Glossary

Lending terms, in plain English

193 terms from bank, credit union and SBA lending. Each one says what it means, how it shows up in the public data on this site, or plainly that it does not, and where to look instead.

A

A&D loan Construction: One loan that pays to buy land and to develop it into finished lots.
Absorption Construction: The pace at which a market leases or sells available space, lots or homes over a set period.
ADC loan Structure: A loan to acquire land, develop it or build on it, repaid from the sale, lease-up or refinance of the finished project. Banks report these as construction, land development and other land loans.
Adjustable rate loan Structure: A loan whose interest rate resets on a schedule to an index, such as prime or SOFR, plus a fixed spread, so the payment can rise or fall over the term.
Adverse action notice Regulation: The notice a lender must give under Regulation B when it refuses credit in substantially the amount or on the terms requested, with the reasons or the right to ask for them.
After repair value (ARV) Property: The estimated market value of a property once a planned renovation is finished, used to size fix-and-flip and other renovation loans.
Agency lender Lender types: A lender authorized to make apartment loans that Fannie Mae or Freddie Mac then buys or backs, under those companies' rules instead of the lender's own.
Allowance for credit losses Regulation: The reserve a lender builds through charges against earnings for the loan losses it expects, which brings the loans on its books down to the amount it expects to collect.
Amortization Structure: The schedule on which a loan's principal is paid down through regular payments. The amortization period sets the payment size and can be longer than the loan's term.
Annual service fee (SBA lender's fee) SBA: A yearly fee a 7(a) lender pays SBA on the outstanding balance of the guaranteed portion of each loan. On a 7(a) loan the lender may not pass it on to the borrower.
Appraisal Documents: A written, independent opinion of a property's market value as of a specific date, prepared by a qualified appraiser.
As-complete value Construction: An appraiser's estimate of what a property will be worth on the date construction is expected to be finished.
As-is value Property: The market value of a property in its actual physical condition, use and zoning on the appraisal's effective date, with no credit for planned work.
As-stabilized value Property: An appraiser's estimate of what a property will be worth on the future date it is projected to reach stabilized occupancy.
Assessment area Regulation: The geographic area a bank draws around its main office, branches and deposit-taking ATMs, inside which regulators judge its record under the Community Reinvestment Act.

B

Balloon payment Structure: The lump sum of remaining principal due at the end of a loan's term when the regular payments did not pay the loan off in full.
Blanket lien Structure: A security interest that covers all or nearly all of a borrower's assets, present and future, instead of one named piece of collateral.
Borrowing base Underwriting: The most a lender will advance on a line of credit at a given time, set as a percentage of the eligible receivables, inventory or other collateral pledged.
Bridge loan Structure: A short-term loan that carries a newly built or newly bought commercial property until it is leased and earning enough to be sold or refinanced with a permanent loan.

