Credit Key Closes $90M in Growth Capital to Scale B2B Payments Platform.  Read the press release ➔
Credit Key Closes $90M in Growth Capital
‍Read the press release ➔
Glossary of credit terms

Credit Terms A to Z

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A

Cash Flow

Cash flow refers to the movement of money into and out of a business over a specific period. It measures liquidity rather than profitability.

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B2B Sales

B2B sales (business-to-business sales) refer to transactions where one company sells products or services to another company.

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Interest Rate

An interest rate is the percentage charged on borrowed money or earned on deposited funds over a specific period.

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Line of Credit

A line of credit is a flexible financing arrangement that allows a borrower to access funds up to a set limit on an ongoing basis.

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Merchant Cash Advance

A merchant cash advance (MCA) is a financing arrangement where a business receives upfront capital in exchange for a percentage of future sales.

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Inventory Financing

Inventory financing is a type of short-term funding that allows businesses to borrow money using inventory as collateral.

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Credit Line

A credit line is a flexible borrowing arrangement that allows a business to access funds up to a predetermined limit.

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Small Business Loan (SBA)

A Small Business Loan (SBA) is a business loan partially guaranteed by the U.S. Small Business Administration (SBA).

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Business Loan

A business loan is a financing arrangement in which a lender provides capital to a company for operational or growth purposes.

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Loan Terms

Loan terms are the specific conditions that define how a loan must be repaid.

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APY

APY (Annual Percentage Yield) is the total amount of interest earned or paid on a financial product over one year, including the effect of compounding.

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Credit Card APY

Credit card APY (Annual Percentage Yield) represents the effective annual cost of carrying a balance on a credit card, including compounding interest.

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Business Credit

Business credit refers to a company’s ability to borrow money or secure financing based on its own financial track record.

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Buy Now Pay Later (BNPL)

Buy Now Pay Later (BNPL) is a short-term financing option that allows customers to split purchases into fixed installments over time.

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Net-30 Payment

Net-30 payment is a trade credit term that requires a buyer to pay an invoice in full within 30 days of the invoice date.

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Interest-Free Financing

A promotional payment option where no interest is charged if the balance is paid within the agreed-upon timeframe, such as 4 biweekly payments.

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Yield

The return a lender earns on a loan or credit portfolio, typically expressed as an annual percentage of the outstanding principal.

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Working Capital

The difference between a business's current assets and current liabilities. Adequate working capital ensures a company can meet short-term obligations.

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Underwriting

The process a lender uses to evaluate a borrower's financial profile and determine the risk, terms, and credit limit to offer.

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Total Cost of Credit

The complete amount a borrower pays over the life of a loan, including principal, interest, fees, and any other charges.

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Trade Credit

An agreement where a buyer can purchase goods or services and pay the supplier at a later date, essentially a short-term loan between businesses.

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Supplier Financing

A financing arrangement where a third party pays the supplier upfront while the buyer repays over time, improving cash flow for both parties.

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Soft Credit Pull

A credit inquiry that does not affect a borrower's credit score. Often used for pre-qualification to give buyers confidence before formally applying.

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Risk Assessment

The process of evaluating the likelihood that a borrower will default on a credit obligation, using financial data, credit scores, and business metrics.

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Point of Sale (POS) Financing

Credit or payment plans offered at the moment of purchase, enabling buyers to choose flexible repayment options during checkout.

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Revolving Credit

A type of credit that does not have a fixed number of payments. The borrower can spend, repay, and borrow again up to the approved credit limit.

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Repayment Schedule

A timeline that outlines when each payment is due, how much is owed, and the breakdown between principal and interest over the life of a loan.

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Principal

The original amount of money borrowed, excluding any interest or fees. Monthly payments typically cover both principal and interest.

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Payment Terms

The agreed-upon conditions for how and when a buyer will pay for goods or services, including due dates, installment schedules, and penalties.

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Pay Over Time

A financing model that allows buyers to spread the cost of a purchase across multiple payments rather than paying the full amount upfront.

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Origination Fee

A one-time fee charged by a lender when a new loan or credit line is established, typically calculated as a percentage of the total amount.

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Order Frequency

The average number of purchases a customer makes within a given time period. Flexible payment terms often drive higher order frequency.

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Omnichannel Payments

A unified payment experience that allows customers to use the same financing options across eCommerce, in-store, phone, and field sales channels.

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Net Terms

Trade credit agreements that specify the number of days a buyer has to pay an invoice in full. Common variations include Net 30, Net 60, and Net 90.

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Minimum Payment

The lowest amount a borrower must pay each billing cycle to keep their account in good standing and avoid late fees or default.

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Net 30

A payment term that gives the buyer 30 days from the invoice date to pay the full amount owed, often with no interest if paid on time.

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Merchant Discount Rate (MDR)

The fee a merchant pays to a financing provider for each transaction processed through the platform, typically expressed as a percentage of the sale.

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Merchant Dashboard

An analytics portal where merchants can track sales, monitor financing adoption, review transaction data, and manage their payment solutions.

