The BLACKNJ Business Glossary is a resource that enables you to define business
terms you may find in business documents and contracts. Browse through or
click alpha links to jump to any term:
8(a): The 8(a) Business Development program is designed
to provide business development assistance and technical assistance to help
socially and economically disadvantaged American businesses gain access
to the mainstream American economy. The program is named for the section
of the Small Business Act that authorizes its policies and procedures.
Accounting: The recording, classifying, summarizing and
interpreting in a significant manner and in terms of money, transactions
and events of a financial character. Accounts Payable: Trade accounts of
businesses representing obligations to pay for goods and services received
Accounts Receivable: Trade accounts of businesses representing
moneys due for goods sold or services rendered evidenced by notes, statements,
invoices or other written evidence of a present obligation.
Acid Ratio: Current assets less inventories divided by
current liabilities. Also known as "Quick Ratio."
Acquisition: The acquiring of supplies or services by the
federal government with appropriated funds through purchase or lease.
ADA (Americans With Disabilities Act): The Americans with
Disabilities Act (ADA) gives federal civil rights protections to individuals
with disabilities similar to those provided to individuals on the basis
of race, color, sex, national origin, age, and religion. It guarantees equal
opportunity for individuals with disabilities in public accommodations,
employment, transportation, State and local government services, and telecommunications.
Affiliates: Business concerns, organizations, or individuals
that control each other or that are controlled by a third party. Control
may include shared management or ownership; common use of facilities, equipment,
and employees; or family interest. The calculation of a firm's size includes
the employees or receipts of all affiliates.
Amortization: Gradual reduction of term debt by periodic
payment sufficient to pay current interest and to eliminate the principal
at maturity.
Ancillary Bond: A type of surety bond where the surety
company guarantees other factors which are incidental and essential to the
performance of a contract.
Annual Receipts: Receipts are averaged over a firm's latest 3 completed
fiscal years to determine its average annual receipts. "Receipts"
means the firm's gross or total income, plus cost of goods sold, as defined
by or reported on the firm's Federal Income Tax return. The term does not
include, however, net capital gains or losses, nor taxes collected for and
remitted to a taxing authority if included in gross or total income.
Appraised Value: The value placed on an item, product or
business by an appraiser, recognized for experience in a particular field.
Assets: The entire property of a person, association, corporation,
or estate applicable or subject to the payment of debts.
Assumptions: The act of assuming/undertaking another's
debts or obligations.
Auction: A public sale of goods to the highest bidder.
Automatic Data Processing (ADP): 1. Data processing largely performed
by automatic means. 2. Pertaining to data processing equipment such as electrical
accounting machines and electronic data processing equipment. 3. The discipline
which deals with methods and techniques of automatic data processing.
Bad Debts: Funds owing to a business which are determined
to be uncollectible. Balance Sheet: Financial statement listing a company's
assets, liabilities, and equity on a specific date.
Bankruptcy: A condition in which a business cannot meet
its debt obligations and petitions a federal district court for either reorganization
of its debts or liquidation of its assets. In the action the property of
a debtor is taken over by a receiver or trustee in bankruptcy for the benefit
of the creditors. This action is conducted as prescribed by the National
Bankruptcy Act, and may be voluntary or involuntary.
Best And Final Offer: For negotiated procurements, a contractor's
final offer following the conclusion of discussions.
Bid Bond: A type of surety bond wherein the surety company
guarantees the bidder will enter into a contract and furnish the required
payment and performance bonds.
Book Value: The value of an item or property at a specific
time after deducting depreciation from original cost.
Break-Even Point: The break-even point in any business
is that point at which the volume of sales or revenues exactly equals total
expenses -- the point at which there is neither a profit nor loss -- under
varying levels of activity. The break-even point tells the manager what
level of output or activity is required before the firm can make a profit;
reflects the relationship between costs, volume and profits.
Bundling Report: The purpose of this page is to provide
a system to alert SBA's Office of Government Contracting of contract bundling
practices on the part of federal agencies that preclude a small business
from successfully competing for a contract.
