Assets
Anything of value. Any interest in real or personal property which can be appropriated for the payment of debt.

Bad Debt
A debt that is not collectible and is therefore worthless to the creditor.

Balance Sheet
Financial statement presenting measures of the assets, liabilities and owner's equity or net worth of business firm or nonprofit organization as of a specific moment in time.

Bridge Loan
Short-term loan to provide temporary financing until more permanent financing is available

Business Plan
A document that describes an organization's current status and plans for several years into the future. It generally projects future opportunities for the organization and maps the financial, operations, marketing and organizational strategies that will enable the organization to achieve its goals.

Capital
Broadly, all the money and other property of a corporation or other enterprise used in transacting its business.

Capitalization
Long-term debt, preferred stock and net worth. The loan capital of a community development loan fund; includes that which has been borrowed from and is repayable to third parties as well as that which is earned or owned by the loan fund (i.e. "permanent capital").

Capital Markets
Those financial markets, including institutions and individuals, that exchange securities, especially long-term debt instruments.

Cash Flow Financing
Short-term loan providing additional cash to cover cash shortfalls in anticipation of revenue, such as the payment(s) of receivables.

Collateral
Assets pledged to secure the repayment of a loan.

Covenant
An agreement or promise to do or not to do a particular thing; to enter into a formal agreement; a promise incidental to a deed or contract. The following are functional objectives guiding most covenants: full disclosure of information, preservation of net worth, maintenance of asset quality, maintenance of adequate cash flow, control of growth, control of management, assurance of legal existence and concept of going concern, provision for lender profit or program goals.

Current Asset
Assets that will normally be turned into cash within a year.

Current Liability
Liability that will normally be repaid within a year.

Current Ratio
Current assets divided by current liabilities -- a measure of liquidity. Generally, the higher the ratio, the greater the "cushion" between current obligations and a firm's ability to meet them.

Debt
An amount owed for funds borrowed. The debt may be owed to an organization's own reserves, individuals, banks, or other institutions. Generally, the debt is secured by a note, bond, mortgage, or other instrument that states repayment and interest provisions. The note, in turn, may be secured by a lien against property or other assets.

Debt Service
Amount of payment due regularly to meet a debt agreement; usually a monthly, quarterly or annual obligation.

Debt Service Reserve
Term used to refer to cash reserves set aside by a borrower, either by internal policy or lender covenant, to repay debt in the event that cash generated by operations is insufficient.

Default
A failure to discharge a duty. The term is most often used to describe the occurrence of an event that cuts short the rights or remedies of one of the parties to an agreement or legal dispute, for example, the failure of the mortgagor to pay a mortgage installment, or to comply with mortgage covenants.

Delinquent
In a monetary context, something that has been made payable and is overdue and unpaid,

Due Diligence
Refers to the task of carefully confirming all critical assumptions and facts presented by a borrower. This includes verifying sources of income, accuracy of financial statements, value of assets that will serve as collateral, the tax status of the borrower and any other material facts presented by the borrower.

Endowment or Trust
A fund that contains assets whose use is restricted only to the income earned by these assets.

Equity
The value of property in an organization greater than total debt held on it. Equity investments typically take the form of an owner's share in the business, and often, a share in the return, or profits. Equity investments carry greater risk than debt, but the potential for greater return should balance the risk.

Equity Participation
An ownership position in an organization or venture taken through an investment. Returns on the investment are dependent on the profitability of the organization or venture.

Fund Balance
Net worth in a nonprofit organization; total assets minus total liabilities.

General Recourse
Rights to demand payment from the general assets of the debtor, without seniority in access to any specific assets.

Guaranteed Loan
A pledge to cover the payment of debt or to perform some obligation if the person liable fails to perform. When a third party guarantees a loan, it promises to pay in the event of a default by the borrower.

Interim Financing
Short-term loan to provide temporary financing until more permanent financing is available.

Intermediaries
Non- or for-profit institutions that have specialized lending capacities. They obtain capital in the form of equity and low interest loans from a variety of sources, including foundations and other funders, to form a "lending pool." They then serve as "wholesalers" who process large numbers of small loans or investments. This "economy of scale" often allows intermediaries to be more efficient than a foundation or funder could be if it considered each investment individually. Also, intermediaries often develop expertise in a particular field or region that foundations or funders cannot afford to develop. In the context of this study, non-financial intermediaries include community foundations and financial intermediaries include credit unions, venture capital and loan funds, banks, etc.

Leverage
Using long-term debt to secure funds for an organization. In the social investment world, often refers to financial participation by other private, public or individual sources.

Liabilities, Total Liabilities
Total value of financial claims on a firm's assets. Equals total assets minus net worth.

Limited Liability
Limitation of shareholders' losses to the amount invested.

Limited Recourse
Rights only to specifically stipulated assets to satisfy an unpaid debt.

Line of Credit
Agreement by a bank that a company may borrow at any time up to an established limit.

Linked Deposit
A deposit in an account with a financial institution to induce that institution's support for one or more projects. By accruing no interest or low interest on its deposit, a foundation essentially subsidizes the interest rate of the project borrowers.

Loan Agreement
A written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan.

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