FUNDINGO

Lending Glossary

Clear definitions of the terms lenders use every day, from loan origination and underwriting to servicing, compliance and CDFI reporting.

136 terms

A

ACH Debit

An electronic payment in which a lender, with the borrower's permission, pulls money directly from the borrower's bank account through the Automated Clearing House (ACH) network. It is the most common way lenders collect scheduled loan payments in the US. ACH debits follow the Nacha Operating Rules, which set requirements for authorization, returns and fraud monitoring.

Servicing & Collections

ACH Return (NSF)

An ACH return is an electronic payment that the borrower's bank sends back unpaid, along with a code that explains why. NSF, or non-sufficient funds (code R01), is the most common reason. Each return reverses a payment the lender thought it had, and Nacha watches how often a lender's debits come back.

Servicing & Collections

Adverse Action Notice

An adverse action notice is the notice a lender must send when it denies a credit application or takes certain other negative actions. In the US, the Equal Credit Opportunity Act requires it for business and consumer credit. It must name the action and give specific reasons, or explain how to request them.

Compliance & Regulation

After-Repair Value (ARV)

After-repair value (ARV) is the estimated market value of a property once a planned renovation is finished. Renovation lenders use it to size loans and to judge whether a project makes sense. It is usually supported by an appraisal or a broker's opinion that compares the finished property with similar homes that recently sold.

Real Estate & Construction

AgentExchange

AgentExchange is Salesforce's marketplace for AI agents, apps and add-on capabilities that extend Salesforce and Slack. It started in March 2025 as a separate marketplace for Agentforce components such as agent actions and templates. By September 2026 Salesforce had folded AppExchange and the Slack Marketplace into it, so AgentExchange is now the single place to find, try and install Salesforce solutions.

Salesforce & AI Lending

Agentforce

Agentforce is Salesforce's platform for building and running AI agents that answer questions and take actions inside Salesforce. Agents use a company's Salesforce data, follow instructions set by administrators and act through approved tools, such as flows and code. Launched in late 2024, it replaced Einstein Copilot. Agentforce remains the name of Salesforce's AI agent platform as of 2026.

Salesforce & AI Lending

AI Agent (Agentic AI)

An AI agent is software that can work toward a goal on its own: it breaks a task into steps, uses tools such as databases, documents and other software, and takes actions, checking its progress as it goes. Agentic AI is the broader term for systems built this way. Unlike a chatbot, an agent can change data and trigger processes, so it needs firm limits.

Salesforce & AI Lending

AI Underwriting

AI underwriting uses artificial intelligence to help assess a loan. Most often, the AI prepares the file: it reads documents, pulls financial figures into a spread, checks for gaps and mismatches, and drafts a summary for the underwriter. A narrower use lets a model score or decide the loan, which raises fair lending and explanation questions that most lenders must answer first.

Salesforce & AI Lending

Alternative Lending

Alternative lending is credit from lenders outside the traditional bank and credit union system. It includes CDFIs and other mission lenders, online lenders, private and hard money lenders, merchant cash advance funders, factoring companies and private credit funds. These lenders often move faster or serve borrowers that banks turn away, usually at a higher cost.

Small Business & MCA

AML and the Bank Secrecy Act (BSA)

The Bank Secrecy Act (BSA) is the main US law for detecting and reporting money laundering and terrorist financing. Anti-money laundering (AML) programs are the controls institutions use to meet it, including customer due diligence, monitoring and suspicious activity reports. FinCEN, part of the US Treasury, administers it.

Compliance & Regulation

Amortization Schedule

A table that lists every scheduled payment on a loan and shows how much of each one goes to interest and how much reduces the principal balance. Early payments are mostly interest. Later payments are mostly principal. Lenders use the schedule to bill borrowers, track balances and check that a loan is paying down as planned.

Loan Terms & Collateral

Annual Certification and Data Collection Report (ACR)

The Annual Certification and Data Collection Report (ACR) is the yearly report every certified CDFI files with the US Treasury's CDFI Fund to show it still meets the certification rules. It covers the organization's mission, governance, financing activity, target market results and financial data. Failing to file it can lead to loss of certification.

CDFI & Community Lending

AppExchange

AppExchange is Salesforce's marketplace for apps, components and consulting partners that extend Salesforce. As of September 2026, Salesforce calls the combined marketplace AgentExchange, bringing together AppExchange, AI agents and Slack apps. Apps distributed there as managed packages must pass Salesforce's security review, and customers can read reviews, try listings and install them into their own org.

Salesforce & AI Lending

Asset-Based Lending (ABL)

Asset-based lending (ABL) is business credit secured by working assets such as accounts receivable, inventory and sometimes equipment. The amount a borrower can draw is tied to the value of eligible collateral through a borrowing base, and the lender watches that collateral closely through regular reports, field exams and control of collections.

Small Business & MCA

Audit Trail

An audit trail is a time-stamped record of who did what on a loan, and when. It logs actions such as changes to terms, approvals, payments posted or reversed, documents added and notices sent, often with the old and new values. It lets auditors, examiners, funders and the lender itself rebuild exactly what happened and why.

Lending Technology & Operations

B

Bad Debt Expense

Bad debt expense is the cost a business or lender records on its income statement for money it does not expect to collect. Most lenders in the US record it in advance, as a provision that builds an allowance for expected losses. Smaller firms sometimes record it only when a specific debt is written off, called the direct write-off method.