C

Call report Data: The financial report every bank and savings association files with its federal regulator each quarter, with a balance sheet, an income statement and schedules that break out loans by kind.
Capital and surplus Regulation: The capital base a national bank's lending limit is measured against: tier 1 and tier 2 capital plus the part of the loan loss allowance that tier 2 leaves out.
Capitalization rate (cap rate) Underwriting: A property's stabilized net operating income divided by its price or value. Divide income by the cap rate and you get an estimate of value.
Carve-out guaranty Underwriting: A guaranty on a non-recourse loan that makes the guarantor personally liable only if the borrower commits listed acts, such as fraud or a voluntary bankruptcy.
Certified development company (CDC) SBA: A lender certified by SBA to package, close and service 504 loans and to issue the debenture that funds up to 40 percent of a project.
Change of ownership loan (SBA 7(a)) SBA: A 7(a) loan that finances buying an existing business or an owner's share of it. SBA requires an independent valuation, 10 percent equity and, for a new owner, debt service coverage of 1.25 to 1.
CMBS conduit loan Lender types: A commercial property loan made to be pooled with other loans and sold to investors as commercial mortgage-backed securities, not kept by the lender that made it.
Commercial mortgage broker Lender types: A commercial mortgage broker is a person or firm that takes a borrower's loan request to lenders and is paid a fee, without lending its own money.
Commitment letter Documents: A commitment letter is the lender's written, binding promise to make a loan on stated terms, if the conditions listed in the letter are met by a set date.
Common bond Credit unions: The tie that members of a credit union share. Federal law names two kinds, occupation and association; a community charter is defined by place instead.
Community bank Lender types: A community bank is a smaller bank that takes deposits and lends mostly in the area around its offices, and decides on loans close to home.
Community development financial institution (CDFI) Lender types: A lender the Treasury's CDFI Fund has certified as having a primary mission of community development and serving a defined target market.
Community development loan Regulation: Under the Community Reinvestment Act rules, a loan whose primary purpose is community development, such as affordable housing or financing for small businesses and farms.
Community Reinvestment Act (CRA) Regulation: The 1977 federal law that directs bank regulators to assess how well each bank helps meet the credit needs of its local communities, including low- and moderate-income neighborhoods.
Completion guaranty Construction: A guarantor's promise to the lender that a project will be finished and its bills paid, without a promise to repay the whole loan.
Construction and land concentration Regulation: A bank's construction, land development and other land loans measured against its capital. The 2006 guidance uses 100 percent of total capital as a screen for closer review.
Construction draw Construction: One advance of construction loan money, released after the lender confirms that the work it pays for is in place.
Construction loan Construction: A short-term loan that pays for building or renovating a property, advanced in stages as work is finished and repaid from a sale or a permanent loan.
Contingent liability Underwriting: A debt a person or company would owe only if something happens, most often a guaranty of someone else's loan that the borrower then stops paying.
Cost overrun Construction: The amount by which a construction project costs more than its budget, which the borrower is normally expected to cover.
CRE concentration Regulation: A bank's commercial real estate loans measured against its capital. Federal guidance from 2006 flags 300 percent of total capital, with 50 percent growth in 36 months, for closer review.
Credit committee Underwriting: A credit committee is the group inside a lender that decides on loans above the amount a single loan officer is allowed to decide alone.
Credit elsewhere test (SBA) SBA: SBA's rule that a loan is eligible only if the business cannot get some or all of the money on reasonable terms elsewhere. The lender must certify it and explain why in its credit memo.
Credit union Lender types: A member-owned cooperative lender. It lends to the people and businesses inside its field of membership and files a call report with NCUA every quarter.
Credit union service organization (CUSO) Credit unions: A company that credit unions own or lend to, set up mainly to provide services to credit unions or their members. Some underwrite and service business loans.
Credit union single borrower limit Credit unions: The most a credit union may lend in commercial loans to one borrower or group of associated borrowers: the greater of 15 percent of its net worth or $100,000.
Cross-collateralization Structure: An arrangement in which two or more properties or assets secure the same loan, or each secures the borrower's other loans, so the lender can look to any of them if one loan defaults.

D

Debenture (SBA 504) SBA: The bond a certified development company issues to fund SBA's share of a 504 project. SBA guarantees it in full, and debentures are normally sold once a month.
Debt fund Lender types: A private investment fund that makes or buys loans with money raised from investors, instead of taking deposits the way a bank or credit union does.
Debt schedule Documents: A table of every loan a business or borrower owes, showing for each the lender, balance, payment, maturity date and collateral.
Debt service coverage ratio (DSCR) Underwriting: Net operating income, or business cash flow, divided by the loan payments due in a year. It shows how many dollars come in for each dollar of debt service.
Debt yield Underwriting: Net operating income divided by the loan amount, shown as a percent. It measures how much income stands behind each dollar lent, whatever the rate or term.
Defeasance Structure: A way to free a property from a loan before maturity by swapping the collateral: the borrower pledges securities that make the remaining payments, and the lien on the property is released.
Delegated authority (SBA lending) SBA: Authority SBA grants a lender to make its own eligibility and credit decision before SBA issues a loan number: PLP and SBA Express for 7(a), ALP and PCLP for 504.
DSCR loan Lender types: A business-purpose mortgage on a rental home of one to four units that is sized mainly on the property's rent against its payment, not on the borrower's personal income.
DUS (Delegated Underwriting and Servicing) Lender types: Fannie Mae's multifamily program, in which authorized lenders underwrite, close and service apartment loans under Fannie Mae's guide and keep a share of any loss.

