Glossary - Banking
Collateral - Assets pledged by a borrower in order to secure a loan or credit, and which may be seized in the event of non-payment. For entrepreneurs, Collateral could include premises, equipment, vehicles, policies, or even the applicant’s home. In marketing terms, Collateral refers to materials which help to promote the business and may include brochures, flyers, newsletters, fact sheets, press kits, etc.
Debt Financing - Money that you borrow from another source, with the understanding that you will pay it back within an agreed period. In other words – a loan. This can be short-term (a year or less) or longer term. Debt Financing is not to be confused with Equity Financing, in which a company is granted a loan in return for a share of the business. This normally occurs with an Angel Investor or Venture Capitalist, or may be a result of issuing shares in a public offering.
Merchant Account - A bank account which allows a business to process debit and credit card transactions. In many instances, banks will also provide merchant accounts specifically geared to the needs of online businesses.