Company's finance vocabulary

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Debt Financing

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This is when a company borrows money from a bank or another lender. It also includes issuing bonds to individuals or institutional investors.

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Loan

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A specific amount of money a company borrows from a bank to fund growth. The borrower must pay back the borrowed amount plus interest within a specified time.

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Collateral

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Sometimes a bank requires something valuable, like property or personal guarantees, as security for a loan. If the loan isn't paid back, the bank can take this collateral.

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Factoring

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This is when a company sells its invoices (money owed to them) to another company before they are due. This way, the company gets cash quickly without waiting for customer payments.

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Line of Credit

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It's like having continuous access to a set amount of money from a bank. You only borrow what you need up to the limit and pay interest on the amount used.

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Public Offering (IPO)

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This is when a company sells its shares (ownership) to the general public for the first time, becoming publicly traded. It can be done by relatively new or established private companies.

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Shares

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These are units of ownership in a company that can be bought and sold, and may yield dividends.

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Preferred Shares

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Are safer shares that yield dividends and are paid before ordinary shares.

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Ordinary Shares

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These are the more common ones, generally carrying voting rights and fluctuating more in value.

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Crowdfunding

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A method of raising capital from the public, often through online platforms like Kickstarter, connecting new companies with many small investors.