“Payment in Kind”, related to the concept of paying interest on debt with additional debt. PIK loans may have a portion or all of the interest rate converted into additional debt vs paying cash interest during the term.

The amount charged on top of the principal (amount loaned) by a lender to a borrower

A warrant gives the holder the right, but not the obligation, to buy common shares of stock directly from the company at a fixed price for a pre-defined time period.

Common in credit transactions, factored into the overall cost of capital. These fees are charged by the lender and can range from 0.5% to 4% of the total loan or total funded amount. Depending on the lender and the deal. Funds here are typically taken out of the total funded proceeds at closing.

The period of time during the total term of the facility in which the borrower makes payments equal only to the amount of interest, not paying down any of the principal amount borrowed. This can aid in cashflow to the borrower due to lower cash payments for a time though can lead to an overall larger cost of capital due to lack of principal paid down.

A term loan provides borrowers with a lump sum of cash upfront in exchange for specific borrowing terms.

A loan that comes in multiple tranches or funding schedules. This can be due to milestones required by the company to draw additional funds or optionality by the company to draw additional funds when needed as to manage their overall cost of capital.

When exact costs are difficult to calculate, a line of credit can be used with funds up to a certain limit. The available credit does not replenish after you make payments, like revolving credit does.

When a revolving credit line is carries a balance from month to month, the revolver refers to the borrower. Also known as a revolver loan or revolving debt. ​​

A lease line of credit allows you to complete multiple leases (ex: equipment) within a fixed period of time, up to your credit limit.

Financing that is repaid typically by the borrower paying a percentage of their monthly revenue until the agreed amount is repaid

“Business Development Company.” - Companies that invest in firms to help them grow in the initial stages of development.

Through a private credit fund, investors combine or pool their capital and enable the manager of the fund to make investments in loans to various private companies.

“Software as a Service” - a software licensing model that allows access to software via the Internet rather than having to install the software on the user’s computer.

Managed service providers maintain the IT operations (software, SaaS subscriptions, hardware, security, etc.) of their clients.

Tech-enabled services are a combination of human expertise and technology. They provide the the "high touch" elements of customer service, employing technology to streamline operations

Also known as a prepayment penalty or early payoff fee, is a fee that some lenders charge when a borrower pays off a loan before the maturity date.

A legally binding agreement between the borrower and lender that certain activities will or will not be carried out (ex: maintaining a maximum debt-to-asset ratio or maintaining working capital).

A subordination agreement prioritizes debts, ranking one behind another for purposes of collecting repayment from a debtor in the event of foreclosure or bankruptcy.

A loan or line of credit secured by collateral (ex: inventory, accounts receivable, equipment, property, etc.)

Capital used to support the growth of a business (ex: product development, market development, acquisition, etc.).

Capital used to finance the company’s everyday operations (ex: payroll, rent, debt payments, etc.)

Capital used for physical assets (ex: property, equipment, etc.)

Typically measured on an annual basis, it’s the calculation of how much customer revenue has stayed with you over the past 12 months, between upgrades, downgrades and churned customers. This typically is not intended to include revenue from new customers gained over that same period of time.

Capitalization Table - The spreadsheet that breaks down the company’s shareholders’ equity including, common equity shares, preferred equity shares, warrants, and convertible equity. This information allows for companies to calculate their market value.

In short, who gets paid when in the event of a company sale, preferred shareholders get paid off before common shareholders. Investors typically take preferred shares in companies, coming with certain provisions that have multiples on capital invested before the common shares are paid out. This means that those shares theoretically could clear much more than their ownership percentage in the event of a sale, before the common shareholders start profiting from the sale of the business.

Waterfall is the illustration of how the funds flow in the event of a company sale. This takes into account all aspects of the ownership structure between preferred shareholders with their liquidation preferences, common shareholders, options and warrant holders.

Commonly related to terminology around warrants and options converting when it comes to debt transactions. A Liquidity event is most commonly understood as a “change of control” transaction, i.e. someone comes in and acquires the majority if your company (or all of it), or you exit via an IPO.