GLOSSARY of Business Terms — H through M |
|
H
Hardware – The equipment used in a data processing system.
Hazard Insurance – Insurance that covers risks on secured loans.
I
Incubator – A facility that houses several new businesses and encourages entrepreneurship. They share common services such as meeting rooms, phone systems, and accountants, and are usually in a technology-related field.
Indemnity – An obligation to compensate another party for losses and damages that have occurred or may occur.
Independent and Qualified Public Accountants – An accountant is independent when he or she has no personal interest in the client's business. They are considered qualified when they hold a license to practice or have worked as a public accountant for five or more years and are accepted by the Small Business Association.
Industrial Revenue Bond (IRB) – A bond issued by the government to a private user to finance the construction of commercial facilities that serve the public.
Innovation – The creation of a new idea, product, or service.
Insolvency – A borrower is considered to be insolvent when he or she cannot pay a financial debt currently.
Interest – Additional amounts paid by the borrower to the lender based upon a percentage of the loan principal.
Inverse Order of Maturity – When a borrower pays more than the scheduled amount of money due on a loan payment, the money left over is deducted from the principal amount. This reduces the maturity of the loan. Also known as "partial prepayment."
Investment Banking – An institution that purchases and sells securities and issues funding for businesses, but does not accept deposits.
Invitation for Bids – Soliciting offers following government rules and regulations, but not restricting any bidders by asking for specific requirements.
J
Job Description – A detailed listing of the tasks performed for a certain job including duties, training, and any physical demands.
Job Sharing – Where two people share the tasks and hours of one job instead of two individual positions.
Judgment – A decision by a court on any liabilities.
Judgment by Confession – In lieu of going to court, defendants can allow themselves to be ruled against for a certain awarded sum.
Junk Bond – A source of high-risk, high-yield corporate funding with a low credit rating.
L
Lease – A document signed to get temporary use of a property.
Legal Rate of Interest – The legal amount a lender can charge a borrower on a loan. This varies from state to state.
Lending Institution – An institution, such as a bank, that issues loans.
Leveraged Buy–Out – To purchase a company using mostly borrowed money.
Lien – When securing a loan, an encumbrance can be placed on an asset until the property is sold or paid for.
Liquidation – Selling of company assets to pay off creditors, debt, and shareholders.
Liquidation Value – The estimated proceeds (net of liabilities) that would result from either a normal or forced sale of an asset(s) if sold without being part of the business of which it was originally a part.
Litigation – When a dispute reaches a court of law.
Loan Agreement – The arrangement of payments, conditions, and restrictions signed by the borrower of a loan.
Loan Payoff Amount – The total amount of money needed to pay off a loan.
Loss Rate – The ratio of the total amount of loans disbursed to the total amount of loans charged off.
Loss Reserve Adjustment Rate – The ratio of charge-offs minus recoveries to the average of outstanding loans for the past five years.
M
Markup – The difference between the cost to retailers and what they actually charge the consumer.
Marginal Cost – The cost associated with the production of one more additional unit.
Maturity – The date when payment of principal on a debt is due.
Maturity Extensions – An extension beyond the date when the debt is due.
Merger – When two or more companies are combined under the name of one of the companies. No new entities are formed. Note: Not to be confused with consolidation, which occurs when two or more companies combine into one under a new name.
Mortgage – A loan giving legal rights to own real estate. A preset schedule of payments and interest rates are calculated when receiving a mortgage.
Multi-Level Marketing (MLM) – Offering commission to distributors who sell your goods or services.
