Terms And Definitions For Commercial And Corporate Banking
Glossary Of Commercial and Corporate Banking
Below is a list of Commercial and Corporate Banking terms and definitions commonly used by commercial lenders, treasury management professionals, credit analysts, portfolio managers, customer relationship managers, and corporate bankers.
Commercial Lending
Acquisition Financing
A loan used to finance the purchase of another business.
Asset-Based Lending (ABL)
A loan secured primarily by business assets such as inventory, equipment, or accounts receivable.
Balloon Payment
A large final loan payment due at the end of the loan term.
Borrowing Base
The maximum amount a borrower may access based on the value of eligible collateral.
Bridge Loan
Short-term financing intended to provide funding until permanent financing is obtained.
Business Acquisition Loan
Financing used to purchase an existing business.
Commercial Credit Facility
A lending arrangement that provides businesses with access to financing.
Commercial Mortgage Loan
A loan secured by commercial real estate.
Construction Loan
Short-term financing used to fund the construction of commercial or residential property.
Credit Facility
A formal agreement allowing a borrower to access credit under specified terms.
Demand Loan
A loan that the lender may require the borrower to repay at any time.
Equipment Loan
Financing used to purchase machinery, vehicles, or other business equipment.
Inventory Financing
A loan secured by inventory held for sale.
Permanent Financing
Long-term financing that replaces temporary funding such as a construction or bridge loan.
Revolving Credit Facility
A credit agreement allowing repeated borrowing and repayment up to an approved limit.
Syndicated Loan
A large loan provided by a group of lenders rather than a single institution.
Term Loan
A loan repaid over a fixed schedule with a specified maturity date.
Working Capital Financing
Financing used to support a company's day-to-day operating expenses.
Credit Analysis
Borrower Capacity
The borrower's ability to repay debt based on cash flow and financial performance.
Cash Flow Analysis
Evaluation of a company's cash inflows and outflows to determine repayment ability.
Collateral Evaluation
Assessment of assets pledged to secure a loan.
Credit Exposure
The amount a lender could lose if a borrower defaults.
Credit Memorandum
A written analysis supporting a lending decision.
Credit Policy
Internal guidelines governing loan approval, underwriting, and portfolio management.
Credit Risk Rating
Internal assessment of a borrower's likelihood of default.
Debt Service Coverage Ratio (DSCR)
A measure comparing available cash flow to debt obligations.
Financial Statement Analysis
Evaluation of financial reports to assess creditworthiness.
Global Cash Flow
Combined cash flow from all related entities and guarantors used in credit analysis.
Guarantor
A person or entity that agrees to repay a loan if the borrower defaults.
Loan Covenant
A contractual requirement the borrower must satisfy during the life of the loan.
Loan Review
Independent assessment of loan quality and underwriting standards.
Loan-to-Cost Ratio (LTC)
The loan amount compared with the total project cost.
Personal Guarantee
A commitment by an individual to repay business debt if the business cannot.
Portfolio Risk
The overall level of credit risk within a loan portfolio.
Treasury Management
Account Analysis
Review of account activity and service charges for commercial customers.
Automated Clearing House (ACH) Origination
Initiating electronic payments or collections through the ACH network.
Cash Concentration
Consolidating funds from multiple accounts into one central account.
Cash Position Reporting
Reporting available cash balances to assist treasury decision-making.
Controlled Disbursement
A cash management service providing early notification of checks presented for payment.
Lockbox Service
A payment collection service that accelerates processing of customer payments.
Positive Pay
A fraud prevention service that matches issued checks against checks presented for payment.
Remote Deposit Capture (RDC)
Electronic deposit of checks using a scanner or mobile device.
Sweep Account
An account that automatically transfers excess balances to another account or investment.
Wire Origination
The process of initiating domestic or international wire transfers.
Zero Balance Account (ZBA)
An account that maintains a zero balance through automatic transfers from a master account.
Commercial Deposit Services
Business Checking Account
A deposit account designed for business transactions.
Commercial Savings Account
An interest-bearing account for business funds.
Escrow Management
Administration of funds held on behalf of third parties.
Interest-Bearing Business Account
A business deposit account that earns interest.
Merchant Deposit Account
An account used to receive card payment proceeds.
Operating Account
A business account used for routine operating expenses.
Payroll Account
A dedicated account used to process employee payroll.
Trust and Escrow Account
An account holding funds for fiduciary or escrow purposes.
Trade Finance
Bank Guarantee
A bank's promise to cover a customer's financial obligation if the customer fails to perform.
Commercial Letter of Credit
A payment guarantee used in domestic and international trade.
Documentary Collection
A trade finance method where banks facilitate payment in exchange for shipping documents.
Export Financing
Financing that supports businesses selling goods internationally.
Import Financing
Financing used to purchase goods from foreign suppliers.
Standby Letter of Credit
A guarantee that payment will be made if contractual obligations are not fulfilled.
Trade Credit
Credit extended by suppliers allowing payment at a later date.
Trade Finance
Financial services supporting domestic and international trade transactions.
Relationship Management
Client Portfolio
The collection of commercial customer relationships managed by a banker.
Cross-Selling
Offering additional financial products or services to existing customers.
Customer Profitability Analysis
Evaluation of the revenue and costs associated with a customer relationship.
Relationship Manager (RM)
Banking professional responsible for managing commercial client relationships.
Relationship Pricing
Pricing loans and services based on the customer's overall banking relationship.
Treasury Services Officer
Specialist who advises business clients on cash management and payment solutions.
Commercial Loan Administration
Annual Credit Review
Periodic reassessment of a borrower's financial condition and loan risk.
Collateral Monitoring
Ongoing review of pledged collateral to ensure adequate loan security.
Covenant Compliance
Monitoring whether borrowers meet financial and operational loan requirements.
Loan Boarding
The process of entering a newly funded loan into servicing systems.
Loan Documentation
Legal documents supporting loan approval and collateral.
Loan Modification
A change to the terms of an existing loan agreement.
Loan Renewal
Extension or replacement of an existing credit facility.
Maturity Review
Evaluation performed before a loan reaches its maturity date.
Payment Default
Failure to make required loan payments as agreed.
Portfolio Monitoring
Ongoing assessment of loan quality and borrower performance.
Corporate Banking
Capital Markets Advisory
Services helping corporations raise debt or equity financing.
Corporate Finance
Financial activities related to funding, investment, and capital structure decisions.
Debt Financing
Raising capital through loans or debt securities.
Investment Banking Services
Advisory services for mergers, acquisitions, securities offerings, and capital raising.
Liquidity Management
Strategies for maintaining sufficient cash to meet business obligations.
Project Finance
Financing based primarily on the projected cash flows of a specific project.
Structured Finance
Customized financing solutions for complex business transactions.
Working Capital Management
Managing current assets and liabilities to support efficient business operations.
Risk and Compliance
Credit Concentration Risk
Risk arising from excessive exposure to a single borrower, industry, or geographic region.
Environmental and Social Risk Assessment
Evaluation of environmental and social factors that may affect lending decisions.
Know Your Business (KYB)
Verification of a business customer's identity, ownership, and operations.
Loan Exception
A loan approved outside normal policy guidelines with appropriate authorization.
Portfolio Diversification
Managing a loan portfolio across different industries and borrower types to reduce concentration risk.
Risk-Based Pricing
Setting loan interest rates and terms according to the borrower's assessed credit risk.
Sanctions Screening
Reviewing customers and transactions against applicable sanctions lists before processing business transactions.