Credit Analysis & Risk

Balloon Payment

A large lump sum due at the end of a loan because the regular payments did not pay off the full balance. Balloon loans are common in commercial real estate and business lending, where payments are set as if the loan ran for 20 or 25 years but the loan comes due after a few years. The borrower usually repays the balloon by refinancing or selling the asset.

Loan Terms & Collateral

Bank Statement Analysis

Bank statement analysis is the review of a borrower's bank statements to measure true revenue, balances, overdrafts, returned payments and existing debt. Underwriters use it to check what the application says, size the loan or advance, and find obligations that don't show on a credit report, such as daily payments to other funders.

Origination & Underwriting

Borrower Portal

A borrower portal is a secure website where borrowers can apply for a loan, upload documents, check what is still missing, see balances and statements, and make payments. Because it exposes private financial data, it needs strong login security. A good portal connects straight to the loan record, so documents and requests land in the right file without staff rekeying anything.

Lending Technology & Operations

Borrowing Base

A borrowing base is the amount a borrower can draw on a revolving credit line, set by the value of eligible collateral such as receivables and inventory. Each type of collateral is multiplied by an advance rate, reserves are subtracted, and the result caps how much the borrower can have outstanding. It is recalculated each time the borrower reports.

Small Business & MCA

Bridge Loan

A bridge loan is short-term financing that covers the gap until a borrower can get permanent financing, sell a property or finish a business plan. In commercial real estate, bridge loans often fund purchases or upgrades of properties that don't yet qualify for a long-term loan. They usually cost more and depend on a clear exit.

Real Estate & Construction

Business Line of Credit

A credit limit a business can draw from as needed, repay and draw again, much like a business credit card but usually larger and cheaper. Interest is charged only on the amount drawn. Lines of credit typically fund working capital, such as inventory, payroll gaps or receivables, and are often renewed each year after the lender reviews the business.

Loan Terms & Collateral

C

Capital Source

A capital source is the pool of money that pays for a loan, such as a CDFI Fund award, a bank loan or investment, a foundation's program-related investment or a government revolving loan fund. Each source carries its own terms, which may limit who can borrow, set covenants and require reports. That is why lenders tag every loan to its source.

CDFI & Community Lending

Capitalization Rate (Cap Rate)

The capitalization rate, or cap rate, is a property's net operating income divided by its value or sale price. It expresses yearly income as a percentage of what the property is worth. Appraisers also run it in reverse, dividing income by a market cap rate, to estimate value, which makes it central to loan-to-value.

Credit Analysis & Risk

Cash Flow Underwriting

Cash flow underwriting judges a borrower's ability to repay from the actual money moving through their bank accounts, such as deposits, balances, overdrafts and existing debt payments, rather than relying mainly on a credit score. It helps lenders assess young businesses and thin-file borrowers, but it needs written rules to stay consistent and fair.

Origination & Underwriting

CDFI Certification

CDFI certification is the US Treasury CDFI Fund's formal finding that an organization meets the rules to be a Community Development Financial Institution. It is needed to apply for most CDFI Fund awards and many bank and foundation programs. Since December 2023 it uses a revised application, and every CDFI certified before then has had to reapply.

CDFI & Community Lending

CDFI Fund

The CDFI Fund is the office of the US Department of the Treasury that certifies Community Development Financial Institutions and runs federal programs that support them. It makes grants and other awards, allocates New Markets Tax Credits, guarantees bonds and collects the annual reports that certified CDFIs must file to keep their status.

CDFI & Community Lending

CDFI Target Market

A CDFI target market is the underserved group of people or the distressed geographic area that a Community Development Financial Institution must mainly serve. The CDFI Fund approves each target market. To stay certified, a CDFI must direct at least 60% of both the number and the dollar volume of its financing to eligible target markets.

CDFI & Community Lending

Charge-Off

A charge-off is the accounting step a lender takes when it decides a loan, or part of one, is unlikely to be collected. The amount comes off the lender's loan balance and is recorded as a loss against its reserve. The borrower still owes the debt, and later collections are recorded as recoveries.

Servicing & Collections

Collateral

Assets a borrower pledges to a lender to secure a loan. If the borrower does not repay, the lender can take and sell the collateral to recover what it is owed. Common collateral in business lending includes real estate, equipment, inventory, receivables and cash accounts. Collateral is a secondary source of repayment, behind the borrower's cash flow.

Loan Terms & Collateral

Commercial Financing Disclosure Laws

Commercial financing disclosure laws are state laws that require providers of business financing, including merchant cash advances, to give a standard summary of cost and terms before the deal is signed. As of October 2026, eleven states have them in force, with Vermont's law starting in July 2027.

Compliance & Regulation

Community Development Financial Institution (CDFI)

A Community Development Financial Institution (CDFI) is a private lender certified by the US Treasury's CDFI Fund because its main mission is community development and most of its lending reaches low-income people or distressed places. CDFIs include loan funds, credit unions, banks and venture funds, and they pair financing with coaching for borrowers.

CDFI & Community Lending

Community Reinvestment Act (CRA)

The Community Reinvestment Act (CRA) is a 1977 US law that encourages insured banks to meet the credit needs of their whole communities, including low- and moderate-income neighborhoods. Regulators rate each bank's performance. Banks often earn CRA consideration by lending to, investing in or partnering with CDFIs.

