase agreement. You pay it to keep the asset, refinance it or return the asset.
Retention of title: A supplier's term that they own goods until paid in full. Suppliers register these interests on the PPSR to protect them.
Revenue-based finance: Funding repaid as a percentage of future revenue, similar in principle to a merchant cash advance but sometimes drawn from all sales, not just card takings. Full entry →
Revolving credit: Credit that becomes available again as you repay it — lines of credit, overdrafts and cards.
Rollover: Extending or renewing a facility at maturity, sometimes on new terms. Short-term loans should not rely on a rollover as their only exit.

S — terms beginning with S

Seasonal finance: Funding shaped around a business's seasonal cycle, such as stock before a peak or wages through a quiet period.
Second mortgage: A mortgage that ranks behind an existing first mortgage on the same property. Full entry →
Security: An asset pledged so the lender can recover the debt if the loan is not repaid. Full entry →
Security interest: A legal interest in property that secures payment or performance of an obligation. Under the PPSA, it covers personal property; land is handled through mortgages and caveats.
Security trustee: A party that holds security on behalf of several lenders in a syndicated or multi-lender deal.
Serviceability: A lender's test of whether the borrower can afford the repayments from their income or cash flow. Full entry →
Serviceability buffer: Extra headroom a lender builds into its affordability test so a borrower can cope if costs rise.
Settlement: The moment a loan is funded and documents are completed — funds released, securities registered and any existing debt paid out.
Short-term loan: A loan repaid within months rather than years, often used to bridge a gap or seize an opportunity. Full entry →
Small business entity: For many ATO concessions, a business with aggregated turnover under $10m.
Small business restructuring: A formal process letting an eligible company keep trading while a restructuring practitioner helps it propose a plan to creditors. Total liabilities must not exceed $1m.
Sole trader: An individual trading under their own ABN. The owner and the business are legally the same, so business debts are personal debts.
Split facility: One approval divided into parts — for example, a term loan for a purchase and a line of credit for working capital.
Stamp duty: State or territory tax on certain transactions, most notably property and some business asset purchases. Rates and exemptions differ by state revenue office.
Standby facility: A limit put in place for emergencies or opportunities and left largely undrawn until needed.
Statutory demand: A formal demand for payment of a debt owed by a company. Failing to pay or set it aside within 21 days lets the creditor presume insolvency.
Stock finance: Funding secured by, or used to buy, inventory.
Subordination: An agreement that one debt will rank behind another, such as a director's loan to the company ranking behind the bank's loan.
Super guarantee: The minimum super employers must pay for eligible workers — 12% since 1 July 2025. From 1 July 2026 it is calculated on qualifying earnings and paid on payday.
Supply chain finance: An arrangement where a financier pays a supplier early on a large buyer's behalf, with the buyer repaying later.

T — terms beginning with T

Tax invoice: An invoice that meets ATO requirements so the buyer can claim a GST credit.
Term loan: A loan for a fixed amount repaid over a set term, usually by regular instalments. Full entry →
Term sheet: A summary of proposed loan terms, issued before formal documents. Check fees, security and conditions here — they are hard to change later.
Title search: An official search of a land title showing the registered owner and any mortgages, caveats or other interests.
Top-up loan: Additional borrowing on top of an existing facility, often against the same property.
Trade credit: Supplier terms that let you pay for goods after delivery — effectively a short, interest-free loan if you pay on time.
Trade finance: Short-term funding for importing or exporting goods, including letters of credit and supplier payment facilities. Full entry →
Trading history: How long a business has been operating under its current ABN. Many lenders set minimum trading periods.
Trust (trustee borrowing): When a business operates through a trust, the trustee borrows on the trust's behalf. Lenders review the trust deed to confirm the trustee has power to borrow and give security.
Turnover: Total sales revenue over a period. Unsecured lenders commonly size limits as a share of monthly or annual turnover. Full entry →

U — terms beginning with U

Unconscionable conduct: Conduct so harsh it goes against good conscience, such as exploiting a serious disadvantage. It is prohibited in business dealings under Australian law.
Undrawn limit: The part of an approved facility you have not yet used.
Unencumbered: Free of any mortgage, caveat or security interest. Unencumbered property gives the most borrowing flexibility.
Unfair contract terms: Laws that make certain one-sided terms in standard-form small business contracts, including many loan contracts, void and subject to penalties.
Unsecured business loan: A loan with no specific asset pledged as security, typically backed by a director's guarantee. Full entry →
Unsecured creditor: A creditor with no security, such as most suppliers. In a liquidation they are paid after secured creditors and priority claims.

V — terms beginning with V

Valuation: An expert's opinion of market value for a property or asset. Full entry →
Valuation shortfall: When a property values lower than expected, reducing the maximum loan at a given LVR.
Variable interest: Interest that can move during the loan term when the lender changes its pricing.
Vendor finance: When the seller of a business or asset lets the buyer pay part of the price over time.
Verification of identity (VOI): Confirming a borrower or guarantor is who they claim to be, usually with photo ID sighted in person or through a certified digital check.
Voluntary administration: A process in which an external administrator takes control of a company to work out its future — a deed with creditors, liquidation or a return to the directors.