E

EBITDA Underwriting: Earnings before interest, taxes, depreciation and amortization: a business's operating profit before financing costs, income taxes and non-cash charges.
Effective gross income (EGI) Underwriting: The income a property is expected to produce after subtracting an allowance for vacancy and for rent that will not be collected.
Eligible passive company (EPC) SBA: A separate company that owns the real estate or equipment and leases all of it to the operating business, allowed under SBA rules when strict conditions are met.
Entitlements Construction: The government permissions a site needs before it can be built on, such as zoning, plan sign-offs and permits.
Equipment financing Structure: A loan used to buy business equipment, secured by that equipment and repaid over a term tied to how long the equipment will be useful.
Equity injection (SBA) SBA: The cash or other equity an owner puts into an SBA-financed project. A 7(a) start-up or business purchase needs at least 10 percent of total project cost; a 504 project needs 10, 15 or 20 percent.

F

Farm Credit association Lender types: A borrower-owned cooperative lender in the Farm Credit System that makes loans to farmers, ranchers and other eligible rural borrowers.
Farm operating loan Farm: A short-term loan or line that pays a farm's yearly costs, such as seed, feed, fertilizer and rent, and is repaid when the crop or livestock is sold.
Farmer Mac Lender types: The Federal Agricultural Mortgage Corporation, a federally chartered company that buys and guarantees farm and rural loans from lenders so they can make more of them.
Farmland loan Farm: A loan secured by farm or ranch land and its improvements, usually made to buy or refinance the land and repaid over many years from farm income.
FDIC certificate number Data: The unique number the FDIC assigns to each bank and savings institution, used to identify it in FDIC records.
FHA 221(d)(4) loan Lender types: A HUD program that provides federal mortgage insurance on a private lender's loan to build or substantially rehabilitate rental apartments.
FHA 223(f) loan Lender types: A HUD program that provides federal mortgage insurance on a private lender's loan to buy or refinance an existing apartment property of five or more units.
FHLB advance Regulation: A loan from a Federal Home Loan Bank to one of its member institutions, made under a written agreement and fully secured by collateral such as mortgage loans.
Field of membership Credit unions: The set of people and organizations a credit union's charter lets it serve. A borrower has to fall inside it and join before the credit union can lend.
Finished lots Construction: Lots with streets and utilities in place, ready for a building to be started.
Fix-and-flip loan Lender types: A short-term business-purpose loan to buy a house, renovate it and sell it, repaid from the sale instead of from monthly income.
Fixed charge coverage ratio (FCCR) Underwriting: A business's earnings before interest, taxes, depreciation and amortization, divided by its fixed charges such as debt payments, capital spending and cash taxes.
Fixed rate loan Structure: A loan whose interest rate is set at closing and does not change for a stated period, often the whole term, so the principal and interest payment stays the same.
Freddie Mac Small Balance Loan (SBL) Lender types: Freddie Mac's fixed-rate program for apartment loans of $10 million or less, delivered through its Optigo lenders. Freddie Mac now titles it Conventional Small.
FSA guaranteed loan Farm: A farm loan made and serviced by a bank, credit union or Farm Credit lender, on which the USDA Farm Service Agency covers most of the lender's loss if the borrower defaults.

G

Global cash flow Underwriting: The combined cash flow of a borrower, its owners and their other businesses, set against all of the debt payments those same parties owe.
Ground lease Structure: A long lease of land on which the tenant owns or builds the improvements. A lender to the tenant takes a lien on the leasehold, not on the land.
Guarantor Underwriting: A person or company that promises to repay a loan if the borrower does not. On a loan to an LLC or corporation, the guarantor is usually an owner.

H

Hard money loan Lender types: A short-term real estate loan from a private or non-bank lender that is decided mainly on the property's value and the exit plan, not on the borrower's income.
HMDA loan register (LAR) Data: The loan-by-loan file a mortgage lender keeps and reports each year under HMDA, with one row for every covered loan and loan request and what happened to it.
Home Mortgage Disclosure Act (HMDA) Data: The federal law that makes mortgage lenders collect and publish loan-level data on loans secured by a dwelling, including apartment buildings and 1-4 unit rentals.
Horizontal development Construction: The work that turns raw land into buildable lots: grading, streets, sewer and water lines and utilities, before any building goes up.
House limit Underwriting: A cap a bank sets for itself, below the legal lending limit, on how much it will hold for one borrower, one property type or one market.
HVCRE exposure Regulation: A land, development or construction loan that a bank must carry at a 150 percent risk weight under the capital rule unless the project meets an exemption, such as 15 percent borrower capital.