Business Concern: A business concern eligible for assistance
as a small business is a business entity organized for profit, with a place
of business located in the United States, and which operates primarily within
the United States or makes a significant contribution to the US economy
through payment of taxes or use of American products, materials, or labor.
Business Death: Voluntary or involuntary closure of a firm
or establishment.
Business Dissolution: For enumeration purposes, the absence
from any current record of a business that was present in a prior time period.
Business Failure: The closure of a business causing a loss
to at least one creditor.
Business Plan: A comprehensive planning document which
clearly describes the business developmental objective of an existing or
proposed business applying for assistance in lending Programs. The plan
outlines what and how and from where the resources needed to accomplish
the objective will be obtained and utilized.
Business Start: For enumeration purposes, a business with
a name or similar designation that did not exist in a prior time period.
Canceled Loan: The annulment or recission of an approved
loan prior to disbursement. Capacity To Repay: The determination made by
a lender on whether a borrower can repay a loan after examining financial
statements, financial ratios and operating data.
Capital: 1. Assets less liabilities, representing the ownership
interest in a business; 2. A stock of accumulated goods, especially at a
specified time and in contrast to income received during a specified time
period; 3. Accumulated goods devoted to the production of goods; 4. Accumulated
possessions calculated to bring income.
Capital Expenditures: Business spending on additional plant
equipment.
Capitalization: The basic resources of a company including
the owner's equity, retained earnings and fixed assets. One of the "Five
C's" of Credit
Capitalized Property: Personal property of the business which has
an average dollar value of $300.00 or more and a life expectancy of one
year or more. Capitalized property shall be depreciated annually over the
expected useful life to the agency.
Carrying Costs: Inventory costs associated with capital,
storage, handling expenses, insurance, taxes and obsolescence.
Cash Conversion Cycle: The length of time between the payment of
payables and the collection of receivables.
Cash Discount: An incentive offered by the seller to encourage
the buyer to pay within a stipulated time. For example, if the terms are
2/10/N 30, the buyer may deduct 2 percent from the amount of the invoice
(if paid within 10 days) otherwise, the full amount is due in 30 days.
Cash Flow: The movement of money into and out of your business.
Cash Flow Statement: An accounting presentation showing
how much of the cash generated by the business remains after both expenses
(including interest) and principal repayment on financing are paid. A projected
cash flow statement indicates whether the business will have cash to pay
its expenses, loans, and make a profit. Cash flows can be calculated for
any given period of time, normally done on a monthly basis. Also, one of
the Five "Cs" evaluated in determining a loan applicant's credit-worthiness
CCR (Central Contract Registration): A data base of all businesses
contracting or seeking contracts with the federal government. It is maintained
by the U.S. Department of Defense.
Certificate Of Deposit: Short-term instruments issued by
commercial banks.
Certified 8(a) Firm: A firm owned and operated by socially
and economically disadvantaged individuals and eligible to receive federal
contracts under the Small Business Administration’s 8(a) Business
Development Program.
Certified Development Company (CDC): A Certified Development Company
is a nonprofit corporation set up to contribute to the economic development
of its community. CDCs work with the SBA and private-sector lenders to provide
financing to small businesses. There are about 270 CDCs nationwide. Each
CDC covers a specific geographic area
Certified Lender Program (CLP): The most active and expert
lenders qualify for the SBA's streamlined lending programs. Under these
programs, lenders are delegated partial or full authority to approve loans,
which results in faster service from SBA. Certified lenders are those who
have been heavily involved in regular SBA loan-guaranty processing and have
met certain other criteria.
Character: The degree to which a potential borrower feels
a moral obligation to repay debts as evidenced by the borower's credit and
payment history. One of the "Five Cs" used in a lending officer's
determination of a particular loan applicant's credit-worthiness.
Charged Off Loan: An uncollectible loan for which the principal
and accrued interest were removed from the receivable accounts.
Charge-Off: An accounting transaction removing an uncollectible
balance from the active receivable accounts.
Closed Loan: Any loan for which funds have been disbursed,
and all required documentation has been executed, received and reviewed.