Compliance & Regulation

Concentration Risk

Concentration risk is the danger that too much of a lender's portfolio depends on one borrower, industry, property type, area or source of repayment. If that one thing goes wrong, many loans can fail at once. Lenders measure concentrations against their capital, set limits in policy, and report actual levels to their board or committee.

Credit Analysis & Risk

Construction Draw

A construction draw is a payment from a construction loan, released after the borrower asks for money for completed work and the lender confirms it. Each draw is checked against the project budget, supported by an inspection and lien waivers, reduced by any retainage, and then added to the loan balance.

Real Estate & Construction

Construction Loan

A construction loan is short-term financing for building or substantially rebuilding a property. Instead of paying out the full amount at closing, the lender releases money in stages, called draws, as work is completed and verified. Borrowers usually pay interest only on the amount drawn, and the loan is repaid by a sale or a permanent loan.

Real Estate & Construction

Core Banking System

A core banking system is the main system of record at a bank or credit union. It processes the institution's basic functions, such as opening deposit accounts, booking loans, posting transactions and updating the general ledger. Lending, CRM and digital banking tools usually connect to the core, which makes core integration a key question when a bank adds new lending software.

Lending Technology & Operations

Credit Analysis

Credit analysis is the study of a borrower's finances, cash flow, collateral, credit history and character to judge whether it can and will repay a loan. It is the fact-finding and number-crunching step inside underwriting. Its output, often a credit memo, supports the decision to approve, decline or restructure a loan.

Origination & Underwriting

Credit Committee

A credit committee is a group of senior lenders, credit officers and sometimes board members that reviews and votes on loans too large or too risky for one person to approve. It usually handles the biggest loans, policy exceptions and loans to insiders, and at many banks it also sets lending policy and risk limits.

Origination & Underwriting

Credit Decisioning

Credit decisioning is how a lender reaches its answer on a loan request: approve, decline, counteroffer or refer to a person for review. It combines data, written rules or scoring models, and human judgment. Good decisioning is fast and consistent, and it records the reasons behind each outcome so the lender can explain any decline.

Origination & Underwriting

Credit Memo

A credit memo, short for credit memorandum, is the underwriter's written case for or against a loan. It describes the request, the borrower, the repayment source, collateral and guarantors, the main risks and any policy exceptions, then makes a recommendation. Approvers use it to decide, and auditors and examiners use it later to see how the decision was made.

Origination & Underwriting

Credit Risk

Credit risk is the chance that a borrower will not repay a loan as agreed, leaving the lender with lost principal, lost interest and collection costs. Lenders assess it before approving each loan, then manage it across the whole portfolio through risk ratings, limits, monitoring, loss reserves and collateral.

Credit Analysis & Risk

CRM for Lenders

A CRM for lenders is customer relationship management software set up for lending. It tracks borrowers, guarantors, brokers and referral partners, along with every deal by loan stage, the documents still owed and the follow-ups due. Some lenders use it only for sales, while others run origination and servicing on the same records.

Lending Technology & Operations

Current Expected Credit Loss (CECL)

Current expected credit loss (CECL) is the US accounting standard, issued by the Financial Accounting Standards Board, that requires lenders to estimate the losses they expect over the full life of their loans from the day each loan is made, and to update that estimate every reporting period. The estimate becomes the allowance for credit losses on the balance sheet.

Credit Analysis & Risk

D

Debt Service Coverage Ratio (DSCR)

The debt service coverage ratio (DSCR) measures how many times a borrower's cash flow covers its loan payments. It equals cash flow available for debt service, such as a property's net operating income, divided by total principal and interest due. A DSCR of 1.25 means $1.25 of cash flow for every $1.00 of debt payments.

Credit Analysis & Risk

Debt Yield

Debt yield is a property's net operating income divided by the loan amount, shown as a percentage. It shows the return a lender would earn from the property's income if it took the property over. Because it ignores interest rates, amortization and cap rates, lenders use it as a simple check on leverage alongside DSCR and loan-to-value.

Credit Analysis & Risk

Debt-to-Equity Ratio

The debt-to-equity ratio compares what a business owes with what its owners have put in and kept in the business. It equals total liabilities, or sometimes total debt, divided by owners' equity. A ratio of 2.0 means $2 of debt for every $1 of equity. Lenders use it to judge leverage and the cushion that protects their loan.

Credit Analysis & Risk

Default Interest Rate

A higher interest rate a lender can charge after a borrower defaults, set in the promissory note or loan agreement. It usually adds a fixed number of percentage points to the normal rate and applies until the default is cured. It compensates the lender for added risk and collection costs, but courts and state laws can limit how it is used.

Loan Terms & Collateral

Delinquency (Days Past Due)

A loan is delinquent when a scheduled payment is not made by its due date. Lenders measure delinquency in days past due, counted from the due date of the oldest unpaid payment, and group loans into buckets such as 30, 60 and 90 or more days. It is the earliest hard signal of credit trouble.

Servicing & Collections

Digital Lending Platform

A digital lending platform is software that lets a lender run lending online from end to end. Borrowers apply, upload documents and sign online, while the lender pulls outside data, makes decisions, funds and services the loan in connected steps. It can be built in-house, licensed from a vendor or assembled from several tools.

