Abstract – A floating lien. An abstract is a filing that allows an individual or company to place lenders or appropriate concerns on notice that a debt is due but has not been satisfied.
Account Creditor – The individual or company which requests the asset-based loan and is generally the recipient of the cash from the lender.
Account Debtor – The individual or company that is liable for a debt created by the acceptance of goods or services from the account creditor.
Account Receivable – A debt owed from an account debtor to an account creditor as a result of goods sold or services rendered.
Accrual Accounting Method – A form of reporting profits or losses based on the consummation of a transaction being accepted by form of contract or invoice without the realization of cash or an expense that has been incurred but has not yet been disbursed.
Adequate Notification – To notify an individual or company in a form that could not be misunderstood for its true intent and purpose. The notification is usually clear and decisive and lacks vague or ambiguous implications.
Aged Trial Balance – A detailed report which provides information on accounts receivables. This report provides information such as the invoicing date; the amount; the due date; payments made, if any; discounts taken, if any; shortages and credits. The conclusion of this report provides management with a grand total of cash receipts due or to be collected.
Angel Lender – An individual who provides funds in the form of a loan to someone of whom he is very close and generally does not require rules and restrictions of a formal lender. More commonly, an angel lender is a friend, family member or close acquaintance of the borrower.
Asset-Based Lending – A loan to an individual or company collateralized by a specific asset or group of assets. Typically asset-based loans do not require real property as collateral.
Assignment of Contracts – The transfer of one’s rights to another for the purpose of taking possession of the instrument or spirit of a contract. Usually when the assignment of a contract exists, it invariably includes the assignment of proceeds.
Assignment of Proceeds – The transfer of one’s rights to another for the purpose of taking possession of cash proceeds forthcoming. This does not constitute an assignment of contract as most people make this common mistake.
Assignee – The recipient of an assignment. The individual or company who is to receive the goods and proceeds for cash or consideration previously granted.
Assignment – The rights of a contract or bond given to one person from another.
Assignor – The individual or company that issues the right to a lender as a result of cash or consideration granted to its borrower.
Availability – The difference between the outstanding debt and the remaining cash availability on the line of credit granted by the lender.
Bill of Lading – A written receipt given by a carrier for goods accepted for transportation.
Bill of Sale – A document that transfers ownership of an asset from one person or company to another.
Cash Accounting Method – A form of reporting profits or losses based on actual receipts of income and disbursements of expenses.
Cash Flow Loan – A loan that is made to an individual or a company over a short period of time, typically 12 months or less.
Chattel Paper – A form of documentation that establishes the “essence of value”, a pink slip, a bill of lading, a bill of sale, etc. A document that could be converted to cash.
Collateral – The intangible or tangible property given as security to the lender by the account credit for any obligations and indebtedness of account creditor.
Concentration – Exceeding an established percentage (usually 25%) of one’s cash or liquidity in a single investment.
Conflicting Security Interest – Clouded title; two lenders holding the same collateral with the inability to determine who has priority.
Consignment – A form of providing tangible goods to a retail or wholesale outlet for the purpose of displaying and selling at will. Consignment does not constitute a perfected security interest in the product – it simply means that the product is the possession of the seller until sold.
Covenant – A rule, a law, a restriction prohibiting an individual or a company from performing unauthorized acts.
Credit Guaranty – A form of guarantying a debt from the debtor in the event of debtor insolvency.
Debit Consolidation Factoring – This service is designed to assist the growing company that is currently in default with his bank or other key creditors (including the IRS). This allows PBCC to assist in “debt negotiations” until such time all creditors are satisfied. Debt consolidation factors allow the company to increase cash flow without increasing debt.
Debt-to-Equity Ratio – A return on investment; an investment created by a form of debt (i.e., bank loan, investor funds, etc.) of which is converted to profit; then retained in earnings which is referred to as “owner” or “stockholder” equity.
Deficiency – A shortage; typically an amount received less than the contractual amount due and payable.
Discount Rate – A fee assessed by an individual or company that purchases an asset of another individual or company for cash or consideration.
Encumbrances – A lien or any form of indebtedness owed against real or personal property. An encumbrance is also recognized as unearned equity.
Estoppels – The act of being prevented from denying or asserting something on the ground that to do so contradicts what has already been admitted or denied either in words or by actions.
Factoring – The outright purchase of accounts receivable.
Float – The amount of time required to allow a demand note or a check to be converted to “hard cash” and made available to the recipient of such a note. Institutions refer to this as “in suspense” or “hold” status.
