Complete Business Funding Glossary – 2017 Edition

Complete Business Funding Glossary – 2017 Edition
Ronis Gracie
on March 1, 2017
Read in 4 min

When you were a kid, you probably had a special group of friends who stayed together no matter what. You may have dressed alike, walked the same way and played the same sports.

Without a doubt, you developed your own way of talking, a jargon that helped your group to distinguish itself from all others. You may be all grown up now, so much so that you are starting your own business, but some things haven’t changed.

If you’re looking to access funding to get your startup off the ground, you need to learn to talk like the people who already have the capital: the “in” crowd. For your convenience, we’ve put together a complete list of funding lingo that will help you communicate in the business investment world.

Accredited investor: a wealthy person who might potentially want to invest in your company. If you are courting someone to put considerable money into your venture, you must legally show that they can afford to do so. The SEC stipulates that the person must have an income of $200,000 in the last two years. If the person is married, joint income must be $300,000 or more during those two years. There must also be a reasonable expectation of similar income in the upcoming year. Alternatively, the person’s or couple’s net worth must exceed $1 million not including primary residence.

Advertorial: also known as advertainment, this refers to paid content designed specifically to simulate a real story. Its true purpose is to pitch a product or service.


Bootstrapping: borrowing or being gifted with cash from friends and family to help you get your business off the ground.

B2B: one business sells products to another.

B2C: a business sells to general consumers.

Burn Rate: this refers to the speed at which you are going through your funds before you break even or begin to make a profit.


Churn Rate: this term is specific to subscription-based businesses and refers to the loss of people who at one time subscribed but later left.

Cottage Business: an enterprise that is comfortably small but not prone to large expansion. Generally, businesses like this are not good candidates for venture capital.


Deck: also known as a pitch deck, this is a PowerPoint presentation consisting of 10 slides that thoroughly describes your business in a polished and concise way. Because a lot hinges on your deck, it is in your best interest to get expert feedback and even hire a graphic designer to assist you in preparing it.

Disruptive technology: a game changer that revolutionizes an industry or the way things are done. Think Model T, McDonald’s and Uber.


Exit Strategy: the way you plan to one day sell your company and benefit your investors. It might be hard to believe, but your time will come.


Freemium: you give a product away at no cost but then try to upsell additional features to your customer.


Gamification: to sell a product by adding an element of fun or games with accompanying incentives and prizes.


IP: intellectual property. If you have a product or concept that is unique, it truly is in your best interest to secure a federal patent, which will run you around $25,000. Imagine what would have happened if the makers of Coke had not done so.

Iterate: make an attempt, adjust for error and try again.

Invoice financing business loans: a lending mechanism that allows you to sell your outstanding invoices to a lender. In return, you receive a high percentage of the invoice amount as ready cash. You pay the lender back, plus fees, when your customer resolves his bill.


Launch: sometimes also known as activation, this term refers to starting a company or opening your website for business.

Leverage: to use something to your advantage. It might refer to business contacts, technology or an area of expertise.

Line of Credit Business Loan: a lending mechanism that works similar to a traditional credit card to grant your business fast cash. The lender gives you a maximum amount that you cannot exceed, and you only get charged interest and fees when you actually access the cash.

Loss Leader Pricing: this is a calculated risk. You intentionally sell a product at a loss to a customer in hopes of repeat business from that person.

Low Hanging Fruit: the easiest thing your business can do to make money.


Market Penetration: how fast are you capturing your potential customers? What percentage of the entire market are you attracting?

Merchant Cash Advance Loan: a lending mechanism that enables you to use your daily credit card proceeds to get fast cash.

Monetize: how you are making money or plan to do so.

MVP: minimum viable product. This term refers to the stripped-down, initial version of your product that gives proof to your investors that it really does exist and has the real potential to make money.


Pivot: to change directions as a company. This term may also refer to using a known concept in a completely new and different way.


Ramen profitable: making enough money to cover the basic living expenses of everyone working for the company.

ROI: return on investment or what the investor can expect to get in return for the money he or she put into the business.

Runway: how long you have until you are completely out of money.


SBA Loan: money provided to you via a lender who has been given incentives by the federal Small Business Administration. These loans come in various forms and can help start-ups and established businesses alike. Just be sure that your documentation is thorough, your credit is good and that you have some collateral to lay down.

Scaleable: something having the potential to become very big because there is a market for a product.

Sweat equity: exchanging shares of your company for expert services that you cannot afford to actually pay for.


Traction: proof that customers are so excited about your product or service that they are buying it.

Traditional Long-Term Business Loans: borrowing a fixed amount of money for a set period of time with a specific interest rate. If you have collateral to provide and an established credit history, this loan can be an excellent option.


Valuation: the value of your company. Pre-money valuation is what you are worth before investments; post-money valuation refers to your value after investments.

Value Prop: what makes your products unique and attractive to potential customers.

VC: venture capital or venture capitalist. This refers to the cash you are looking for or the person wielding the wallet.


You might no longer be asking would-be intruders for the password to enter your secret treehouse… and you’d probably be too big to climb into it yourself anyway!

Nevertheless, jargon is still an important part of your life and your future success as an entrepreneur. Use it to your advantage and let these buzz words give you entry into the world of the rich and powerful.

Ronis Gracie Finance Journalist

A serial entrepreneur experienced with building several small companies from the ground up and consulting for many others, Ronis understands the finer points of small business financing. He’s passionate about small business & is committed to simplifying small business lending for others.

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