Lending Technology & Operations

DSCR Loan

A DSCR loan is a mortgage on an investment rental property that qualifies mainly on the property's rent compared with its monthly payment, rather than on the borrower's personal income. The lender divides the rent by the full monthly payment to get a debt service coverage ratio (DSCR) and sets the loan terms from there.

Real Estate & Construction

E

Escrow Account

An escrow account holds money a lender or servicer collects from the borrower to pay bills tied to the loan, most often property taxes and insurance. The borrower adds a monthly amount to each payment, and the servicer pays the bills when they come due. It protects the collateral from tax liens and lapsed coverage.

Servicing & Collections

Exit Strategy

An exit strategy is the borrower's plan for repaying a short-term loan, usually by selling the property, refinancing into a long-term loan, or using another source of cash. Bridge, fix-and-flip and construction lenders review the exit as closely as the property itself, because the loan is only as safe as the plan to repay it.

Real Estate & Construction

Explainable AI

Explainable AI is AI whose outputs come with reasons a person can understand and check. It shows which factors drove a score, flag or recommendation, and the explanation must truly reflect how the system reached it. In lending, explainability lets a lender give accurate reasons for a credit denial, test for unfair treatment and answer examiners and funders.

Salesforce & AI Lending

F

Factor Rate

A factor rate is a multiplier used to price a merchant cash advance or some short-term business financing. Multiply the amount funded by the factor rate to get the total amount owed: a $20,000 advance at a 1.25 factor rate means $25,000 must be repaid. Unlike an interest rate, the total cost does not change with how long repayment takes.

Small Business & MCA

Fair Lending (ECOA)

Fair lending means treating credit applicants equally, without discrimination, at every step of a loan. In the US, the Equal Credit Opportunity Act (ECOA) and its Regulation B bar creditors from discriminating on bases such as race, sex, age or marital status. It covers business credit as well as consumer credit.

Compliance & Regulation

Financial Services Cloud

Financial Services Cloud is Salesforce's industry version of its CRM for banks, credit unions, wealth managers and insurers. It adds financial data models, such as households, financial accounts and goals, plus industry workflows on top of Sales Cloud and Service Cloud. Salesforce's help pages call it Agentforce Financial Services, while its product website uses Financial Services Cloud as of October 2026.

Salesforce & AI Lending

Financial Spreading

Financial spreading is entering a borrower's balance sheets, income statements and tax returns into a lender's standard format, so several years can be compared side by side and key ratios computed. The result, called a spread, is the base for commercial underwriting, from debt coverage to leverage, and for tracking the borrower's results after closing.

Origination & Underwriting

Five Cs of Credit

The five Cs of credit are a framework lenders use to judge a borrower: character (track record and willingness to repay), capacity (cash flow to make payments), capital (the borrower's own money in the deal), collateral (what the lender can recover) and conditions (loan purpose, terms and outside factors such as the industry and economy).

Origination & Underwriting

Fix-and-Flip Loan

A fix-and-flip loan is short-term financing that helps a real estate investor buy a property, renovate it and sell it for a profit. The lender usually funds most of the purchase at closing and holds back the renovation budget, releasing it in draws as work is completed and inspected.

Real Estate & Construction

Forbearance

Forbearance is a temporary agreement that lets a borrower pause loan payments or pay less for a set period, usually during a short-term hardship. The debt is not reduced. Missed or reduced amounts must be repaid later through a lump sum, a repayment plan, a deferral or a loan modification.

Servicing & Collections

Funder Reporting

Funder reporting is the set of reports a lender sends to the investors, banks, foundations and government programs that supply its lending capital. The reports show how the money was used, how the loans are performing, whether covenants are met and what impact was achieved. Each funder sets its own content, definitions and due dates.

CDFI & Community Lending

G

General Ledger (GL) Integration

General ledger (GL) integration is the automatic flow of loan activity, such as disbursements, payments, interest, fees and charge-offs, from the loan system into the accounting books. It turns each loan event into the right accounting entries, so the loan book and the general ledger agree at month-end without staff rekeying totals or hunting for differences.

Lending Technology & Operations

Global Cash Flow

Global cash flow is the combined cash flow of a business and the people and companies behind it, such as owners, guarantors and related businesses. Lenders compare the group's total cash available with its total debt payments to see whether everyone together can carry the new loan, not just the borrowing business on its own.

Credit Analysis & Risk

Grace Period

A grace period is the number of days after a loan payment's due date during which the borrower can still pay without a late fee. The due date does not move, and the payment can still count as past due. Grace periods are set by the loan documents and, for some consumer loans, by state law.

Servicing & Collections

H

Hard Money Loan

A hard money loan is a short-term loan from a private lender that is based mainly on the value of the real estate securing it, rather than the borrower's income or credit. Investors use these loans for fast purchases, renovations and bridge situations. Rates and fees are higher than bank loans, and terms are short.

Real Estate & Construction

Holdback

In a merchant cash advance, the holdback is the share of a business's daily or weekly sales that goes to the funder until the purchased amount has been delivered. It is also called the specified percentage, remittance rate or split. Many funders collect fixed ACH debits estimated from the holdback and adjust them through reconciliation when sales change.