Foreign Corporation Permit – A permit granted by the Secretary of State authorizing an out-of-state corporation to conduct its business within that given state.
Hypothecate – To pledge (property) as security or collateral for a debt or without transfer of title or possession.
Insolvency – The inability to pay one’s debts and has lost the ability to create income or generate profits.
Internal Rate of Return – A return on an investment that is greater than the amount described in a contract or any other investment instrument. The internal rate-of-return is measured by the ability of the investor to reduce his internal expenses during the course of managing the investment; which means that the investor actually makes more than what is outlined in the contract or other investment instrument.
Invoice – An itemized list of goods dispatched or delivered to a buyer, with prices and charges.
Judgment – A ruling handed down by a court of law ordering an individual or company to make good on an obligation.
Levy – To take possession of an asset or to liquidate the asset for cash, for the purpose of satisfying a debt or judgment, on an obligation.
Lien – An attachment, either voluntary or involuntary. A lender will apply a lien to encumber real or personal property. The lien could be granted by form of an abstract judgment rendered by a court of law.
Line of Credit – Availability of funds by the lender based on the account debtor’s ability to pay.
Loan-to-Value – Based on current market value, the cash from the value of an asset less any liens or encumbrances.
Manifest – A detailed list of a ship or truck’s cargo, submitted to Custom officers. This document describes the true owner of the goods, as a pink slip would show the true owner of a vehicle. This document is also referred to as chattel paper.
Non-Recourse – Generally, accounts purchased by the lender remains with the lender. The lender accepts full credit risk for any and all accounts for which it purchases.
Ostensible Authority – An individual that holds himself out to be one of authority to perform a duty of which the authority was never granted. Such person taking the ostensible authority he or she may have caused a lender to advance funds or act in a manner which would normally be considered inappropriate, if the lender was aware of the actual authority this individual possesses.
Overage – The amount of money received by the lender of which is unidentifiable, non-factored receivables or overpayment on invoices.
Perfected – A fully executed lien or encumbrance in accordance with the laws of the State in which the loan was granted.
Performance Guaranty – An “assurance” that if the duties prescribed by a contract are not performed, the guarantor assumes responsibility for the contract’s completion.
Personal Property – Assets that belong to an individual or company that can only be pledged as security by virtue of a UCC-1 Financing Statement.
Pooled Collateral – A form of security provided to a lender for the purpose of a short term or long term loan. Assets are grouped together and pledged to the lender for a single loan.
Post Pention “Chapter 11″ Financing/Sale Lease – This service is for the company that is presently in Chapter 11 Bankruptcy. Upon court approval, PBCC can provide “instant cash” on receivables, combined with instant cash on equity in existing equipment if needed.
Priority Lien – First position; the senior lender in a transaction.
Purchase Order – A written arrangement to acquire goods or services.
Real Property – Real estate collateral that can only be perfected by a note and a Deed of Trust.
Rebates – A bonus paid back to the account creditor as a result of prompt paying receivables.
Recourse – An established time frame (usually 90 days) in which non-performing invoices will be returned to the account creditor for payment to the lender.
Reserves – The amount generally held by a lender over and above the principal amount advanced, usually 20% of the gross amount. This is held for the purpose of covering non-performing invoices.
Security Interest – A creditor that holds a perfected right or lien in an individual or company’s existing assets, either in part or entirety.
Sliding Scale – A time frame (usually in 15 day increments) of which a lender incrementally increases the amount of fees assessed on each outstanding receivable.
Specific Collateral – A single form of security provided to a lender for the purpose of a short term or long term loan. Specific collateral includes items such as an automobile, a piece of equipment or inventory.
Subordinate – To assign one’s collateral position, whether in full or in part, to another to exchange one’s security interest over another.
Superior Lien – A lien that is issued by a Federal Court. Generally, the Federal Court issues superior lien rights to the lender during the course of post bankruptcy petition financing. If approved, the Federal Court will place the lender in front of all other creditors with the intent to benefit all the creditors.
Term Loan – A loan that is made to an individual or a company over a long period of time, typically 12 months or more.
UCC – Short for Uniform Commercial Code. UCC is the lawful code mandated by the State, which sets forth the rules and provisions of a perfected security interest.
Unperfected Assignment – The rights given from one person to another; however, the assignment is improperly documented and recorded.
Warranty – An undertaking by the person insured that a condition of the receivables is as stated or will be exactly fulfilled.