What is an Acquisition Loan?An acquisition loan is money borrowed specifically to purchase a company or asset. How Does an Acquisition Loan Work?The basic idea behind acquisition loans is that the
What is a Back to Back Loan?With back to back loans two parties, each in a different country, lend money to each other in an effort to hedge against currency risk. They are also called "parallel
  A balloon loan is a loan with a large payment made near or at the end of the loan term.   Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid
What is a Bridge Loan?A bridge loan is a short-term, high-interest loan that provides a quick source of cash for commercial or individual needs.  It is called a bridge loan because it serves as
What is a Broker Loan?A broker loan is a loan that the lender can obligate the borrower (a brokerage house) to repay at any time. How Does a Broker Loan Work?Also known as a call loan or demand loan
What is a Bullet Loan?A bullet loan is a loan that does not amortize over time and must be repaid with a single large payment (also called a balloon payment) at the end of the term of the loan.How
What is a Call Loan?A call loan is a loan that the lender may force the borrower to repay at any time.How Does a Call Loan Work?Also called a broker loan or demand loan, a call loan is granted to a
What is the Call Loan Rate? The call loan rate, also known as the "broker loan rate", is the interest rate charged on the call loans used by brokerage houses to fund clients' margin trading
What is a Car Title Loan?A car title loan is a short-term loan where a borrower uses the title of his or her car as collateral for the loan. How Does a Car Title Loan Work?Loans for car title loans
What is a Cash Flow Loan?A cash flow loan is a loan, usually to a company, intended to meet daily cash needs during times when cash flow is inconsistent. These loans are short-term in nature;
What is a College Work Study Program (CWSP)?The College Work Study Program (CWSP) is a type of financial aid that a school awards to a student who has completed a FAFSA and has demonstrated a
What Is a Construction Loan?Sometimes referred to as a “self build loan,” a construction loan is a loan that is used to finance the construction of a new home or some other type of real estate
What is a Demand Loan?A demand loan is a loan where the lender may require the borrower (a brokerage house) to repay at any time. These loans may also be called a broker loan or call loan, What
What Is the Discount Rate?The discount rate, also known as the Fed discount rate, is the interest rate charged to commercial banks and other institutions on loans from a Federal Reserve bank. This
What is a Guaranteed Loan?With a guaranteed loan, a party other than the borrower has promised to take responsibility if the borrower cannot make the payments. The entity assuming this responsibility
What is a Hard Loan?A hard loan is a loan between a lender and borrower in different countries that is denominated in a hard currency.How Does a Hard Loan Work?For example, a hard loan from a lender
What is a Hard Money Loan?A hard money loan is a short-term loan that uses the value of real property owned by the borrower as its collateral.How Does a Hard Money Loan Work?A hard money loan
What is an Installment Loan?An installment loan is a type of loan that is repaid in periodic installments (usually monthly payments) that include principal and interest. How Installment Loans WorkAn
What is a Loan From the Bank?A loan is a sum of money that is borrowed by an individual or business from a lender (typically a financial institution or another party with money). How Does a
What is a Loan Loss Provision?A loan loss provision is an expense that is reserved for defaulted loans or credits.  It is an amount set aside in the event that the loan defaults.How Does a Loan
What are Loan Loss Reserves?Loan loss reserves are accounting entries banks make to cover estimated losses on loans due to defaults and nonpayment.How Do Loan Loss Reserves Work?Let's assume Bank
What Is a Loan Officer?  There comes a time in everyone’s life where they need to finance a major purchase. It may be a car loan, a line of credit for a business, or even the cornerstone of
What is Loan Sharking? What are Loan Sharks?Loan sharking refers to predatory lending practices by individuals or organizations (aka loan sharks) that charge extraordinarily-high interest rates. How
What is Loan Syndication?Loan syndication is a lending process in which a group of lenders provide funds to a single borrower. How Loan Syndication WorksWhen a project is unusually large or complex
What is a Loan-to-Value (LTV) Ratio?The loan-to-value (LTV) ratio is a calculation that helps lenders measure mortgage risk. The formula to calculate the loan-to-value ratio is: Loan to value =
What is a Negative Amortizing Loan?Negative amortizing loans are loans in which the loan's principal balance increases even though the borrower is making payments on the loan. How Does a Negative
What is a Negatively Amortizing Loan?Negatively amortizing loans are loans in which the loan's principal balance (usually a mortgage) increases even though the borrower is making payments on the loan
What is a Nonperforming Loan?A nonperforming loan is a loan that is close to defaulting or is in default.How Does a Nonperforming Loan Work?Let's assume Bank XYZ lent $1,000,000 to Company ABC,
What is a Payday Loan? A payday loan is an advance on one’s paycheck. Independent lenders and some large banks offer the service. How Does a Payday Loan Work? John Doe’s checking account has
What is a Signature Loan?A signature loan is a loan offered by banks or other financial institutions that does not require collateral. Signature loans are also known as personal or unsecured loans
What is a Syndicated Loan?A syndicated loan is a loan made by a group of lenders who share or participate in a specific loan given to a project.How Does a Syndicated Loan Work?A project may require
What is a Take-Out Loan? A take-out loan is a loan that replaces another loan. How Does a Take-Out Loan Work? Let's say Company XYZ is a real estate development company. It owns a piece of
What is a Tax Refund Anticipation Loan (TRAL)?A tax refund anticipation loan (TRAL) is a short-term loan from a third party. The loan is collateralized by the borrower's pending tax refund. How Does
What is a Teaser Loan?A teaser loan is usually an adjustable-rate mortgage (ARM) with an artificially low initial interest rate. How Does a Teaser Loan Work?The interest rate on the ARM corresponds
What is a Term Loan?A term loan has a set maturity date and usually has a fixed interest rate. How Does a Term Loan Work?Let's say Company XYZ wants to borrow $1 million to build a factory. It meets
What is an Unsecured Loan? An unsecured loan is debt that does not have any collateral attached. How Does an Unsecured Loan Work? Let’s assume you would like to borrow $100,000 to start a
What is a Wet Loan?A wet loan is a mortgage in which the borrower gets the funding before all the paperwork is done. How Does a Wet Loan Work?Let's assume John Doe wants to buy the house for sale at
What is a Working Capital Loan?A working capital loan is a loan used by companies to cover day-to-day operational expenses.How Does a Working Capital Loan Work?In many cases, companies are unable to