For statistical purposes, first or total disbursement is counted as a closed
loan.
Closing: Actions and procedures required to effect the
documentation and disbursement of loan funds after the application has been
approved, and the execution of all required documentation and its filing
and recordation where required.
Certificate of Competency: The Certificate of Competency
(COC) program allows a small business to appeal a contracting officer's
determination that it is unable to fulfill the requirements of a specific
government contract on which it is the apparent low bidder. When the small
business applies for a COC, SBA industrial and financial specialists conduct
a detailed review of the firm's capabilities to perform on the contract.
If the business demonstrates the ability to perform, the SBA issues a COC
to the contracting officer requiring the award of that specific contract
to the small business.
Collateral: Something of value--securities, evidence of
deposit or other property--pledged to support the repayment of an obligation.
Also one of the Five "Cs" used in determining a loan applicant's
credit worthiness.
Collateral Document: A legal document covering the item(s)
pledged as collateral on a loan, i.e., note, mortgages, assignment, etc.
Collection Policy: Actions a business takes to collect slow-paying
accounts.
Commercial Paper: Unsecured promissory notes of large corporations.
Compromise: The settlement of a claim resulting from a
defaulted loan for less than the full amount due. Compromise settlement
is a procedure available for use only in instances where the government
cannot collect the full amount due within a reasonable time, by enforced
collection proceedings or where the cost of such proceedings would not justify
such effort.
Conditions: External factors such as government regulation,
competition, industry trends, national economic trends, that can affect
the success of a business. One of the "Five Cs" of credit.
Consortium: A coalition of organizations, such as banks
and corporations, set up to fund ventures requiring large capital resources.
Contingency Fund: Cash held for emergencies or unexpected
outflows of funds. Also known as "Precautionary Balances."
Contingent Liability: A potential obligation that may be
incurred dependent upon the occurrence of a future event. Two examples are:
(1) the liability of an endorser or guarantor of a note if the primary borrower
fails to pay as agreed and (2) the liability that would be incurred if a
pending lawsuit is resolved in the other party's favor.
Contract: A mutually binding legal relationship obligating the
seller to furnish supplies or services (including construction) and the
buyer to pay for them.
Contracting: Purchasing, renting, leasing, or otherwise
obtaining supplies or services from nonfederal sources. Contracting includes
the description of supplies and services required, the selection and solicitation
of sources, the preparation and award of contracts, and all phases of contract
administration. It does not include grants or cooperative agreements.
Contracting Officer: A person with the authority to enter
into, administer, and/or terminate contracts and make related determinations
and findings.
Contractor Team Arrangement: An arrangement in which (a)
two or more companies form a partnership or joint venture to act as potential
prime contractor; or (b) an agreement by a potential prime contractor with
one or more other companies to have them act as its subcontractors under
a specified government contract or acquisition program.
Copyright: The legal right granted to authors, composers,
artists and publishers to protect their thoughts and ideas for exclusive
publication, reproduction, sale and distribution of their works. Some of
the material on SBA's web site is copyrighted and it will be so stated in
the document. If it is not copyrighted we prefer that you link to our information
rather than taking it and posting it on your site. Our information changes
hourly and daily.
Corporation: A group of persons granted a state charter
legally recognizing them as a separate entity having its own rights, privileges,
and liabilities distinct from those of its members. The process of incorporating
should be completed with the state's secretary of state or state corporate
counsel and usually requires the services of an attorney.
Costs: Money obligated for goods and services received
during a given period of time, regardless of when ordered or whether paid
for.
Covenant: A prescription for action in a loan document.
Covenant not to Compete: The agreement by the seller of
a business, not to enter into competition with the buyer of the business
within a specific area for a specific period of time.
Credit: Time allowed for the payment of goods or services
sold on trust as well as confidence in the buyer's ability and intention
to fulfill their financial obligations.
Credit Period: Length of time allowed before the credit
buyer must pay for credit purchases.
Credit Policy: Actions taken by a business to grant, monitor
and collect the cash for outstanding accounts receivable.