Small Business & MCA

Human-in-the-Loop

Human-in-the-loop means a person reviews and approves what an AI system prepared before it takes effect. The AI can gather data, draft a summary or suggest an action, but a named person decides and is accountable. In lending, it keeps credit decisions, adverse action notices and money movement under human control, with each review and override recorded.

Salesforce & AI Lending

I

Impact Reporting

Impact reporting is how a lender measures and shares the community results of its lending, such as jobs supported, businesses started, homes financed or borrowers reached in low-income areas. CDFIs and other mission lenders report impact to the CDFI Fund, investors, foundations and their boards, often in a different format for each audience.

CDFI & Community Lending

Intelligent Document Processing

Intelligent document processing (IDP) is software that reads documents and turns them into usable data. It sorts each file by type, pulls out the key values, checks them against rules or other documents and sends the results into the lender's systems. In lending, it reads tax returns, bank statements and IDs, with low-confidence results sent to a person for review.

Lending Technology & Operations

Interest Reserve

An interest reserve is money set aside within a construction or bridge loan to pay the loan's interest while a project is being built or leased up and isn't yet earning income. The lender pays interest from the reserve each month, so the loan stays current until the project produces cash. Regulators warn it can hide a failing project.

Real Estate & Construction

Interest-Only Loan

A loan where the borrower pays only the interest for a set period, so the principal balance does not go down. Interest-only terms are common on bridge, construction and fix-and-flip loans, where the borrower plans to repay from a sale or refinance. Payments are lower at first, but the full principal is still owed at the end.

Loan Terms & Collateral

Investor Reporting

Investor reporting is the regular set of reports a lender sends to the banks, funds, foundations, investors and loan buyers that provide its capital. The reports show how the loans are performing, including balances, delinquency, charge-offs, covenant compliance and, for mission lenders, community impact.

Servicing & Collections

Invoice Factoring

Invoice factoring is a way for a business to get cash now by selling its unpaid invoices to a funder, called a factor. The factor advances most of the invoice value up front, collects from the business's customers, and pays the rest, minus its fee, once the customer pays. It is a sale of receivables, not a loan.

Small Business & MCA

K

Know Your Business (KYB)

Know Your Business (KYB) is the process of verifying a business borrower and the people who own and control it. Lenders confirm the company exists and is in good standing, identify its beneficial owners, check public records and screen everyone against sanctions lists before lending.

Compliance & Regulation

Know Your Customer (KYC)

Know Your Customer (KYC) is the process of confirming a borrower's identity and understanding enough about them to judge the risk of lending to them. For US banks and credit unions it is required by the Customer Identification Program rule. Many nonbank lenders follow similar checks because partners and investors require them.

Compliance & Regulation

L

Lending Workflow Automation

Lending workflow automation uses set rules to move loan work forward without manual handoffs. When something happens, such as a document arriving or a loan being approved, the system takes the next step: it assigns a task, sends a reminder, routes an approval or updates a status. The rules are written by the lender, so the same step happens the same way every time.

Lending Technology & Operations

Lien

A legal claim on property that secures payment of a debt. A lender with a lien can take and sell the property if the debt is not paid, and the lien stays attached until the debt is paid and the lien is released. Liens can come from an agreement, such as a mortgage, or from law, such as a tax or mechanic's lien.

Loan Terms & Collateral

Lien Waiver

A lien waiver is a signed document in which a contractor, subcontractor or supplier gives up some or all of its right to file a lien on a property, usually in exchange for payment. Construction lenders collect lien waivers with draws to confirm the people doing the work were paid and to protect the lender's own lien.

Real Estate & Construction

Loan Application

A loan application is a borrower's formal request for credit. It states who is borrowing, how much, for what purpose and over what term, and it gives the lender the identity, financial, ownership and collateral details needed to start underwriting. In the US, when a request counts as an application has legal weight under fair lending rules.

Origination & Underwriting

Loan Boarding

Loan boarding is the step where a closed loan is set up in the servicing system so billing and payment collection can begin. The approved terms, such as amount, rate, interest method, payment schedule, fees and collateral, become the servicing record. Boarding also applies to loans bought from another lender. Errors made here follow the loan for its whole life.

Lending Technology & Operations

Loan Broker (ISO)

A loan broker connects borrowers with lenders and earns a commission without lending its own money. In merchant cash advance and small business funding, brokers are often called ISOs, short for independent sales organizations. They find businesses that need money, collect the application and documents, send the deal to funders and present the offers.

Small Business & MCA

Loan Covenant

A promise in a loan agreement that the borrower will do, or not do, certain things while the loan is open. Covenants include sending financial statements, keeping insurance, staying above a minimum debt service coverage ratio and not taking on more debt without approval. Breaking a covenant can be an event of default, even if every payment is on time.

Loan Terms & Collateral

Loan Data Migration

Loan data migration is moving existing loans, with their balances, payment schedules, accrued interest and payment history, from an old system to a new one. A sound migration cleans and reconciles the data first, moves what servicing and reporting need, proves that every balance ties to the old system and the general ledger, and keeps the old data available read-only.

Lending Technology & Operations

Loan Disbursement

The release of loan money by the lender, either to the borrower or to others on the borrower's behalf, such as a seller, a title company, a prior lender or a contractor. A loan may be paid out all at once at closing or in stages, as with construction draws and line of credit advances. Each release needs checks and approvals before money moves.