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Line of Credit

A flexible financing arrangement that provides a borrower with access to a set amount of funds that can be drawn upon, repaid, and reused.

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Lending Risk

The probability that a borrower will fail to repay a loan or credit obligation. Lenders use credit scoring and underwriting to manage this risk.

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Late Fee

A charge assessed when a borrower fails to make a payment by the due date. Late fees incentivize timely repayment and offset collection costs.

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KYC (Know Your Customer)

Regulatory requirements that financial institutions follow to verify the identity of their clients and assess potential risks.

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KYB (Know Your Business)

The verification process lenders use to confirm the identity, legitimacy, and risk profile of a business applying for credit.

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Instant Decision

A real-time credit approval process that gives borrowers an immediate yes or no, typically within seconds of submitting an application.

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Installment Plan

A repayment structure where the total amount owed is divided into equal payments made at regular intervals, such as biweekly or monthly.

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Gross Merchandise Value (GMV)

The total value of goods sold through a platform over a given period, before deducting fees, returns, or discounts.

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Grace Period

A set timeframe after a payment due date during which a borrower can pay without incurring a late fee or penalty.

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Fraud Prevention

Systems and processes designed to detect and block fraudulent credit applications or transactions before they result in financial loss.

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Days Sales Outstanding (DSO)

The average number of days it takes a company to collect payment after a sale. Lower DSO indicates faster cash collection.

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Financing Terms

The conditions under which credit is extended, including repayment schedule, interest rate, fees, and duration. Common B2B terms range from Net 30 to 12 months.

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Due Diligence

The investigation and analysis a lender conducts before extending credit to a borrower, including financial history, credit score, and business performance.

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Default

The failure of a borrower to meet the repayment obligations of a loan or credit agreement. Defaults increase lending risk and collection costs.

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Checkout Financing

Point-of-sale financing offered during the checkout process, allowing buyers to select payment terms before completing their purchase.

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Conversion Rate

The percentage of visitors or prospects who complete a desired action, such as making a purchase. Flexible payment options can significantly lift conversion rates.

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Credit Limit

The maximum amount a borrower is authorized to spend on their line of credit. Limits may increase over time based on repayment history.

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Credit Decisioning

The automated or manual process of assessing risk factors to approve, decline, or adjust the terms of a credit application in real time.

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Credit Approval

The process of evaluating a borrower's creditworthiness to determine eligibility for a line of credit or financing terms.

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Business Line of Credit

A revolving credit facility that allows a business to draw funds up to a set limit, repay, and borrow again — providing flexible access to working capital.

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B2B Payments

Financial transactions between two businesses, as opposed to business-to-consumer (B2C). B2B payments often involve larger order values and extended payment terms.

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Buy Now Pay Later (BNPL)

A financing option that allows buyers to purchase goods immediately and pay for them over time in installments, often interest-free for short-term plans.

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Cash Flow

The net amount of cash moving in and out of a business over a given period. Positive cash flow means more money is coming in than going out.

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Borrower Portal

A self-service dashboard where borrowers can view their credit line, track orders, manage upcoming payments, and review purchase history.

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Accounts Receivable (AR)

Money owed to a business by its customers for delivered goods or services. Efficient AR management is critical for maintaining healthy cash flow.

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Average Order Value (AOV)

The average dollar amount spent per transaction. Offering pay-over-time options typically increases AOV by enabling larger purchases.

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Approval Rate

The percentage of credit applications that are approved. Higher approval rates mean more customers can access flexible payment terms at checkout.

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Accounts Payable (AP)

The amount a business owes to suppliers for goods or services purchased on credit. AP is a key liability on the balance sheet and directly impacts cash flow management.

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Annual Percentage Rate (APR)

The yearly cost of borrowing expressed as a percentage, including interest and fees. APR helps businesses compare the true cost of different financing options.

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Auto-Pay

A feature that automatically deducts scheduled payments from a borrower's account, reducing the risk of missed payments and late fees.

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© YEAR Credit Key.  All rights reserved. | Snap Credit, Inc. | NMLS ID: 2162273 | Privacy policy | Lead Bank privacy policy | Terms of service

Credit Key is not a bank. Certain business-purpose loans made by Lead Bank and subject to credit approval.  Personal guaranty may be required. Borrower must be a valid business in good standing. Fees vary based on loan amount. This card is issued by Sutton Bank, Member FDIC, pursuant to license by Mastercard.
*Instant credit decision not guaranteed
© 2024 Credit Key.  All rights reserved. | Snap Credit, Inc. | NMLS ID: 2162273 | Privacy policy | Lead Bank privacy policy | Terms of service

Credit Key is not a bank. Certain business-purpose loans made by Lead Bank and subject to credit approval.  Personal guaranty may be required. Borrower must be a valid business in good standing. Fees vary based on loan amount. The Credit Key Prepaid Mastercard® is issued by Sutton Bank, Member FDIC, pursuant to license by Mastercard.
*Instant credit decision not guaranteed