Credit Rating: A grade assigned to a business concern to
denote the net worth and credit standing to which the concern is entitled
in the opinion of the rating agency as a result of its investigation.
Current Assets: Money, inventory and equipment that will be used
up in the short term -- usually within one year.
Current Ratio: The ratio of current assets to liabilities. Also
called "quick ratio."
Data Element: The basic unit of identifiable and definable
information. A data element occupies the space provided by fields in a record
or blocks on a form. It has an identifying name and value or values for
expressing a specific fact.
Data Universal Numbering System (DUNS): D&B's Data
Universal Numbering System, the D&B D-U-N-S Number, has become the standard
for keeping track of the world's businesses. The D&B D-U-N-S Number
is D&B's distinctive nine-digit identification sequence, which identifies
information products and services originating exclusively through D&B.
The D&B D-U-N-S Number is an internationally recognized common company
identifier in EDI and global electronic commerce transactions.
Debenture: Debt instrument evidencing the holder's right
to receive interest and principal installments from the named obligor. Applies
to all forms of unsecured, long-term debt evidenced by a certificate of
debt.
Debt Capital: Business financing that normally requires
periodic interest payments and repayment of the principal within a specified
time.
Debt Financing: The provision of long term loans to small
business concerns in exchange for debt securities or a note.
Debt to Total Assets Ratio: Total debt divided by total
assets.
Deed of Trust: A document under seal which, when delivered, transfers
a present interest in property. May be held as collateral.
Defaults: The nonpayment of principal and/or interest on the due
date as provided by the terms and conditions of the note.
Deferred Loan: Loans whose principal and or interest installments
are postponed for a specified period of time.
Depreciation Schedule: An accounting procedure for determining
the amount of value left in a piece of equipment.
Disabled: The "disabled" are individuals whose physical
or mental abilities prevent them from fully participating in normal activities
and/or functions of living.
Disaster: A disaster is a natural or human-caused occurrence
causing vast destruction and distress.
Disbursement: The actual payout to borrower of loan funds,
in whole or part. It may be concurrent with the closing, or follow it.
Disbursing Officer: An employee authorized to pay out cash
or issue checks in settlement of vouchers approved by a certifying officer.
Disclaimer: A statement regarding the responsibility and
liability for website content and certain presenters, contractors, speakeres,
etc. Choosing "More..." at the end of this definition will lead
you to SBA's Disclaimer Of Endorsement and Liability regarding the material
in the upcoming viewing screens.
Discount Interest Rate: One in which the amount of interest
is deducted from the face value of the loan with the borrower receiving
the remainder.
Divestiture: Change of ownership and/or control of a business
from a majority (non-disadvantaged) to disadvantaged persons.
Earning Power: The demonstrated ability of a business to
earn a profit, over time, while following good accounting practices. When
a business shows a reasonable profit on invested capital after fully maintaining
the business property, appropriately compensating its owner and employees,
servicing its obligations, and fully recognizing its costs, the business
may be said to have demonstrated earning power. Demonstrated earning power
is the foremost test of the business risk in pressing upon an application
for a loan. Easement: A right or privilege that a person may have on another's
land, as the right of a way or ingress or egress.
EDI: Electronic Data Interchange: Transmission of information between
computers using highly standardized electronic versions of common business
documents.
EEOC (Equal Employment Opportunity Commission): Small Business
Information - The U.S. Equal Employment Opportunity Commission (EEOC) enforces
the federal laws that prohibit employment discrimination on the basis of
an individual's race, color, religion, sex, national origin, age, or disability.
Electronic Data Interchange: Transmission of information
between computers using highly standardized electronic versions of common
business documents.
Electronic Federal Tax Payment System (EFTPS): Electronic Federal
Tax Payment System, provides an electronic system for paying federal taxes.
The IRS replaced the current system of processing taxes in compliance with
North American Free Trade Agreement (NAFTA) mandates, and now expedite the
availability of funds and investment decision making information to the
U.S. Treasury while providing flexible payment options to the business taxpayer
Emerging Small Business: A small business concern whose size is
no greater than 50 percent of the numerical size standard applicable to
the Standard Industrial Classification code assigned to a contracting opportunity.
