April 22, 2022
Industry Insights
Frequently Used Terms
Learn about frequently used financial terms such as accounts receivable, amortization, commercial mortgage, and more in this informative blog post.
- Accounts Receivable: Claim against a debtor for an uncollected amount, generally from a completed transaction of sales or services rendered.
- Amortization: The schedule for paying down a loan’s principal over time. A 25-year amortization spreads principal repayment over 25 years, even if the loan matures sooner. Interest-only periods pause amortization. (In accounting, amortization also refers to expensing intangible assets over time.)
- Commercial Mortgage: Legal instrument evidencing a security interest in assets, usually real estate.
- Depreciation: A non-cash operating expense that reduces the value of a tangible asset as a result of wear and tear, age, or obsolescence. Depreciation is recorded in the financial statements of an entity as a reduction in the carrying value of the asset in the balance sheet and as an expense in the income statement.
- Estimate Property Value: Approximate amount someone is willing to pay for a property and the amount the seller is willing to accept in a given market at a given time. For context: this would be the price of the property you have agreed to pay the seller if you are requesting a Commercial Mortgage.
- EBITDA: Earnings before interest, taxes, depreciation, and amortization (EBITDA). This metric reflect a company’s progress absent financing decisions, taxes, and various non- cash expenses.
- Fees: Amount charged by a bank to provide their services. Could be an annual or one time charge at the loan closing.
- Financial Covenants: Promises or agreements by the borrower to fulfill terms set by the bank. For example: Total Leverage Covenant of 3.50x would mean, you need to maintain your Total Debt / EBITDA below 3.50x.
- Guarantors: A party who will guarantee repayment or performance of a covenant.
- Interest Expense: Payment for the use or forbearance of money.
- Interest Rate: The cost of money expressed as an annual percentage
- Inventory: Tangible property held for sale, or materials used in a
production process to make a product. - LIBOR: The London Interbank Offered Rate, the former benchmark for floating-rate loans. It stopped being published for U.S. dollar loans after June 2023 and has been replaced by SOFR.
- Liens: Creditor’s claim against property. For example, a mortgage is a lien against a house.
- Line of Credit or “LOC”: A line of credit is more like cash on demand for a set amount. You can draw funds up to the credit limit set when your company needs it, and you only pay interest on the funds you withdraw.
- NAICS Code: North American Industry Classification System, used throughout North America to classify businesses with a six-digit number based on the primary type of work the business performs.
- Net Income: Revenues – Expenses = Net Income/Loss
- Net Worth: The total wealth of an individual/ business or household considering assets and liabilities (found on the balance sheet). Total Assets- Total Liabilities= Total Net Worth.
- One-time or Non-cash Expenses: A write-down or accounting charge that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows.
- Personal Guarantee: The assumption of responsibility for payment of a debt or performance of some obligation if the liable party fails to perform to expectations. For context: Banks are looking for a personal guarantee for an extra level of protection if the borrower is unable to repay their loan.
- Pricing: Interest charged on loan.
- Prime: Rate of INTEREST charged by major U.S. banks on loans made to their preferred customers.
- Revenue: Sales or royalty proceeds. Quantity times price sold.
- SOFR: The Secured Overnight Financing Rate, the benchmark most U.S. floating-rate commercial loans now price from. The Federal Reserve Bank of New York publishes it daily, based on overnight borrowing backed by U.S. Treasury securities. Lenders usually quote a spread over 30-day average SOFR or term SOFR. See current rates.
- Tax Expense: The total amount of taxes owed by an individual, corporation, or other entity to a taxing authority. Income tax expense is arrived at by multiplying taxable income by the effective tax rate.
- Term Loan: Loan for a specified time period.
- Total Assets: An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events. Anything of value to which the firm has a legal claim. Any owned tangible or intangible object having economic value useful to the owner.
- Total Liabilities: Debts or obligations owed by one entity (debtor) to another entity (creditor) payable in money, goods or services.
- Total Net Worth: Similar to Equity. The excess of assets over liabilities.
- Working Capital: The deployment of current assets and current liabilities so as to maximize short-term liquidity.
Filed under
Written by
Cletus McKeown
Cletus leads growth at Bridge across hotel financing and production capital for consumer brands. He spends his time on the distance between what borrowers are told and what actually gets you the capital you need.
More from Cletus →More from Industry Insights
Industry Insights
Net 30, October 2026: What we heard at Walmart Open Call
A yes from the buyer is the start. What founders asked next at Walmart Open Call, the four questions to settle before accepting a retail order, the free Retail Growth Budget, and two production runs funded for an organic chocolate maker.
Industry InsightsBridge Cuts Hotel Debt Placement Fees by 50% as AI Drives Down the Cost of Financing
New 50-basis-point pricing launches October 1 for franchisees of Bridge partners, saving hotel owners $50,000 to $100,000 on a $10 million financing.
Industry InsightsMinibar and Loan Market Update from Bridge, September 2026
The Fed’s first hike since 2023, a new Bridge index showing hotel construction costs outrunning the market, RevPAR growth that is all rate, the October 1 SBA change, and a $29 million non-recourse close.
Industry InsightsNet 30, August 2026: We launched a $500M fund
Bridge now lends its own balance sheet and can fund before the PO exists, why August wrecks CPG cash flow, and the math on funding inventory with equity.