Servicing & Collections

Loan Lifecycle

The loan lifecycle is every stage a loan passes through, from the first inquiry to the day it is paid off, refinanced or charged off. It covers application, underwriting, approval, closing, funding, boarding into servicing, payments, changes to terms and the loan's final outcome. Most errors and delays happen at the handoffs between stages.

Lending Technology & Operations

Loan Loss Reserve

A loan loss reserve is money a lender sets aside for loans that may not be repaid. In accounting, it is the allowance for credit losses, an estimate that reduces the reported value of the loan book. Some programs, such as the SBA Microloan program, also require a separate cash reserve account held against outstanding loans.

Credit Analysis & Risk

Loan Management System (LMS)

A loan management system (LMS) is software for managing loans, but vendors use the term in two ways. Some mean servicing only: payments, balances and collections after funding. Others mean one platform that covers the whole loan, from application through underwriting, closing, servicing and payoff. Always ask a vendor which one they mean.

Lending Technology & Operations

Loan Modification

A loan modification is a permanent change to a loan's terms, agreed in writing by the lender and borrower. It can lower the rate, extend the term, change the payment schedule or add missed payments to the balance. Modifications for borrowers in financial difficulty need clear approval, records and disclosure.

Servicing & Collections

Loan Origination

Loan origination is the process of creating a new loan, from the borrower's first request through intake, document collection, underwriting, the credit decision, closing and funding. It ends when the money goes out and the loan is handed to servicing. How well a lender runs origination shapes its speed, consistency and the quality of every loan it books.

Origination & Underwriting

Loan Origination System (LOS)

A loan origination system (LOS) is software that runs a loan from the first application to closing and funding. It collects the application and documents, runs credit and identity checks, supports underwriting, routes the file for approval and produces closing documents. When the loan funds, the LOS hands it to servicing, ideally without anyone retyping the terms.

Lending Technology & Operations

Loan Participation

A loan participation is an arrangement in which a lead lender makes a loan and sells shares of it to other lenders, called participants. The borrower deals only with the lead, which services the loan and passes each participant its share of payments. Participations let lenders fund larger loans and spread risk.

Servicing & Collections

Loan Pipeline

A loan pipeline is every deal a lender is working on that has not yet closed, sorted by stage, from first inquiry through application, underwriting, approval and closing. Lenders track it to forecast new loans and funding needs, spot stuck deals, balance staff workload and see how much capital will be committed soon.

Origination & Underwriting

Loan Portfolio Management

Loan portfolio management is the ongoing work of watching and steering all of a lender's loans as one book, not one loan at a time. It means setting risk limits, tracking performance, grading and reviewing loans, spotting concentrations, stress testing and reporting results to leadership, so the lender can act before small problems become large losses.

Credit Analysis & Risk

Loan Processing

Loan processing is the work between a loan application and closing: collecting documents, verifying the borrower's information, ordering outside reports and building a complete file for a decision. It is one part of loan origination. The processor gets the file ready, and the underwriter decides whether to approve it.

Origination & Underwriting

Loan Servicing

Everything a lender or servicer does to manage a loan after it closes, until it is paid off or written off. That includes billing, collecting and posting payments, handling escrow, sending statements, watching covenants and insurance, managing late payments and changes, and producing payoff figures. Servicing can be done in-house or by a third-party servicer.

Servicing & Collections

Loan Servicing Software

Loan servicing software manages a loan after it closes. It tracks the balance, calculates interest, sends bills and statements, collects and applies payments, handles fees and escrow, tracks late payments and produces payoff quotes. It is the lender's record of what each borrower owes, and its totals should tie to the accounting books every month.

Lending Technology & Operations

Loan Workout

A loan workout is a negotiated plan between a lender and a struggling borrower to resolve a troubled loan without foreclosure or a lawsuit. It can combine forbearance, a modification, new collateral, a partial paydown or a planned sale. The goal is to recover more than the lender would by enforcing its rights.

Servicing & Collections

Loan-to-Cost (LTC)

Loan-to-cost (LTC) compares a loan's size to the total cost of a project, including land, hard costs, soft costs and contingency. It equals the loan amount divided by total project cost, shown as a percentage. Construction and renovation lenders use it to make sure the developer has enough of their own money in the deal.

Credit Analysis & Risk

Loan-to-Value (LTV)

Loan-to-value (LTV) compares a loan's size to the value of the property or asset securing it. It equals the loan amount divided by the collateral's value, shown as a percentage. A $750,000 loan on a $1,000,000 building is 75% LTV. The lower the LTV, the more the collateral can lose value before the lender is at risk.

Credit Analysis & Risk

M

Managed Package

A managed package is how Salesforce partners bundle and distribute an app to customers. It holds the app's objects, fields, code, automation and pages under its own unique name prefix. The vendor protects much of the code and ships upgrades, while customers add their own settings and fields on top. Unmanaged packages, by contrast, hand over editable source with no upgrades.

Salesforce & AI Lending

Merchant Cash Advance (MCA)

A merchant cash advance (MCA) gives a business a lump sum of cash today in exchange for a larger amount of its future sales. The funder collects a share of the business's receipts, often through daily or weekly ACH debits, until the agreed amount is delivered. MCAs are generally structured as a purchase of future receivables, not a loan.