W — terms beginning with W

Waiver: A lender's written agreement not to enforce a condition or covenant, usually for a specific breach or period.
Winding up: Another term for liquidating a company and ending its existence.
Working capital: Current assets minus current liabilities — the money available to run day-to-day operations. Full entry →
Working capital cycle: The time between paying for inputs and getting paid by customers. The longer it is, the more cash a business needs.
Write-off (bad debt): Recording that a customer's debt will not be collected, removing it from receivables.

X — terms beginning with X

Xero, MYOB and other ledgers: Popular cloud accounting ledgers. With your permission, many lenders can now read ledger data directly, which speeds up assessment — though any well-kept set of books does the job.

Y — terms beginning with Y

Year-end accounts: The financial statements prepared at the end of the financial year, used for tax returns and most bank lending.
Year-to-date (YTD) figures: Financial results from the start of the financial year to now. Lenders use them to see whether trading has moved since the last tax return.
Yield (lender's): The total return a lender earns on a loan from interest and fees combined. Understanding it explains why fee-heavy and interest-heavy offers can cost the same.

Z — terms beginning with Z

Zero-based budgeting: Building each budget from nothing, justifying every cost afresh rather than adding to last year's figures. A useful discipline before borrowing.

How to use this glossary

Business lending has its own vocabulary, and most of it is never explained on the page where you first meet it. A letter of offer might mention a GSA, a caveat, capitalised interest and a minimum term in the same paragraph. This glossary gives each of those words a short, plain definition written for Australian owners, with a link to the full encyclopedia entry wherever we have one.

Type any part of a word in the search box and the list narrows instantly. The letter tabs filter to a single letter, and every term has its own link, so you can send a colleague or your accountant straight to a definition. If a definition leads you to a product, the full entry explains how it works, who it suits, how to qualify and what to consider instead.

Why the words matter before you borrow

Two offers with the same headline amount can behave very differently. One might need a first mortgage and a personal guarantee; another might sit behind your existing home loan as a second mortgage with capitalised interest. Understanding the terms is the fastest way to compare them properly, and to spot conditions such as a minimum interest period or a balloon payment before they surprise you.

It also helps you give accurate answers on an enquiry form. If you know whether your property already has a mortgage, what your approximate LVR is and whether the need is short or long term, a lending specialist can point you to the right product on the first call. When you are ready, you can check what your business could qualify for in about 60 seconds.

Terms people look up most

Loan-to-value ratio (LVR) — the number that decides most property-secured loans.
Caveat loan — short-term finance protected by a caveat on title.
Invoice finance — unlocking cash from unpaid invoices.
Personal guarantee — what you are signing when you back your company's loan.
General security agreement (GSA) — security over a business's personal property.
Exit strategy — how a short-term loan will be paid out.

A note on definitions in contracts

These definitions describe how terms are generally used in Australian business lending. Every loan contract has its own definitions clause, and that clause is what counts for your loan. If something in your paperwork reads differently from what you see here, ask the lender or your adviser to explain the difference in writing.

Ready to put the vocabulary to work?

Knowing the language is half the job; the other half is matching your business to a lender that fits. Our enquiry takes about a minute, there is no credit check when you first enquire, and your details are not passed around a panel of lenders. A real person reads what you send and calls to talk it through, so please answer the questions as accurately as you can. See if you qualify →

Frequently asked questions

What is the difference between a caveat and a mortgage?

Both protect a lender's position on a property title. A mortgage is registered on title and gives the lender formal priority and a power of sale after default. A caveat is a warning notice that stops certain dealings being registered without the caveator being notified. Caveat loans are quicker to set up, which is why they are used for short, urgent needs.

What does LVR mean on a business loan?

LVR is the loan-to-value ratio: the loan as a percentage of the security property's value. If a property is valued at $1m and total borrowing against it is $600k, the LVR is 60%. Lenders set a maximum LVR for each kind of property and loan, and that maximum largely decides how much you can borrow.

Is invoice finance the same as factoring?

Factoring is one type of invoice finance. In factoring, the financier usually collects from your customers. In invoice discounting, you keep collecting and the arrangement can be confidential. Both unlock cash tied up in unpaid invoices.

What is a GSA in business lending?

A general security agreement gives a lender security over some or all of a business's personal property — equipment, vehicles, stock, receivables and so on. The lender registers its interest on the Personal Property Securities Register so its priority is protected.

Can I use these definitions in my own documents?

The glossary is written for general understanding. Loan contracts define their own terms, and the contract's definitions always win, so check the definitions clause of any offer you receive.

I can't find a term. What should I do?

Try a shorter word in the search box, or look under the full name rather than the acronym. If the term came from a loan offer you have received, our specialists can explain it when they call — there is no credit check when you first enquire.

Found the word. Now find the loan.

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