I

Intercreditor agreement Documents: A contract between two or more lenders to the same borrower that sets whose lien and payments come first and what each may do if the borrower defaults.
Interest reserve Construction: An account set up by the lender that pays the loan's interest during construction and lease-up, usually funded as a line in the loan budget.
Interest-only (IO) Structure: A loan, or a stretch of a loan's term, in which payments cover interest alone and the principal balance does not go down.
Investor 1-4 unit property Property: A house, duplex, triplex or fourplex held as a rental or for resale, not lived in by the borrower. It has fewer than five units, so it is not multifamily.
IRS tax transcript (Form 4506-C and 8821) Documents: The IRS record of a filed return that an SBA lender orders itself, with Form 4506-C through IVES or Form 8821, to check the numbers it was given.

L

Land loan Construction: A loan to buy land that has not been developed, repaid from other income or from a later sale or development loan.
Lease-up Property: The period after a building is finished or renovated while it fills with tenants and its income climbs toward a stable level.
Legal Entity Identifier (LEI) Data: A unique 20-character code, issued under the ISO 17442 standard, that identifies a legal entity anywhere in the world.
Legal lending limit Regulation: The most a bank may have outstanding to one borrower by law. For national banks it is 15 percent of capital and surplus, plus 10 percent more when the extra is fully secured by readily marketable collateral.
Letter of intent (LOI) Documents: A letter of intent is a short, mostly non-binding letter that sets out the main terms two parties expect to agree on before the full documents are drafted.
Life company lender Lender types: A life insurance company that makes long-term, fixed-rate commercial mortgage loans with its own investment money and usually keeps them.
Line of credit Structure: A commitment from a lender to advance money up to a set limit, which a business can draw, repay and draw again as its cash needs rise and fall.
Loan constant Underwriting: One year of loan payments divided by the loan amount, shown as a percent. It folds the interest rate and the amortization period into a single number.
Loan covenant Structure: A promise in a loan agreement that the borrower will do certain things, or will not, for as long as the loan is outstanding, such as keeping a minimum debt service coverage ratio.
Loan participation Structure: A loan in which other lenders buy shares from the lender that made it, under a written agreement that keeps the first lender in the loan for its whole life.
Loan sale Structure: A lender's transfer of all or part of a loan to another party, so that the buyer, not the lender that made the loan, holds that share of it.
Loan servicing Structure: The work of running a loan after it closes: collecting payments, releasing draws, tracking the borrower's reporting and collateral, and handling changes or a default.
Loan syndication Structure: Loan syndication is a group of lenders making one loan together under a single credit agreement, with one lender arranging it and acting as agent.
Loan-to-cost ratio (LTC) Underwriting: The loan amount divided by the total cost of a project: the property plus all construction costs. It shows how much of the budget the lender funds.
Loan-to-deposit ratio Underwriting: A lender's total loans divided by its total deposits, which shows how much of the money customers keep with it is already lent out.
Loan-to-value ratio (LTV) Underwriting: The loan amount divided by the value of the property securing it. A $700,000 loan on a property valued at $1,000,000 is 70 percent loan to value.
Loans to assets Underwriting: A lender's total loans divided by its total assets, which shows how much of its balance sheet is in loans and not in cash, securities and other holdings.
Loans to one borrower Regulation: The total a bank counts against its lending limit for one borrower: loans, binding commitments and standby letters of credit, plus loans to related parties that the rules combine.
Lot takedown Construction: A builder's purchase of finished lots from a developer in batches on a set schedule, in place of buying them all at once.
Low-income designation Credit unions: An NCUA status for a federal credit union when a majority of its members are low-income by the rule's test. It lifts the cap on member business loans.

M

Manufactured housing community Property: A residential development of lots, or pad sites, where manufactured homes sit, along with the roads, utilities and amenities that serve them.
Member business loan (MBL) Credit unions: A credit union's business-purpose loan to one of its own members. The total of these loans is capped by federal law; loans to non-members are counted separately.
Member business loan cap Credit unions: The legal ceiling on a credit union's member business loans: 1.75 times its net worth, or 1.75 times the net worth a well capitalized credit union must hold, if that is less.
Mini-perm Structure: A medium-term loan, shorter than a permanent loan, that a bank makes on a finished property so the owner has time to lease it up before long-term financing.
Multifamily (5+ units) Property: Residential rental property with five or more units. Banks, credit unions and HMDA all draw the line between four units and five.

