A

Accounts Payable

Accounts payable is money a business owes to suppliers and vendors for goods or services received but not yet paid for.

Accounts Receivable

Accounts receivable is money customers owe a business for goods or services already delivered but not yet paid for.

Amortization

Amortization is the process of repaying a loan through scheduled payments that cover both interest and principal over the loan term.

Annual Percentage Rate (APR)

APR is the yearly cost of borrowing expressed as a percentage, including the interest rate and most fees.

Average Daily Balance

Average daily balance is the average amount of money in a bank account at the end of each day over a period, usually a month.

B

Balance Sheet

A balance sheet is a financial statement showing a business's assets, liabilities, and owner's equity at a specific point in time.

Balloon Payment

A balloon payment is a large, lump-sum payment due at the end of a loan after smaller regular payments.

BDC (Business Development Bank of Canada)

BDC is a federal Crown corporation that provides financing and advisory services to Canadian entrepreneurs.

Blanket Lien

A blanket lien gives a lender a security interest in all of a business's assets rather than one specific asset.

Break-Even Point

The break-even point is the level of sales at which total revenue equals total costs, so the business neither makes nor loses money.

Bridge Loan

A bridge loan is short-term financing that covers a gap until longer-term funding or expected cash arrives.

Business Bank Statement

A business bank statement is a monthly record of deposits, withdrawals, and balances in a business bank account.

Business Line of Credit

A business line of credit is a revolving credit limit a business can draw from, repay, and draw again, paying interest only on the balance used.

Business Loan Broker

A business loan broker helps business owners find and compare financing from multiple lenders.

Business Number (BN)

A Business Number is the nine-digit identifier the Canada Revenue Agency assigns to a business for tax accounts.

C

Canada Small Business Financing Program (CSBFP)

The CSBFP is a federal program that shares loan risk with participating lenders to help small businesses access financing.

Capital Cost Allowance (CCA)

Capital Cost Allowance is the Canadian tax deduction that lets businesses claim depreciation on eligible capital assets over time.

Cash Flow

Cash flow is the movement of money into and out of a business over a period of time.

Co-Signer

A co-signer is a person who agrees to share responsibility for repaying a loan if the primary borrower cannot.

Collateral

Collateral is an asset a borrower pledges to secure a loan, which the lender can claim if the loan is not repaid.

Commercial Loan

A commercial loan is any loan made to a business rather than to an individual for personal use.

Commercial Mortgage

A commercial mortgage is a loan secured by commercial real estate such as an office, warehouse, or retail building.

Compound Interest

Compound interest is interest calculated on both the original principal and previously accumulated interest.

Credit Bureau

A credit bureau is a company that collects credit history and produces credit reports and scores. In Canada, the main bureaus are Equifax and TransUnion.

Credit Score

A credit score is a number that summarizes creditworthiness. Canadian scores range from 300 to 900.

Credit Utilization

Credit utilization is the percentage of available revolving credit currently being used.

Current Ratio

The current ratio is current assets divided by current liabilities, a measure of a business's ability to pay short-term obligations.

D

Daily Remittance

Daily remittance is a repayment structure in which a fixed amount or percentage is withdrawn from a business account every business day.

Debt Consolidation

Debt consolidation combines several debts into one new loan with a single payment.

Debt Service Coverage Ratio (DSCR)

DSCR is a business's net operating income divided by its total debt payments, showing whether it earns enough to cover its debt.

Debt-to-Equity Ratio

The debt-to-equity ratio compares a business's total liabilities with its owner's equity.

Default

Default is the failure to repay a loan according to its agreed terms.

Down Payment

A down payment is the portion of a purchase price paid upfront in cash, with the remainder financed.

E

EBITDA

EBITDA stands for earnings before interest, taxes, depreciation, and amortization — a measure of operating profitability.

Equipment Financing

Equipment financing is a loan used to buy business equipment, with the equipment itself serving as collateral.

Equipment Lease

An equipment lease lets a business use equipment for a fixed period in exchange for regular payments, with options to buy, return, or upgrade at the end.

F

Factor Rate

A factor rate is a decimal multiplier, such as 1.2, used to calculate the total repayment on a merchant cash advance.

Fixed Interest Rate

A fixed interest rate stays the same for the life of a loan.

G

General Security Agreement (GSA)

A general security agreement is a Canadian lending document that gives a lender a security interest in a business's assets.

Gross Margin

Gross margin is revenue minus the cost of goods sold, expressed as a percentage of revenue.

Gross Revenue

Gross revenue is the total income a business earns from sales before any expenses are deducted.