Small Business & MCA

Mezzanine Financing

Mezzanine financing is debt that ranks below a senior loan but above the owners' equity. In commercial real estate, it is usually secured by a pledge of the ownership interests in the company that owns the property, not by a mortgage. It lets a sponsor borrow more than a senior lender will provide, at a higher cost.

Real Estate & Construction

Microloan

A microloan is a small loan, usually to a startup, a very small business or a self-employed person, often made by a nonprofit or community lender. In the US, the term also refers to the SBA Microloan Program, which funds nonprofit intermediaries that make loans of up to $50,000 and give borrowers business coaching.

CDFI & Community Lending

Mission Lending

Mission lending is lending where the main goal is a social or community result, such as helping low-income families, small businesses or underserved places, with financial return as a means rather than the end. CDFIs, nonprofit loan funds, community development credit unions and some banks practice it, often pairing loans with coaching and flexible terms.

CDFI & Community Lending

Month-End Close

Month-end close is the routine a lender follows to finalize each month's numbers. Staff post every payment, return and disbursement, run interest accruals, reconcile loan cash to the bank and tie the loan subledger to the general ledger. Once every difference is explained, a manager approves the results and locks the period so reports stay consistent.

Lending Technology & Operations

N

Net Operating Income (NOI)

Net operating income (NOI) is a property's yearly income after vacancy and operating expenses, but before loan payments, depreciation and income taxes. It shows the cash the property itself produces, no matter how it is financed. Lenders use NOI as the starting point for debt coverage, debt yield and value.

Credit Analysis & Risk

New Markets Tax Credit (NMTC)

The New Markets Tax Credit (NMTC) is a US federal tax credit that draws private investment into businesses and projects in low-income communities. Investors put money into Community Development Entities (CDEs) and claim a credit worth 39% of the investment over seven years. The CDFI Fund awards the credit allocations, and Congress made the program permanent in 2025.

CDFI & Community Lending

O

OFAC Screening

OFAC screening is checking borrowers, owners, guarantors and other parties against the US sanctions lists kept by the Treasury's Office of Foreign Assets Control. OFAC rules apply to every US person and company, not only banks, and liability is strict. Lenders screen at onboarding and keep screening while the loan is open.

Compliance & Regulation

Open Banking

Open banking lets a person or business share their bank-account data with another company, such as a lender, through a secure, permission-based connection. Instead of uploading paper statements, the borrower logs in and approves access, and the lender receives balances and transactions directly. In the US, the federal rule for consumer data sharing is still being rewritten as of 2026.

Lending Technology & Operations

Origination Fee

An upfront fee a lender charges for making a loan, usually set as a percentage of the loan amount or as a flat dollar fee. It covers the cost of reviewing, approving and closing the loan. The fee is often taken out of the loan proceeds at closing. In commercial real estate and private lending, it is often called points.

Loan Terms & Collateral

P

Payment Waterfall

The set order in which a lender applies each payment it receives, such as fees first, then interest, then principal, then escrow. The order is set in the loan documents and can change after a default. Lenders that share loans with partners or investors also use a waterfall to split each payment among the owners.

Servicing & Collections

Payoff Statement

A payoff statement, or payoff quote, gives the exact amount needed to pay a loan in full on a specific date. It adds unpaid principal, interest accrued since the last payment, fees and any prepayment penalty, and lists a daily interest amount for each day after the quoted date.

Servicing & Collections

Personal Guarantee

A promise by an individual, usually a business owner, to repay a business loan from their own assets if the business cannot. It gives the lender a second source of repayment and ties the owner's own finances to the loan's success. Guarantees can be unlimited or capped, and they are standard in small business and many commercial real estate loans.

Loan Terms & Collateral

Prepayment Penalty

A fee a borrower pays for paying off all or part of a loan before it is due. It makes up for the interest the lender expected to earn. Common commercial structures include a step-down percentage that falls each year, yield maintenance tied to Treasury rates, and defeasance. The loan documents set when the penalty applies and how it is calculated.

Loan Terms & Collateral

Private Credit

Private credit is lending by nonbank investors, such as private debt funds and business development companies, directly to companies. The loans are negotiated one-on-one instead of being sold in the public bond market or syndicated through banks. Most go to midsize businesses, often owned by private equity firms, and most carry floating interest rates.

Small Business & MCA

Promissory Note

The borrower's signed, written promise to repay a loan. The note states the amount borrowed, the interest rate, the payment schedule, the maturity date and what happens on default. It is the core debt document in most loans. Other documents, such as a mortgage or security agreement, give the lender rights in collateral to back up that promise.

Loan Terms & Collateral

R

Recourse vs. Non-Recourse Loan

A recourse loan lets the lender pursue the borrower, and often a guarantor, for any amount still owed after the collateral is sold. A non-recourse loan limits the lender to the collateral itself. Many commercial real estate loans are non-recourse but include carve-outs that make the borrower or guarantor personally liable for certain bad acts.

Loan Terms & Collateral

Retainage

Retainage is a portion of each construction payment that is held back until the project is complete. Owners hold it from contractors, contractors hold it from subcontractors, and construction lenders often hold it from each loan draw. It protects against unfinished work, defects and unpaid bills, and is released at or near completion.

Real Estate & Construction

Revenue-Based Financing

Revenue-based financing is business funding repaid as a percentage of the company's revenue until a set total, often called the cap, has been paid. Payments rise in strong months and fall in slow ones. Some providers structure it as a loan and others as a purchase of future revenue, and several US states regulate it as sales-based financing.