N

NCUA 5300 call report Data: The financial report every natural person credit union files with NCUA each quarter. It is the public source for what a credit union lends and holds.
NCUA charter number Data: The number NCUA uses to identify a credit union in its records and call report files. It is the surest way to tell apart credit unions with similar names.
Net operating income (NOI) Underwriting: A property's annual income minus its operating expenses, before loan payments, income taxes and depreciation. It is the top number in DSCR and debt yield.
Net worth ratio Credit unions: A credit union's net worth divided by its total assets, as a percentage. NCUA treats 7 percent or more as well capitalized and 6 percent as adequately capitalized.
NNN lease (triple net) Property: A lease where the tenant pays rent plus the property's operating costs, typically taxes, insurance and maintenance. The exact split is whatever the lease says.
Non-bank lender Lender types: A non-bank lender is a company that makes loans but does not take deposits, so it is not a bank, a savings institution or a credit union.
Non-owner-occupied commercial real estate Property: Commercial property where half or more of the loan's repayment comes from rent paid by tenants unrelated to the owner.
Non-recourse loan Underwriting: A loan the lender can collect only from the property pledged for it, not from the guarantor personally, except for listed bad acts.

O

Optigo Lender types: Freddie Mac's name for its multifamily loan products and for the network of lenders it buys those apartment loans from.
Originating lender Structure: The lender the borrower first contracts with, which then sells participations in the loan to other lenders and stays in the loan itself.
Originator Lender types: An originator is the person, or the lender, that brings in a loan request and carries it through to closing.
Owner-occupied commercial real estate Property: Commercial property where the loan is repaid mainly by the business that occupies it, not by rent from unrelated tenants.

P

Participant lender Structure: A lender that buys a share of a loan another lender originated. It takes part of the credit exposure, usually without dealing with the borrower directly.
Payment and performance bond Construction: Two surety bonds on a construction contract: one backs payment of subcontractors and suppliers, the other backs completion of the work.
Permanent loan Structure: A longer-term loan on a finished, leased property that replaces the construction or bridge loan and is repaid from the property's income.
Personal guaranty Underwriting: A signed promise by an individual, usually an owner, to repay a business or real estate loan personally if the borrowing company does not.
Phase I environmental site assessment Documents: A study of a property's records, history and visible condition by an environmental professional to identify likely contamination, done without sampling soil or water.
Portfolio lender Lender types: A portfolio lender is a lender that keeps the loans it makes on its own books instead of selling them to an investor.
Post-closing liquidity Underwriting: The cash and other liquid assets a borrower or guarantor still holds after paying the down payment and closing costs on a loan.
Preferred Lenders Program (PLP) SBA: A status SBA gives some 7(a) lenders to decide eligibility and credit on their own authority, with SBA reviewing a loan only at purchase or oversight.
Prepayment penalty Structure: A charge a loan agreement sets for paying off some or all of the principal before a stated date. Common forms are a step-down schedule, yield maintenance and defeasance.
Prime rate Structure: A base rate banks post for pricing short-term business loans. The Federal Reserve reports it as the rate posted by a majority of the 25 largest U.S. commercial banks.
Pro forma Documents: A projection of a property's or project's future income, expenses and cash flow, built on stated assumptions and not on past results.

R

Rate floor Structure: The minimum interest rate a variable rate loan can charge. When the index plus the spread falls below the floor, the borrower pays the floor.
Rate lock Structure: A lender's commitment to hold a quoted interest rate for a set number of days before closing, often backed by a deposit the borrower can lose if the loan does not close.
Recourse Underwriting: A lender's right to collect a loan from the borrower or guarantor personally, beyond the property or other collateral pledged for it.
Regulation B Regulation: The federal rule, 12 CFR part 1002, that carries out the Equal Credit Opportunity Act: it bars credit discrimination on prohibited bases and sets notice rules, for business credit as well as consumer credit.
Regulation C Regulation: The Consumer Financial Protection Bureau rule, 12 CFR part 1003, that carries out the Home Mortgage Disclosure Act and sets which lenders report and what they report.
Rent roll Documents: A list of every unit or space in a property showing the tenant, the rent, the lease dates and what is vacant, as of a stated date.
Replacement reserves Underwriting: Money set aside, or an expense assumed by the lender, for periodic replacement of capital items such as roofs, heating and cooling systems and parking lots.
Retainage Construction: The share of each construction payment that is held back until the job is finished and the liens are cleared.
RSSD ID Data: The unique number the Federal Reserve assigns to a bank, credit union, holding company or other financial entity as its identifier in Federal Reserve records.

