Business Funding Glossary

Term Loan

A lump-sum business loan repaid in fixed monthly installments over a set period. ORP Group's unsecured term loan offers up to $1,000,000 with a 5–7 year term and rates from Prime + 2% APR.

Example: A $500,000 unsecured term loan at Prime + 2% APR over 7 years carries a fixed monthly payment for the life of the loan.

Who qualifies: Requires a 680+ personal credit score and 2 years of tax returns showing $50,000+ income each year.

Business Line of Credit

A revolving credit facility that lets a business draw funds up to a set limit, repay, and re-borrow as needed. Interest is paid only on the outstanding balance.

Example: A $100,000 line with $30,000 drawn at 14% APR accrues interest only on the $30,000.

Who qualifies: Typically requires 6+ months in business, $15,000+ in monthly revenue, and a credit score of 600+.

SBA 7(a) Loan

The SBA's flagship loan program. Loans up to $5 million are partially guaranteed by the SBA, allowing approved lenders to offer lower rates and longer terms than conventional financing.

Example: A $500,000 SBA 7(a) at 11.5% APR over 10 years is about $7,030/month.

Who qualifies: 2+ years in business, 650+ credit, demonstrated repayment ability.

SBA 504 Loan

SBA program for major fixed-asset purchases — owner-occupied real estate and large equipment. Structured 50/40/10 between bank, CDC, and borrower.

Example: A $1,000,000 SBA 504 to buy a building typically requires 10% down ($100,000).

Who qualifies: For-profit businesses under $15M net worth and $5M average net income.

SBA Express Loan

Accelerated SBA 7(a) variant up to $500,000 with SBA decisions in 36 hours. Carries a lower SBA guarantee (50%) for the faster turnaround.

Example: A $150,000 SBA Express at 13% APR over 7 years is about $2,725/month.

SBA Microloan

SBA-backed loan up to $50,000 issued through nonprofit intermediaries, designed for startups and underserved entrepreneurs.

Revenue Based Funding

Funding repaid through a fixed percentage of future business revenue. No fixed APR, no collateral, and approval is based on sales and bank deposits.

Example: A $75,000 revenue-based advance repaid at 8% of monthly sales would pay down faster in strong months and slower in weak months.

Who qualifies: 6+ months in business, $10,000+ average monthly revenue, business bank account.

Invoice Factoring

Sell outstanding B2B invoices to a factor at a discount, receiving 80–95% of invoice value upfront and the remainder (less a fee) when the customer pays.

Example: On a $100,000 invoice at 90% advance with a 2% fee, the business receives $90,000 within 24–48 hours.

Purchase Order Financing

Short-term financing where a lender pays a supplier directly so a business can fulfill a confirmed PO.

Example: A $250,000 confirmed PO can be funded so the supplier is paid up front.

BTC-Backed Loan

A loan collateralized by Bitcoin holdings rather than business assets. Lets owners access liquidity without selling crypto.

Example: Pledge $200,000 in BTC and borrow $100,000 (50% LTV).

Merchant Cash Advance (MCA)

A lump-sum advance repaid via fixed daily/weekly debit or % of card sales, priced with a factor rate rather than APR. Often 40%–350%+ effective APR.

Example: A $100,000 MCA at a 1.40 factor rate carries $140,000 total repayment.

Commercial Mortgage

A loan secured by commercial real estate. Terms 5–25 years with 20–30% down.

APR (Annual Percentage Rate)

Total annual cost of borrowing — interest and most fees — expressed as a percentage. Makes loans with different terms directly comparable.

Factor Rate

A multiplier (e.g., 1.20 to 1.50) used to price short-term funding like MCAs. Multiply funded amount by factor rate to get total repayment — NOT an APR.

Example: $100,000 advance at 1.30 = $130,000 total. Over 6 months that converts to ~71% APR.

Origination Fee

One-time fee to process and fund a loan, usually 1%–5% of the loan amount. May be paid up front or netted out.

Prepayment Penalty

Fee for paying off a loan before its scheduled term ends. Common on SBA 7(a) loans within the first 3 years.

SBA Guarantee Fee

Fee paid to the SBA on guaranteed portions of an SBA 7(a) loan, typically 2%–3.75% depending on loan size.

Discount Rate (Factoring)

Fee a factor charges per invoice, usually 1%–5% per 30 days.

Personal Guarantee

Legal commitment by a business owner to personally repay a business loan if the business defaults. Required by most lenders for 20%+ owners.

UCC Filing

Public filing made by a lender to claim a security interest in business assets as collateral.

Debt Service Coverage Ratio (DSCR)

Net operating income divided by total annual debt payments. Lenders typically require 1.15–1.35.

Example: $200,000 NOI and $150,000 in annual debt = DSCR of 1.33.

Collateral

An asset pledged to secure a loan. Lenders can seize collateral if the borrower defaults.

Soft Credit Pull

Credit inquiry that does NOT affect a borrower's credit score. ORP Group uses a soft pull to pre-qualify.

Hard Credit Pull

Credit inquiry that lowers a credit score by a few points. Required by most lenders before final funding.

Time in Business

How long a business has operated under its current legal entity. Most alternative lenders require 6+ months; SBA and bank loans typically 24+.

Working Capital

Cash and short-term assets a business uses to fund daily operations. Calculated as current assets minus current liabilities.

Advance Rate

Percentage of an invoice or asset's value a lender funds up front. Factors advance 80–95%; equipment loans 80–100%.

Holdback

Portion of daily card-sales revenue an MCA lender debits each day, often 8–20%.

Factoring Reserve

Portion of an invoice the factor holds back until the customer pays — typically 5–20%.