Employees: The number of employees of a firm is its average
number of persons employed for each pay period over the firm's latest 12
months. Any person on the payroll must be included as one employee regardless
of hours worked or temporary status. The number of employees of a firm in
business under 12 months is based on the average for each pay period it
has been in business.
Enterprise: Aggregation of all establishments owned by
a parent company. An enterprise can consist of a single, independent establishment
or it can include subsidiaries or other branch establishments under the
same ownership and control.
Entrepreneur: One who assumes the financial risk of the initiation,
operation and management of a given business or undertaking.
Equity: An accounting term used to describe the net investment
of owners or stockholders in a business. Under the accounting equation,
equity also represents the result of assets less liabilities.
Equity Financing: The provision of funds for capital or
operating expenses in exchange for capital stock, stock purchase warrants
and options in the business financed, without any guaranteed return, but
with the opportunity to share in the company's profits. Equity financing
includes long-term subordinated securities containing stock options and/or
warrants. Utilized in SBIC financing activities.
Equity Partnership: A limited partnership arrangement for
providing start-up and seed capital to businesses.
Escrow Accounts: Funds placed in trust with a third party, by a borrower
for a specific purpose and to be delivered to the borrower only upon the
fulfillment of certain conditions.
Establishment: A single-location business unit, which may
be independent--called a single-establishment enterprise--or owned by a
parent enterprise.
Export Working Capital: The Export Working Capital (EWCP)
Program was designed to provide short-term working capital to exporters.
The EWCP is a combined effort of the SBA and the Export-Import Bank.
Fair And Reasonable Price: A price that is fair to both parties,
considering the agreed-upon conditions, promised quality, and timeliness
of contract performance. "Fair and reasonable" price is subject
to statutory and regulatory limitations.
Fair Market Value: What a qualified buyer will pay for
goods, services, or property.
FAQs: Frequently Asked Questions (FAQs)
Feedback: Your comments on the quality of the material
you receive at this website. Your feedback is important to us and we also
ask you to rate our site.
Financial Forecast: Projection of revenues and expenses
for the next one to five years.
Financial Plan: An outline for how to use the money
(capital) you have and how to raise the money you will need.
Financial Ratios: Measures of capital, including debt
to asset, current, and debt to worth. See individual definitions for "acid,"
"current," "quick" ratios.
Financial Reports: Reports commonly required from applicants
request for financial assistance, e.g.: Balance Sheet -A report of the
status of a firm's assets, liabilities and owner's equity at a given time.
Financing: New funds provided to a business, by either
loans or purchase of debt securities or capital stock.
Five "Cs" Of Credit: A system used by lending
officers to evaluate a loan application: Character, Cash Flow, Collateral,
Capitalization and Conditions. See individual definitions.
Fixed Assets: Equipment, buildings, etc., which are
purchased and used for long-term purposes.
Fixed Costs: Costs of doing business such as rent, utilities,
depreciation, taxes, etc., that remain generally the same regardless of
the amount of sales of goods or services.
Flow Chart: A graphical representation for the definition,
analysis, or solution of a problem, in which symbols are used to represent
operations, data, flow, equipment, etc.
Foreclosure: The act by the mortgagee or trustee upon
default, in the payment of interest or principal of a mortgage of enforcing
payment of the debt by selling the underlying security.
Franchising: A continuing relationship in which the
franchisor provides a licensed privilege to the franchisee to do business,
and offers assistance in organizing, training, merchandising, marketing
and managing in return for a consideration. Franchising is a form of business
by which the owner (franchisor) of a product, service or method obtains
distribution through affiliated dealers(franchisees). The product, method
or service being marketed is usually identified by the franchisor's brand
name, and the holder of the privilege (franchisee) is often given exclusive
access to a defined geographical area.
Freedom Of Information Act (FOIA): The FOIA, enacted
in 1966, generally provides that any person has a right of access to federal
agency records. This right of access is enforceable in court except for
those records that are protected from disclosure by the nine exemptions
to the FOIA.
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