Small Business & MCA

Revolving Loan Fund (RLF)

A revolving loan fund (RLF) is a pool of lending capital that is lent out, repaid and then lent again to new borrowers. Repayments flow back into the fund instead of returning to the original funder. RLFs are often started with grants or loans from federal programs such as the EDA, SBA or USDA, or from states, cities and foundations.

CDFI & Community Lending

Risk Rating

A risk rating is a grade a lender assigns to each loan to show how likely it is to be repaid as agreed. Most lenders use a numbered scale that maps to US regulatory categories: pass, special mention, substandard, doubtful and loss. Ratings guide approval authority, pricing, monitoring and the loan loss reserve, so they must change when a borrower's condition changes.

Credit Analysis & Risk

S

Salesforce-Native

Salesforce-native describes software built on the Salesforce Platform itself, using its objects, automation, security and reporting. The app's data is stored inside the customer's own Salesforce org, next to their CRM records. Non-native apps run on outside servers and connect to Salesforce through integrations that copy or sync data back and forth.

Salesforce & AI Lending

SBA 504 Loan

An SBA 504 loan is long-term, fixed-rate financing from the US Small Business Administration program for buying or building real estate or major equipment. A typical project has three parts: a bank loan for about half the cost, a loan from a Certified Development Company (CDC) for up to 40% and at least 10% from the borrower.

Small Business & MCA

SBA 7(a) Loan

An SBA 7(a) loan is a small business loan made by a bank or other approved lender and partly guaranteed by the US Small Business Administration. It is the SBA's main loan program and can fund working capital, equipment, real estate, refinancing or the purchase of a business. As of 2026, SBA lists a maximum loan amount of $5 million.

Small Business & MCA

Section 1071

Section 1071 of the Dodd-Frank Act requires lenders to collect and report data on small business credit applications, including whether applicants are women-owned or minority-owned. Under the CFPB's revised rule issued May 1, 2026, lenders making at least 1,000 covered loans a year must comply starting January 1, 2028.

Compliance & Regulation

Secured Overnight Financing Rate (SOFR)

A benchmark interest rate that measures the cost of borrowing cash overnight using US Treasury securities as collateral. The Federal Reserve Bank of New York publishes it each business day. SOFR replaced LIBOR as the main reference rate for US dollar floating-rate loans after June 30, 2023. Lenders usually charge SOFR plus a fixed spread.

Loan Terms & Collateral

Stacking

Stacking is when a business takes two or more merchant cash advances or short-term loans at the same time, often from different funders. Each new advance adds another daily or weekly payment on top of the others. Many advance contracts forbid it, because it raises the risk that the business cannot keep up with all of its payments.

Small Business & MCA

State Small Business Credit Initiative (SSBCI)

The State Small Business Credit Initiative (SSBCI) is a US Treasury program that gives states, territories and Tribal governments federal money to run small business financing programs. They use it for loan participations, loan guarantees, collateral support, capital access programs and venture capital, working through private lenders such as banks and CDFIs.

CDFI & Community Lending

Stipulations (Stips)

Stipulations, or stips, are the documents and conditions a funder requires before it will release money, such as recent bank statements, the owner's ID, a voided check or proof of ownership. The term is common in small business lending and merchant cash advance funding. Each stip is typically tracked as requested, received or cleared.

Origination & Underwriting

T

Technical Assistance

Technical assistance is coaching, training and advice that a lender gives borrowers before, during or after a loan, such as help with a business plan, bookkeeping or credit repair. CDFIs must provide this kind of support, called development services, to stay certified. The term also covers capacity-building grants that funders like the CDFI Fund give to lenders.

CDFI & Community Lending

Term Loan

A loan for a fixed amount that is paid out up front and repaid on a set schedule over an agreed period of several years. Term loans usually finance long-lived needs such as equipment, an acquisition or real estate. Unlike a line of credit, money that is repaid cannot be borrowed again.

Loan Terms & Collateral

Term Sheet

A term sheet is a short, usually non-binding summary of the main terms a lender is willing to offer: amount, rate, term, repayment, fees, collateral, guarantees, key covenants and conditions to close. It comes early, before full underwriting and approval, so both sides can agree on the shape of a deal before spending money on appraisals and legal work.

Origination & Underwriting

Transaction Level Report (TLR)

A Transaction Level Report (TLR) is a loan-by-loan data file that CDFIs submit to the US Treasury's CDFI Fund. It lists each loan or investment made in a fiscal year, with details such as amount, terms, location, borrower type and the target market it counts toward. The Fund uses it to check certification and award compliance.

CDFI & Community Lending

U

UCC-1 Filing

A public notice, called a financing statement, that a lender files with a state office to record its claim on a borrower's business assets. Filing a UCC-1 is the usual way to perfect a security interest, which sets the lender's priority over later creditors. In most states a UCC-1 lasts five years unless the lender files a continuation.

Loan Terms & Collateral

Underwriting

Underwriting is the work of deciding whether a borrower can and will repay a loan, and on what terms. The underwriter gathers facts about the borrower, its finances, any collateral and any guarantors, measures them against the lender's written policy, and recommends whether to approve, decline or restructure the deal.

Origination & Underwriting