S

Savings institution Lender types: A savings institution is a savings association or savings bank: a deposit-taking lender whose charter grew out of home mortgage lending.
SBA 504 loan SBA: A fixed-asset financing in which a bank lends 50 percent or more, a certified development company funds up to 40 percent through an SBA debenture, and the borrower puts in at least 10 percent.
SBA 7(a) loan SBA: SBA's main business loan program. A lender makes the loan and SBA guarantees part of it: up to 85 percent of $150,000 or less and 75 percent of more, on loans up to $5,000,000.
SBA 7(a) Small loan SBA: A 7(a) term loan of $350,000 or less. The lender may use its own forms and credit memo for much of the file, and the debt service coverage floor is 1.10 to 1.
SBA agent (packager, referral agent or broker) SBA: Anyone who represents an applicant or a lender in dealings with SBA for pay: an attorney, accountant, consultant, packager or broker. SBA does not require a borrower to use one.
SBA CAPLines SBA: SBA's 7(a) lines of credit for short-term operating needs, in four types: Working Capital, Contract, Seasonal and Builders. The most for one line is $5,000,000.
SBA collateral requirements (7(a)) SBA: SBA's rules for what a 7(a) lender must take as collateral and how each asset counts, such as improved real estate at 85 percent of value. A request must not be declined only for thin collateral.
SBA Express loan SBA: A 7(a) loan of $500,000 or less that only a lender with SBA Express authority can make, on its own credit decision, with a 50 percent SBA guaranty.
SBA Form 159 (fee disclosure) Documents: The form that discloses to SBA any fee paid to an agent such as a packager or broker, and a lender fee above $2,500, with the compensation agreement behind it.
SBA Form 1919 (Borrower Information Form) Documents: The form each 7(a) co-borrower signs and gives the lender. It reports employees and jobs and the purpose of the loan, and the lender keeps the signed form and enters its data into SBA's system.
SBA Form 413 (Personal Financial Statement) Documents: SBA's personal financial statement. Each 20 percent owner and each guarantor except a supplemental guarantor gives one, or the lender's own equivalent, signed and dated within 90 days.
SBA Franchise Directory SBA: SBA's list of franchise brands it has reviewed and found eligible. A brand that meets the FTC definition of a franchise must be on it for the loan to go ahead.
SBA guaranty percentage SBA: The share of a 7(a) loan that SBA guarantees to the lender: up to 85 percent of a loan of $150,000 or less, up to 75 percent of a larger loan, and 50 percent on SBA Express.
SBA Lender Match SBA: An SBA online tool where a business answers a few questions and SBA sends a summary of interested lenders within two business days. It is not a loan request and promises no loan.
SBA occupancy requirement SBA: The rule that a business using SBA money on real estate must occupy at least 51 percent of an existing building, or 60 percent of a new one, and may lease out the rest within set limits.
SBA size standard SBA: SBA's test that a business and its affiliates are small enough for a loan: the limit for its industry in 13 CFR 121.201, or an alternative of $20 million net worth and $6.5 million net income.
Schedule RC-C Data: The call report schedule where a bank lists the loans and leases it holds by category, such as construction, multifamily, nonfarm nonresidential, farmland and commercial and industrial loans.
Section 1071 (small business lending data rule) Regulation: The part of the Dodd-Frank Act, carried out in Regulation B subpart B, that will require larger lenders to collect and report data on credit requests from small businesses.
Small business loan (CRA and call report definition) Regulation: In bank reporting, a business loan with an original amount of $1,000,000 or less that is a commercial and industrial loan or is secured by nonfarm nonresidential real estate.
Small-balance multifamily Property: A loan on an apartment building of five or more units that falls under a size cap. Each program sets its own cap, so the phrase has no single legal meaning.
SOFR (Secured Overnight Financing Rate) Structure: A daily benchmark interest rate, published by the Federal Reserve Bank of New York, that measures the cost of borrowing cash overnight against Treasury securities.
SOP 50 10 (SBA lender manual) SBA: SBA's rulebook for 7(a) and 504 loans, in three parts: core requirements, 7(a) requirements and 504 requirements. Version 8.1 took effect on October 1, 2026.
Spec home Construction: A house built before any buyer has signed a contract for it, so the loan is repaid only when a buyer is found.
Special purpose property Property: A building whose design or construction limits it to the use it was built for, such as a car wash, hotel, gas station or bowling alley.
Spread (margin over an index) Structure: The fixed number of percentage points a lender adds to an index, such as prime or SOFR, to set a loan's interest rate.
Standby letter of credit Structure: A bank's written promise to pay a third party if the bank's customer does not repay a debt or does not perform an obligation.
Step-down prepayment penalty Structure: A prepayment charge set as a percentage of the amount prepaid that drops on a fixed schedule, usually each year, until it reaches zero.
Subordination, non-disturbance and attornment (SNDA) Documents: An agreement in which a tenant puts its lease behind the lender's mortgage, the lender agrees to honor the lease after a foreclosure, and the tenant agrees to treat the new owner as landlord.
Supervisory LTV limits Regulation: Loan-to-value ceilings in the federal real estate lending guidelines, from 65 percent for raw land to 85 percent for improved property, that a bank's own limits should not exceed.