GST/HST

GST/HST is the federal goods and services tax, or the harmonized sales tax in participating provinces, collected on most sales in Canada.

H

Hard Credit Pull

A hard credit pull is a full credit check done when you formally apply for credit, which can temporarily lower your credit score.

Holdback

A holdback is the percentage of daily sales or deposits withheld to repay a merchant cash advance.

I

Interest Rate

An interest rate is the percentage a lender charges on borrowed principal, usually expressed annually.

Inventory Financing

Inventory financing is funding used to purchase stock, sometimes secured by the inventory itself.

Invoice Factoring

Invoice factoring is the sale of unpaid invoices to a factoring company at a discount in exchange for immediate cash.

Invoice Financing

Invoice financing is borrowing against unpaid invoices, with the invoices serving as collateral.

L

Lender

A lender is an institution or company that provides funds to borrowers in exchange for repayment with interest or fees.

Lien

A lien is a legal claim a lender places on an asset as security for a debt.

Liquidity

Liquidity is how quickly a business can turn assets into cash to meet obligations.

Loan Renewal

A loan renewal extends or replaces a loan at or near maturity, often with new terms.

Loan Term

The loan term is the length of time a borrower has to repay a loan in full.

Loan-to-Value (LTV)

Loan-to-value is the loan amount divided by the value of the collateral, expressed as a percentage.

M

Maturity Date

The maturity date is the date on which the final payment on a loan is due.

Merchant Cash Advance (MCA)

A merchant cash advance is a lump sum provided in exchange for a share of a business's future sales, repaid through a daily or weekly holdback.

N

Net Income

Net income is the profit left after all expenses, interest, and taxes are subtracted from revenue.

Notice of Assessment (NOA)

A Notice of Assessment is the statement the Canada Revenue Agency sends after processing a tax return, showing assessed income and any balance owing.

NSF (Non-Sufficient Funds)

NSF means a payment was returned because the account did not have enough money to cover it.

O

Origination Fee

An origination fee is a one-time charge a lender takes for processing a new loan, usually a percentage of the loan amount.

P

Payment Frequency

Payment frequency is how often loan payments are made — daily, weekly, bi-weekly, or monthly.

Personal Guarantee

A personal guarantee is a promise by a business owner to repay a business loan personally if the business cannot.

Prepayment Penalty

A prepayment penalty is a fee charged for paying off a loan before its scheduled end.

Prequalification

Prequalification is a preliminary review that estimates what financing a business may qualify for, usually without a hard credit check.

Prime Rate

The prime rate is the benchmark interest rate Canadian banks use to price variable-rate loans, influenced by the Bank of Canada's policy rate.

Principal

Principal is the original amount of money borrowed, excluding interest and fees.

Profit and Loss Statement (P&L)

A profit and loss statement summarizes a business's revenue, costs, and expenses over a period, showing net profit or loss.

R

Refinancing

Refinancing replaces an existing loan with a new one, typically to get a lower cost, longer term, or better payment schedule.

Revenue-Based Financing

Revenue-based financing is funding approved and repaid based on a business's revenue rather than its collateral or credit alone.

Revolving Credit

Revolving credit is a credit limit that can be used, repaid, and reused repeatedly.

S

Secured Loan

A secured loan is backed by collateral that the lender can claim if the borrower defaults.

Soft Credit Pull

A soft credit pull is a credit check that lets a lender preview your credit without affecting your credit score.

SR&ED Tax Credit

The Scientific Research and Experimental Development (SR&ED) program is a Canadian tax incentive that provides credits for eligible research and development spending.

Stacking

Stacking is taking multiple merchant cash advances or short-term loans at the same time, often to cover payments on earlier ones.

Startup Loan

A startup loan is financing for a new business, typically one operating for less than two years.

Subordination

Subordination is an agreement that ranks one lender's claim behind another's in the event of default.

T

Term Loan

A term loan is a lump sum repaid in fixed instalments over a set period.

Time in Business

Time in business is how long a company has been operating, usually measured from registration or first revenue.

Total Cost of Borrowing

The total cost of borrowing is the full amount you pay above the principal, including interest and all fees.

U

Underwriting

Underwriting is the process a lender uses to evaluate risk and decide whether to approve a loan and on what terms.

Unsecured Loan

An unsecured loan is not backed by specific collateral and is approved based on credit and cash flow.

V

Variable Interest Rate

A variable interest rate changes over the life of a loan, usually in line with a benchmark such as the prime rate.

W

Working Capital

Working capital is current assets minus current liabilities — the money a business has available to run day-to-day operations.

Working Capital Loan

A working capital loan is short-term financing used to cover everyday operating expenses such as payroll, rent, and inventory.