Banking glossary: Commercial banking terms explained

Commercial banking glossary terms 

1. Commercial lending – a loan to a business rather than a loan to an individual consumer. They may have an interest rate based on the LIBOR rate or prime rate and are secured by collateral 

2. Asset-based lending – loaning money in an agreement that is secured by collateral such as stock, plant and machinery, and invoices

3. Bridging – a short-term loan, usually taken out for any amount of time between two weeks to three years pending the arrangement of a longer-term finance arrangement

4. Secured lending – when the borrower is required to give the lender collateral as a form of insurance against defaulting on the loan

5. Term loans – a loan from a bank for a specific amount that has a specified repayment schedule, with a fixed or floating interest rate

6. Trusts – a private legal agreement in which assets such as cash, real estate, and shares are held in trust for a beneficiary

7. Base rate – this is the interest rate that central banks (for example the Bank of England) charge banks for lending to them

8. Factoring – when a company buys a debt or invoice from another company

9. Confidential discounting – a private agreement between an invoice finance provider and a business which remains undisclosed to customers of the business

10. Charge cards – an electronic payment card that charges no interest but requires that you pay the statement balance in full, usually monthly

11. Interest rate – the sum of money you are charged by a lender for borrowing money. This number is usually expressed as a percentage

12. Deposits – a sum of money held by a bank, these can be accessed instantly, fixed for a period of time or accessed within a previously agreed notice period (often 100 days).

Get in touch to discuss your banking needs, or read our glossary of real estate finance terms.