T

T-12 (trailing 12 months) Documents: A property's income and expense statement for the most recent twelve months, usually shown month by month.
Take-out loan Construction: The permanent loan that pays off a construction loan, or the commitment from a lender to make that loan once the project is finished and leased.
Tenant estoppel certificate Documents: A signed statement from a tenant confirming the terms of its lease and that the lease is in effect, which a lender or buyer can then rely on.
Term loan Structure: A business loan for a set amount with a maturity of more than one year, repaid on a fixed schedule from the company's cash flow.
Term sheet Documents: A term sheet is a short written outline of the loan a lender is prepared to consider: amount, rate, term, fees and main conditions. It is usually not binding.
Third-party lender (SBA 504) SBA: The bank or other lender that makes the first-lien loan, usually about half the project cost, in an SBA 504 project. SBA does not guarantee its loan.
Tier 1 capital Regulation: A bank's core capital under the capital rule: common equity tier 1 plus additional tier 1. The minimums are 6 percent of risk-weighted assets and a 4 percent leverage ratio.
Title insurance (lender's policy) Documents: A policy that protects a lender against loss if its mortgage turns out not to have the lien priority it expected, or if title to the property is defective.
Total risk-based capital Regulation: The sum of a bank's tier 1 and tier 2 capital. The capital rule requires it to be at least 8 percent of the bank's risk-weighted assets.

U

UCC lien Documents: A lender's claim on business assets other than real estate, made public by filing a financing statement under Article 9 of the Uniform Commercial Code.
Uniform Bank Performance Report (UBPR) Data: A public report, calculated each quarter mostly from a bank's call report, that turns the filing into ratios and compares the bank with a peer group.
Unused commitment Regulation: The part of a legally binding promise to lend that the borrower has not drawn yet, such as the open amount on a line of credit or the unfunded balance of a construction loan.
Upfront guaranty fee (SBA 7(a)) SBA: The one-time fee a 7(a) lender pays SBA for its guaranty, set by loan size and charged on the guaranteed portion. The lender may pass it on to the borrower.
USDA Business and Industry loan (B&I) Farm: A business loan in a rural area, made by a private lender, on which USDA Rural Development guarantees part of the lender's loss.

V

Value-add Property: Buying an underperforming property and raising its income through renovation, repairs or stronger management. Lenders call it repositioning or rehabilitation.

W

Working capital Underwriting: The money a business has tied up in day-to-day operations, measured as current assets minus current liabilities; a working capital loan funds that gap.

Y

Yield maintenance Structure: A prepayment charge sized so the lender or investor earns about what it would have earned had the loan run to the end of the yield maintenance period.

Plain definitions for orientation, not legal, tax or credit advice. Figures and sources are on each page. The data dictionary lists every field in the lender record.