Glossary
Corporate Finance Terminology
Understand the key terms and concepts used in corporate and property finance.
Browse our comprehensive glossary of finance terms to better understand corporate and property lending.
A
Asset-Backed Lending
Loans secured against tangible assets such as property, vehicles, equipment, or other valuable items. The asset serves as collateral, allowing borrowers to access capital based on the value of what they own.
Arrangement Fee
A one-time fee charged by lenders to cover the administrative costs of setting up a loan. Typically expressed as a percentage of the loan amount.
B
Bridging Loan
Short-term finance designed to "bridge" a gap until long-term funding can be secured or an asset is sold. Commonly used in property transactions.
Break Costs
Charges applied if a borrower repays a loan before the agreed minimum term or fixed period ends.
D
Development Finance
Funding specifically for property development projects, covering land purchase, construction costs, and related expenses. Released in stages as the project progresses.
Day 1 Funding
The initial loan advance made when a development finance facility is first drawn. Typically covers land purchase and initial project costs.
E
Exit Strategy
A borrower's plan for repaying a loan, such as selling the property, refinancing to a long-term mortgage, or using business profits.
Equity Finance
Raising capital by selling shares in a business rather than borrowing. Investors receive ownership in exchange for their investment.
G
GDV (Gross Development Value)
The estimated market value of a property or development once completed. Used to calculate loan-to-value ratios for development finance.
Gross Profit
The difference between the GDV of a development and its total costs (land, build, finance, professional fees). Represents the developer's profit before tax.
I
Invoice Finance
Lending against a company's outstanding invoices to release cash flow before customers pay. Includes factoring and invoice discounting.
Interest Roll-Up
When interest charges are added to the loan balance rather than paid monthly. Common in development and bridging finance where cash flow is limited during the project.
L
LTV (Loan to Value)
The ratio of a loan amount to the value of the asset securing it, expressed as a percentage. For example, a £700,000 loan on a £1,000,000 property is 70% LTV.
LTC (Loan to Cost)
The ratio of the loan to the total development costs, including land purchase, construction, and fees. Commonly used in development finance.
M
Mezzanine Finance
Subordinated debt that sits between senior debt and equity. Higher risk for the lender, resulting in higher interest rates, but allows developers to achieve higher leverage.
Monitoring Surveyor
An independent professional appointed by the lender to inspect development progress and certify stage completion before releasing funds.
P
Private Debt
Lending from non-bank institutions such as private credit funds, family offices, or specialist lenders. Often more flexible than traditional bank finance.
Personal Guarantee (PG)
A legal commitment from an individual to repay a business loan if the company cannot. Makes the guarantor personally liable for the debt.
R
Retained Profit
In development finance, the portion of project profit held by the lender until the development completes successfully. Released upon sale or refinance.
Refinance
Replacing an existing loan with a new one, typically to secure better terms, release equity, or move from short-term to long-term funding.
S
Senior Debt
First-ranking debt with priority claim on assets in case of default. Considered lower risk and typically has lower interest rates than subordinated debt.
Securities-Backed Lending
Loans collateralized by investment portfolios such as stocks, bonds, or mutual funds. Allows borrowers to access liquidity without selling investments.
T
Term Loan
A loan with a fixed repayment schedule over a specified period. Can be short-term (under 3 years) or long-term (over 3 years).
V
Venture Debt
Debt financing for venture-backed startups. Provides growth capital without equity dilution, typically alongside equity investment rounds.
Valuation
Professional assessment of a property or asset's market value, conducted by a RICS-qualified surveyor for lending purposes.
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